February 8, 2006

It’s The ‘Morning After’ In Phoenix

The Arizona Republic reports on the Phoenix housing bubble. “Listings are up and houses are taking more time to sell as buyers regain the upper hand in the Valley’s volatile resale market. Andre and Petrusia Bilyk are what’s known in the housing market as motivated sellers.They put up their northeast Valley house for sale in November, hoping it would move quickly.”

“But the couple got caught in the abrupt market swing that has drastically increased the number of houses for sale in metropolitan Phoenix. They’ve reduced the price twice; it now stands at $449,000, yet there were no takers. So they resorted to an old home-selling trick that’s supposed to bring luck, burying a statue of St. Joseph upside down by the For Sale sign in their yard.”

“‘The four of us, we held hands, and my wife said a prayer to St. Joseph to put us in escrow,’ Andre Bilyk said. ‘We were having an open house the next day. You gotta do what you gotta do.’”

“Some homeowners who never considered selling couldn’t pass up the opportunity to try to cash in at prices that are still near the market top. ‘It’s shifting to a buyers’ market,’ said Bob Rucker, head of the MLS. ‘We are returning to a more normal market than we have had over the past year or so.’”

“The pressure is on real estate agents and sellers to get creative or cut prices to make their listings stand out in the growing crowd. ‘The buyers are saying, ‘Show me 10 more houses. They know there is a lot of inventory,’ said Brett Barry, an agent who’s listing the Bilyk house. ‘If it doesn’t pick up, sellers might have to mark down homes more than they expected to get the attention of the few buyers that are out there. The market moved 50 percent in one year. This could be the morning after.’”

“Jay Butler at Arizona State University, noted in a recent study that Valley resale homes have not been so difficult to afford since 1990. Incomes could hardly keep pace with price increases, and Butler said it could get worse. ‘People reach a point where they say, ‘I can’t afford this,’ Butler said. ‘If prices and rates move up, we’re in deep trouble.’”

“How quickly has the market changed? Bill Ryan, an agent in the East Valley, said that it June, he couldn’t keep two or three active listings. Now, he has 35. ‘Investors have basically gone away,’ he said. ‘Prices are so high, they can’t make them economically pencil. They were about 30 percent of market early in ‘05. Take away 30 percent of the market and that’s a big hit.’”

“The Bilyks say they won’t panic and sell out at a bargain-basement price. They expect the market to perk up, and they won’t move to the new house until the old one sells. ‘I’m sitting on a lot of equity in this house,’ Andre Bilyk said.”

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Comment by WillM
2006-02-08 07:50:22

To Andre and Petrusia Bilyk: No need to pray. Just stop being so damn greedy and drop the price 20%. You will sell the house and still make a tidy profit. There are plenty of buyers out there, just not for the overly inflated prices! ;)

Comment by dennis
2006-02-08 11:17:23

Wise up!! If this were a stock and the bid ask was wide you had better get out while you can because all of the vultures will be waiting for you at the bottom of the pit.

Comment by rudekarl
2006-02-08 07:53:51

“The Bilyks say they won’t panic and sell out at a bargain-basement price. They expect the market to perk up, and they won’t move to the new house until the old one sells. ‘I’m sitting on a lot of equity in this house,’ Andre Bilyk said.”

I hope these nice folks continue to not panic and just sit there while their hard-earned equity slips away. Money for nothing - easy come, easy go.

Comment by goleta
2006-02-08 08:04:06

Most of those owners bought their homes with ARM and I/O. How many of them have the cash to close if they reduce the prices by 20% ?

We might have to wait till they all file BK.

Comment by NurseLiz
2006-02-08 08:07:48

Okay, so we have a good friend who lives in Loudoun County (nova) and he flipped out when I told him that the DC market was about to see a serious downturn in the coming months. He said that DC would NEVER see a big downturn because of the government being here…I just shook my head and told him that it’s different this time and that we have never experienced a market with so many exotic mortgages, cash out refi’s etc and that the foreclosure market alone was going to hurt this area because so many could have never bought without i/o’s etc. So, he’s always lived here but he and many others just don’t get it!!

Comment by cereal
2006-02-08 08:12:36

so bill ryan, the remax guy is telling his clients to expect a 3% return in the coming year. at best that’s kissing your sister. at worst, he will be proven the liar that he is.

Comment by Arwen U.
2006-02-08 08:17:47

But the couple got caught in the abrupt market swing

A RE agent/RE bull on the Washington Post RE message boards liked to admonish others never to use the words “suddenly” or “abrupt” with the real estate market. But she “suddenly” went awol on the board in about November. Hmmm.

The Bilyks have another home in progress. It is quite possible they will lose both. They need to be motivated sellers and nothing else.

