‘Upward Price Pressures’ Have Ended In Phoenix
A pair of reports provide an update on the housing bubble in Arizona. “New home permits in February dropped more than 20 percent from the same time last year, perhaps a signal that the Valley’s incessant new home price increases will end. The 3,729 permits issued last month marked the lowest total in the last 24 months, according to the latest issue of The Phoenix Housing Letter, released Monday.”
“Although resale market prices are decreasing, Letter publisher R.L. Brown said the new home market will take longer to adjust because ‘builders aren’t prone to lower the base prices of a product.’ However, builders have rolled out numerous incentives, including price discounts and free or discounted upgrades.”
“‘That’s happening all over the Valley right now,’ Brown said.”
“Builders are also adding cheaper floorplans to existing models within specific developments, in effect repositioning the product within the community. Brown doesn’t see the current housing conditions as a precursor to any kind a disaster. ‘We’re seeing the resale market begin to adjust,’ said Brown. ‘Housing prices reached a point to where the consumer said no more.’”
“Housing prices have skyrocketed since the beginning of 2005, eclipsing appreciation rates of 40 and 50 percent in many parts of the Valley. But those days may be over as sellers get more realistic with pricing. ‘I don’t think it will be very long before the resale (price) is reflective of what consumers are willing to pay for a home,’ Brown said.”
“Brown doesn’t believe the Valley can sustain the 1.63 percent monthly rate increase. The March average base price of all of plans offered in the marketplace was $387,000, while the median closing price was $268,000. ‘It was past time that the rapidly upward price pressures on the new housing market ended,’ Brown said. ‘I suspect that we can say they’ve ended.’”
And the Kingman Daily Miner has this report on builder incentives. “Thirty-three new houses in Mission Estates, developed by Scholl Homes at Mallory Loop off Hualapai Mountain Road, will hit the market this Saturday and Sunday. These three to four-bedroom houses will be priced at a relatively low level, focusing on local residents who have been looking to buy a house but cannot afford one, said Frank Trotman, a Scholl Homes’ manager.”
“The intent of purchase must be for the owner to occupy the property, and investors who are aiming to buy these properties and turn them over for a profit will be prohibited, said Trotman. Scholl homes is going to have loan officers on-site during the project’s grand opening on Saturday and Sunday to evaluate applicants’ qualifications, and those who are granted a loan could own a house there right away.”
“About 10 houses have been completed and are ready for people to move in immediately, and the rest will be ready for occupancy within the next two weeks.”
“Although everyone is invited to apply for the builder’s loan, Trotman suggested those who have stable jobs obviously have more of a chance to qualify. Without a stable income, Trotman said, it would be hard to convince loan officers to grant financial assistance.”
“The 33 houses are just a small part of Scholl Homes’ construction project in the Kingman area. The company will build about 200 houses in Kingman and Golden Valley each year for the next ten years. Trotman said research from his company showed the water supply would not be a problem for the area for decades to come.”
Thanks to the reader in Kingman who keeps us posted with links like this. If you will remember, it was the perma-bull Brown who got quoted last week on the ‘preliminary numbers’ not looking good for February. He really has his tale between his legs now, so he must be setting everyone up for the bad news.
I got this from the learning annex:
“NOW IS THE TIME
I really don’t want to see you miss this one of a kind event, but if you keep letting these opportunities slip past, eventually they will be gone. Don’t make that mistake. This weekend is just a few weeks away. Are you ready to be a part of it? Are you ready to start building yourself a real estate fortune?
We still have seating available for the weekend in the Main Hall – although I don’t expect it to last much longer because there are only 53 seats left. You’ll see all 4 Keynote Speakers, plus have admission to any of the 72 seminars and the Expo floor. Regular price is $179, but if want you to affect some CHANGE in your life…some change for the richer! Click on Redeem Coupon or use coupon code LA1178 in the next 3 days and you’ll get $80 off that price – pay only $99!
Make the change…take a chance. It’s never going to be as easy as it will on April 8th and 9th. Millionaires will be made. Will you be one of them?”
Seats still available… have they milked this thing yet?
Oh Melody,
They have gotten more milk out of this cow than HISTORY has ever recorded… and it’s a FACT!
These things are unbelievable, melody. I actually attended one about ten years ago with my wife, who was in real estate at the time. It’s a very emotional pitch — they keep referring to the “coulda shoulda woulda” folks who just never got off the stick and got rich. Every one of them had books or tapes (or both) to hawk and when you walked out of the auditorium you had to run a gauntlet of 20-somethings yelling at you like carnival barkers, trying to get you to buy books. One thing I know for sure is that if there was so much money to be made in real estate, they wouldn’t have all this time on their hands to write books, fly to seminars, and star in TV shows.