Comment by craven_moorehead
2006-02-08 08:21:19

If burying statues in the front yard is NOT a sign a of PANIC, I don’t know what is.

Even worse for the Bilyk’s, it appears that Andre might making a living off the housing bubble. It appears he sells ADT security systems.


Not a line of business that will probably do very well during a housing downturn. These people have bet everything on the bubble.

Comment by rent2home
2006-02-08 08:47:18

Wow! How were you able to find this information!

Comment by sfv_hopeful
2006-02-08 08:23:24

I wish I could paste pictures on this blog. There was a listing in an area I’m keeping my eye on that originally went on the market as a flip on 8/20/05 for $650K, then reduced to $600K and sat for almost 6 months. Yesterday, it magically disappears and reappears as a “New Listing!”..the same broker, the same place, the same price. What’s changed is a new MLS#, new description, and even the old pictures have been replaced with “pictures coming soon!”. Maybe it’s just me, but isn’t this ILLEGAL? Or at the very least, isn’t it extremely unethical? On the one hand while the obvious desperation of the broker is comical, isn’t this the kind of thing that pi$$es people off?

Comment by greenlander
2006-02-08 08:25:14

They don’t seem all that motivated to me…

Comment by Davis Renter
2006-02-08 08:27:28

All I can say is ““Newly abundant liquidity can readily disapear”

/cheers to greedy sellers

Comment by azfamdeals1
2006-02-08 08:47:59

Due to some unexpected chores the past couple of weeks, I had the opportunity to drive extensively around the Greater Phoenix area beyond my usual North Snottsdale base. Witnessed a sea FOR SALE signs in every neighborhood, every price point and every type of dwelling.Also numerous banners over rental comlplexes with “FREE RENT” highlights and other come-ons. Also noted a substantial number of vacant commercial properties with “FOR LEASE” & “AVAILABLE”.
While Phoenix and environs always had an active real estate market due to the rapid growth, this is far beyond any of my observations in the 11 years of my stay. Even if conditions remain flat, the outlook here is at best problematic, if conditions deteriorate, (oil,interest rates,recession,etc.), the near term future (1-3 yrs), is bleak to say the least.

Comment by feepness
2006-02-08 10:57:01

Who are the major builders in Phoenix?

Comment by bottomfisherman
2006-02-08 08:30:55

It still amazes me to see greedy sellers try anything, even voodoo, to try to sell their overpriced homes. This guy said he is sitting on a nice profit, so why be so foolish as to stand by watch it slip away? At least some HBs are more pragmatic- Just cut the price by 150K (Centex) and move those turkeys!

Comment by poguemahone
2006-02-08 08:37:50
Comment by cereal
2006-02-08 08:42:59

phoenix is like a cheap horror flick. a great big mysterious tumor has formed and you just know something terrible is about to happen.

Comment by Out at the peak
2006-02-08 09:02:20

‘I’m sitting on a lot of equity in this house,’ Andre Bilyk said.

You only think you are…

Comment by Lars
2006-02-08 09:06:12

Here is the MLS for the house in the article. MLS #: 2434945
Looks like it’s lowered to $434k

Gotta love chicken wire and stucco.

Comment by econ_101
2006-02-08 09:08:06

I think the key paragraph in this was:

“How quickly has the market changed? Bill Ryan, an agent in the East Valley, said that it June, he couldn’t keep two or three active listings. Now, he has 35. ‘Investors have basically gone away,’ he said. ‘Prices are so high, they can’t make them economically pencil. They were about 30 percent of market early in ‘05. Take away 30 percent of the market and that’s a big hit.’”

I have read almost this same quote elsewhere (in regards to FL, Sacramento) recently. The key is that 30% of demand has suddenly disappeared. If you pencil something like this in using rough supply and demand curves, it shows EXACTLY what is happening:

1) prices stay fixed in short run, inventory (surplus) grows because old price no longer clears market (exactly what is being observed).
2) prices start to adjust downward at some point (soon) to move towards a market clearing price.

This is stuff they teach in the first 2 weeks of any college econ class. Here is what it looks like (see graph)

Comment by Robert Cote
2006-02-08 09:26:36

Coyotes have the good sense to knaw off their own leg caught in a trap but the “Bilyks say they won’t panic and sell out at a bargain-basement price.” Two mortgages. do they think they a building equity or something?