Did you notice it? It says “this weekend is weeks away”. LOL I think they meant days but hey, what do you expect from realtor like people?
Realtor like people not even close, Take the worst opinion of Realtors you can find on this blog and multiply by ten then you’ll be scratching the surface. I get asked daily by clients am I going to attend this. I say no and explain why and everytime I get a big Ahhhhhhh thanks for giving me the heads up.
‘It was past time that the rapidly upward price pressures on the new housing market ended,’ Brown said. ‘I suspect that we can say they’ve ended.’”
Realtor in an elevator, plummeting to Earth, to another realtor: “I think we can say that the elevator is no longer rising. I suspect it’s safe to say that.”
LOL. Reminds me of that old joke about the guy who jumps off the Empire State Building. As he’s half-way down, someone sticks their head out a window and says “Oh my god, you’re going to die!”, to which the guy falling replies “Nah, I’m OK so far.”
Such ridiculous terms “suspect”.
“Sustain” is another one of the favorite weasel words. AG used it often, saying things like “such home price appreciation is not sustainable”. What does this really mean? That the rate of appreciation is not sustainable or does it mean that current home prices are not sustainable? This current blog article uses the sustain word too:
“Brown doesn’t believe the Valley can sustain the 1.63 percent monthly rate increase.”
“Sustain” implies prices will not actually drop, they simply will not keep increasing at this rate. Clever word smithing is becoming so common place, and nobody worries about the more serious ramifications of purposeful intent to mislead. Not good when such tactics are being used by the fed.
FED!!! I forgot about tomorrow!
Whatddya’ll think?
Another measured 1/4 point increase in the FF rate, or else the Helicopter Ben label will be tatooed on to his chest forever…
EGGZAKLY, GetStucco.
“Housing prices have skyrocketed since the beginning of 2005, eclipsing appreciation rates of 40 and 50 percent in many parts of the Valley. But those days may be over as sellers get more realistic with pricing.”
This stuff is going to sound like a broken record as the weeks and months tick on…
Saturday’s Santa Barbara News Press Front Page article noted that Feb 2006 pricing is actually LOWER than Feb 2005.
WHAT’S important to note, is this EFFECTIVELY WIPES OUT THE 20% GAINS for the entire year of 2005. Local sellers and the Realtors (TM) do not want to admit that… and neither will they in Arizona!
They are going to have to admit it eventually. Spring selling season is shaping up to be pretty disastorous in bubble markets especially Phoenix. Prices peaked summer of last year. As we get into the summer months this year you will be comparing peak prices from last year. I wonder how they will spin that? Right now now they can hang on to the last gasp of the market. I’m just curious how high will Phoenix inventory peak.
You may be, they won’t. There are two year, three year, five year and ten year comparisons to be made.
Don’t think they won’t.
They’re already doing it
OK boys and girls. Wanna play Dog Pile? There’s a yo-yo agent named Larry who’s been dumping on anyone with the gall to suggest there is a housing bubble. He’s been posting on Barry Ritholtz’ blog at http://bigpicture.typepad.com/comments/2006/03/new_real_estate.html#comments
Had a jolly time with him last night but he just won’t quit, and I bore easily. Facts and logic don’t seem to phase him. thought some of you might like to have some fun too! You can google his name since he uses his real name to post and check out his webpage too. That’s where I got some of my ammo. Have fun!
I read Larry’s posts, what an idiot.
Can you believe him? If you look the threads under previous topics in the real estate section, you’ll see he’s been infesting that blog for a few months. Most of the posts are very informative.
LARenter, what are you smoking? There’s no bubble in Phoenix. The NAR said so in their anti-bubble report for Phoenix:
With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the Phoenix-Mesa-Scottsdale metro market, as detailed below, reveals that there is very little danger of this. In fact, the local housing market is in excellent shape with a potential for significant housing equity gains, particularly for homebuyers who plan to remain in their house for the long run.
A high usage of interest only loans (45%) and ARMS (67%) places a greater exposure risk to interest rate changes. But the risks are mitigated from recent job additions of more than 70,000 in the past 12 months. Also Phoenix prices are quite affordable in relation to prices in nearby California. [just a 6-hr commute to LA]
Mortgage rates declining to 45-year lows have been a major force in boosting home prices in recent years. Lower rates allow homebuyers obtain a larger loan without necessarily increasing monthly mortgage payments.
Interest-only loans accounted for 38% of all loans, while ARMS accounted for 39% in 2004 in the local region. The figures are likely to be modestly higher in 2005. Therefore, some homeowners could feel the pinch of higher rates over time. [the same way that one would "feel the pinch" of of an anvil falling on one's head -ed]
The region is a prime retirement destination. The local market will benefit from second-home purchases by U.S. baby boomers as well by wealthy foreigners. [apparently, the Arabian desert isn't hot and dry enough for Saudi sheiks so they're all moving to the Phoenix suburbs]
The local housing market will experience a price decline of 5% only under extreme unlikely scenarios. For example, mortgage rates rising to 10.3% in combination with local job losses totaling 78,000 could lead to a price decline.
Yea …yea… this is what realtors were saying for the last couple of years to get people to buy . Its not happening anymore …don’t you get it . The dessert people and the boomers are not going to rescue Arizona from their investor ridden false markets .
‘We’re seeing the resale market begin to adjust,’ said Brown. ‘Housing prices reached a point to where the consumer said no more.’”
WTF is ‘adjust’?? How about the bubble popping. Wait…that’s right, ther is no bubble. Let see what he says when it creeps tp a 12mo inventory.
I guess she’s not selling any houses
RE Commission Enhancement Strategy (TM)
That’s funny
If the fed, congress and other leaders allow housing in America to cost 10 times more than many other countries, America will lose its status as an economic leader. That is why housing prices will fall.
But it doesn’t. Certainly there are crazy areas, but in general prices look quite reasonable to my Australian eyes.
And compared to most of England (not just London!), the US like-for-like looks downright cheap.
Before attending a sales event always ask yourself, ‘if it’s such a money maker why would he/she be showing me?’ We all know how powerful greed is and I’ve never met anyone who could turn a buck quickly allow another to take his place. That’s what I find so interesting about Trump. He sees the handwriting on the wall and the easy money now is in seminars, tv spots, and his own tv program (apprentice). The latter btw begs the question, ‘how many of the participants, young millionaires, are living on paper real estate profits?’ Gee, maybe they’ll be offering their services to The Donald for housekeeping.
What better way to pump to the lowest rung on the pyramid scheme? They get buyers by cheerleading and promising, the buyers’ (future pyramid suckers) identities AND they get the buyers (future pyramid suckers) to pay for it!
An ingenious $$$$$$$$$ machine!
I can see a broker signing up for skydiving lessions. When the green jump light comes on the jump instructor reminds them to jump, spell bubble and pull the ripcord. As the jump instructor floats peacefully half way toward the ground the broker passes him, saying b-b-b-b-b-u-u-u-u-b-.
THIS FROM REALTY TIMES MARKET WATCH
Quote by Lori Hoffman (SB Realtor) on March 12, 2006
“Many buyers are taking a “wait and see” attitude. Now that a soft landing can be expected, with interest rates remaining favorable and the excessive pressure to “buy it now” lessening, buyers can relax a little. They do need to understand, however, that prices in the Santa Barbara area are not going to plummet. Therefore excessively low offers are not appropriate. Rather, Buyers should take advantage of the increase in inventory and realize that this is a great time to be buying.”
She also gives a March 12, 2006 Market TREND PREDICTION OF PRICES RISING (she gives the market a 4 of 5: “5″ being prices are heading full steam ahead).
Does anyone else check Realty Times and see what local realtors are writing about what they think the market is doing?
My guess is that realtors are going to have to start doing drugs or drinking a little harder to really be able to write these types of assessments.
LOL. If it’s a ‘buyer’s market’, they determine what is appropriate.
Idiots like this think they can keep the bubble inflated with empty rhetoric. Wake up, Lori, the dream is over.
Sorry to rain on your parade Lori, but my Mother of All Lowball Offers TM is coming your way!
I read the reports . What a joke . Nothing but spin .
Realtor Lori Hoffman cant tell buyers they can’t or shouldn’t make low-ball offers .Realtors have to present all offers.
They don’t have to present frivolous offers however.
What about sellers FRIVOLOUS asking prices??
Yes, I enjoy reading the realtor comments. Occasionally, you find someone who is trying to tell it straight. The others are good for a chuckle or two.
Thanks SLO Renter, Housing Wizard and Betamax-
I’ve kind of given up on the Realty Times site (as a source for real information)…
many of the realtors that respond and post their names, predictions (contact info + websites
) for individual towns/states they are marketing their services to…
seem to be on the HELL BENT path of trying to CONVINCE anyone that will read their bullcrap that the market is only heading up up up!
This Santa Barbara realtor Lori Hoffman’s entry forced me to share it with Ben’s National Housing Bubble Blog.
I think these might be great for Ben’s weekend topics too…
bloggers posting the most outrageous of claims!!!
That would be good. You should post your version in the topics thread Friday.
Thanks Ben, I appreciate it.
I read them… and GARY WATTS keeps coming up… bogus slowdown, buy buy buy, it’s extremely annoying!!!!!
The self-professed flipper who bought the house next door to me went to a seminar and was convinced by Gary Watt’s thoughts. The flipper is doing a hell of a lot of rehab to the place, so maybe I should be grateful?
Robin,
Definitely a windfall for you! Nicely remodeled homes around you will only help.
JUST ONE MORE, I COULDN’T RESIST!
This one I found in SAN DIEGO (GetStucco’s home town):
On March 16, 2006 Rima Hakooz (a real estate consultant in San Diego) writes:
“…San Diego market will again be fueled by the continuing shortage of housing across much of the state, according to C.A.R. economists.”
Rima ALSO rates price trends at a “4″ out of 5… prices RISING in San Diego!!
This article is priceless. It’s like Lori has been appointed herself this month’s hall monitor
“Childen, excessive running in the halls while not in class is not appropriate”
I’ve seen a lot of Realtors say things like:
“Where are all the buyers? Don’t wait for prices to fall. [They are acknowledging that buyers are NOT buying, but waiting.] Prices will not fall. You simply have more inventory to choose from. Just get in there and buy, buy, buy.”
Yeah, right. Like **they** determine what prices will be. Perhaps all the idiot buyers are “in the game” and now the smart buyers can, once again, show the market that it is BUYERS who determine what prices will be. Many sellers need to sell, there’s not a single buyer who **needs** to buy.
In the past few years, buyers have been chasing prices. Now’s the time for prices to chase the buyers. There’s a long wait, and a long way to go, but patience will be rewarded.
Yes, I look at Realtytimes just for laughs. Whether the market is skyrocketing or nosediving, it’s ALWAYS a great time to buy.
“Therefore excessively low offers are not appropriate.”
This b@tch is absolutely crazy. I wonder if she has a shiny pocket watch for buyers to stare at.
If you had a secret, that allowed you to make millions upon millions, why would you share it with a lot of people for $99. ???
Human beings can be so gullible when you can get them to believe there is a easy road to wealth….
Yes, we are all still looking for the philosopher’s stone . . . .
P.T. Barnum knew all of the tricks long ago but the desire to obtain wealth quickly removes all of the gray matter from people or should I say sheeple and the desire to get rich quickly takes hold like a big vice. We could fast forward these past few years to 2050 and it will be repeated again as greed never leaves the human sole.
…like believing in real estate bubbles?
Re: Idicators:
In addition to checking ‘reduced’ in the RE section of Craigslist, I am now using the keyword ‘pre-foreclosure’. Today I netted 12 for the SF Bay Area.
http://www.craigslist.org/cgi-bin/search?areaID=1&subAreaID=0&query=pre-foreclosure&catAbbreviation=rfs&minAsk=min&maxAsk=max
Foreclosure.com lists 691 pre-foreclosures , 388 bankruptcies, and 2,950 tax liens for San Francisco alone.
Sorry - ‘Indicators’.
This is good, thanks for sharing
“Your head is humming and it won’t go
In case you don’t know,
The piper’s calling you to join him,
Dear lady, can you hear the wind blow,
And did you know
Your stairway lies on the whispering wind.”
——————————————————————————————
Can anyone else hear the whispering wind? Wait — it isn’t whispering anymore — it has begun to whistle now, and rather loudly I might add…
—————————————————————————————–
New-Home Sales Fell in Feb.; Inventories Rose to New Record
By Tomoeh Murakami Tse
Washington Post Staff Writer
Saturday, March 25, 2006; Page D01
“The market has peaked. Now the question is, when do we start going down the back side?” said Christopher Thornberg, an economist for the Anderson Forecast at UCLA’s Anderson School of Business. “I don’t hear the wind whistling past my ears just yet. But I think I will over the course of this year.”
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/24/AR2006032400605.html
Good catch Get Stucco.
good catch and quoted the Zep - that’s hardcore!
There’s a feeling I get when I look to the west …
This is BS! Here in Glendale, which is the least-sexy city in the Phoenix Metropolitan area, houses have nearly DOUBLED in price in the last year. A $120K house a few blocks away from me is now $220K, 150k nearby is now 300k. That’s WAY MORE than 40-50 percent. I think part of the current spin is to admit there’s a bubble but to WAY UNDERPLAY the price gouging that’s going on. I wouldn’t trust any report that says we’ve only had a 40% increase, and then suggest that it’s the highest.
Thats good to know August Busch III . I think the 40% was the entire state ave. increase . But its outragous that a house can go up over 100% in one year in some sections . I don’t know why Arizona , with its hugh inventory , would warrant that kind of a increase .
All the more reason to offer less than half the asking price.
Well said Housing Wizard…
That’s what is so fascinating about the housing bubble- these stories (in each of our own cities) just don’t “make sense” anymore.
Some day soon, America is going to collectively wake up and ask the hard questions- and that’s when it really unravels.
August Busch III makes the excellent point that an average home in a “least sexy city” of Phoenix nearly doubles in price in one year! For what?? Exactly. For no apparent reason at all. And it is hundreds of thousands of home stories across the nation that are in a similar situation. It’s gonna POP big, we just don’t know if it will be tomorrow, next week, or later this year.
No….They won’t wake up and ask hard questions. They’ll just wake up and wonder where the money has gone. Then they will start to whine.
I have never seen anything like the price increases of the last 4 years . All I can say is never buy anything you can’t afford just cause the rest of the herd is doing it .Don’t even buy something if you can afford it if you think the price is wrong . At one point in Japan they were charging 1 million dollars a sq. foot for commercial property in I don’t know were , before their crash .
So true, so true. Like the Saturday Night Live Show, if you don’t have cash, don’t buy it!!!!!!
Way O/T (and I apologize if someone already posted it), but sums up a lot of what many of us are saying:
Denial, it’s not just a river in Egypt
By Mike Whitney
Online Journal Contributing Writer
Mar 27, 2006, 01:27
A lot of rubbish has been written lately about “religious faith.” The fact is, there’s a force that’s more powerful than faith; the power of denial. America is drowning in denial. Most people would rather keep their heads stuck in the sand than face the disaster right before their eyes.
http://onlinejournal.com/artman/publish/article_633.shtml
I saw this earlier and it’s a good article… thanks for sharing.
Aames Investment to Close Offices, Trim Staff
E. Scott Reckard
March 28, 2006
Cutting costs in reaction to a tough mortgage market, Los Angeles-based sub-prime lender Aames Investment Corp. said Monday that it would close offices in Deerfield, Fla., and Parsippany, N.J., and eliminate 100 jobs in its wholesale lending division, which makes loans through mortgage brokers.
Aames, a specialist in higher-cost loans to borrowers with imperfect credit, also is changing its corporate structure so the parent company is no longer a real estate investment trust. REITs are required to pay at least 90% of their taxable earnings to stockholders as dividends, and Aames wants to retain its capital for internal growth.
ADVERTISEMENT
The cuts and restructuring are expected to save the company $10 million a year, Aames said in filing its annual report with the Securities and Exchange Commission. It said it lost $6.2 million, or 10 cents a share, in 2005, contrasted with a profit of $41.8 million, or 68 cents, in 2004.
Aames shares rose 2 cents to $6.31 before the announcement.
UK mortgage apps and sales/prices up slightly = wierd
maybe from the summer rate cut ?
Sign of the times on NYC craigslist this morning:
$1300000 - I COULD BUY YOUR 2-BR/2-BA — BUT ONLY BEFORE RATES INCREASE
——————————————————————————–
Reply to: hous-145888432@craigslist.org
Date: 2006-03-28, 1:04AM EST
Are you exasperated by no calls/emails in response to that wildly overpriced ad your “Realtor” recommended? I am a motivated buyer with massive cash. Looking UES, Midtown East. Will buy based on 2002 comps only. I can act very quickly on the right apartment. Find a buyer now before it’s too late.
this is in or around Manhattan
no — it’s NOT ok to contact this poster with services or other commercial interests
145888432
That NY bottomfisher is courageous offering 2002 comps. He’d better flip it fast!
It’s amazing how educated people believe all the talking points. I was talking to my mother, who was a retired teacher and is otherwise quite saavy, and the subject of a housing bubble came up, and she said “but there’s just so much demand”… I tried to explain the speculators buying up 10-20 houses apiece isn’t real demand, but I don’t think it sunk in. I will try again in a few months I guess.