Comment by ocrenter
2006-02-08 09:34:05

4832 E ARMOR ST, Cave Creek, AZ 85331**
Listing Price: $434,900
Bedrooms: 3
Full Baths: 2
Partial Baths: 0
Square Feet: 1,987
Lot Size: 7,501 TO 10,000 SQ FT
Year Built: 1996
On Market: 88 days
Type: SFR
Status: ACTIVE
MLS #: 2434945
Price Reduced: 01/19/06 — $463,000 to $449,000
Price Reduced: 02/05/06 — $449,000 to $434,900

Listing Agent: BRETT BARRY

Let’s look at other motivated sellers in the same community, these more motivated guys have bigger, newer homes with lower prices and they are not selling:

4750 E PRESERVE WY, Cave Creek, AZ 85331
List Price: $429,900
Bedrooms: 4
Full Baths: 3
Partial Baths: 0
Square Feet: 2,248
Lot Size: 1 TO 7,500 SQ FT
Year Built: 2003
On Market: 123 days
Type: SFR
Status: ACTIVE
MLS #: 2380953
Price Reduced: 11/17/05 — $464,900 to $457,000
Price Reduced: 01/07/06 — $457,000 to $445,000
Price Reduced: 01/31/06 — $445,000 to $429,900

4446 E COYOTE WASH DR, Cave Creek, AZ 85331
List Price: $429,000
Bedrooms: 3
Full Baths: 3
Partial Baths: 0
Square Feet: 2,132
Lot Size: 1 TO 7,500 SQ FT
Year Built: 2001
On Market: 133 days
Type: SFR
Status: ACTIVE
MLS #: 2390050
Price Reduced: 02/04/06 — $449,000 to $429,000

Comment by AZgolfer
2006-02-08 12:46:24

How do you get in info? I tried to used Dominica and I can’t get it to work.

Comment by realestateblues
2006-02-08 09:34:39

Does anyone know how much they paid for that house? MLS listing didn’t have an address.
I wonder how much equity they have.

Comment by ptf
2006-02-08 14:18:03

they paid about 200k for the house. they should list it at 380k, and take all offers over 345k. at 435k, they are STILL OF THE PHUCKING COMPS… what is wrong with these people.???

Comment by ocrenter
2006-02-08 09:39:05

“Bill Ryan, a ReMax agent in the East Valley, said that it June, he couldn’t keep two or three active listings. Now, he has 35. He expects resale prices to climb 3 to 5 percent this year, sustainable gains but not enough to keep investors looking for a quick appreciation and a fast sale in the market.”

you have to wonder about the journalistic integrity of this reporter when there’s a quote like this and the reporter doesn’t fire back with the question: “but how do you get 3-5% appreciation when there’s over 33,000 resale homes on the market and no buyers?”

Comment by ocrenter
2006-02-08 09:44:48

“Does anyone know how much they paid for that house? MLS listing didn’t have an address. I wonder how much equity they have.”

Per Domania.com
4832 E Armor St May 01 $198,000

These guys are hoping for a $200,000 tax-free windfall. If these guys really want to be competitive, drop the price by $30,000 more, I’m sure there’s a greater fool that will jump at that “bargain.” $170,000 tax free windfall ain’t bad.

Comment by homewishes
2006-02-08 12:58:49

If they haven’t taken out a HELOC.

Comment by David
2006-02-08 09:46:29

The inventory is just exploding in the Phoenix metro area. According to ZipRealty and Bubble Tracking Blog the available homes for sales as of Feb 7th, 2006 was 33,550. On Jan 2nd it was 26,715. That is a 25% increase in inventory in just over a month. Phoenix is extremely bubblicious. The flood of inventory is just incredible.

Bubble Meter Blog

Comment by feepness
2006-02-08 10:59:50

Who are the homebuilders in Phoenix?

Comment by mtnrunner2
2006-02-08 10:05:20

sfvhopeful - Sellers let listings expire, and relist. If they take it off the market, they must wait 3 months to relist. This is not unethical or illegal. It is transparent. A buyers’ agent can check the history of the property, and the past MLS listings come up. When a buyer’s agent sees past listings, and price reductions, and long time on market, then they will come in with a much lower offer, knowing the seller is getting weaker. My friend is a realtor, and she told me that’s what she does. Only realtors have access to the data on historical listings. Realtors also check MLS sold and pending data, to assist their buyers and sellers in making decisions. Unfortunately, people trying to track the market do not have this data, and we must wait several months to get it. Soon we’ll see January sales, which are for offers made in November and December. We don’t have any information on what’s happening in February, until April or May. We also don’t get analysis of the data, i.e. are median prices higher bec. a lot of expensive new homes came on the market?

bottomfisherman - it doesn’t serve any purpose to label someone as a “greedy seller”. Everyone is entitled to ask market value for an item. If buyers don’t come, sellers start lowering their price. I assume you are in a hurry for prices to come down. It will take some time, so you must be patient. Sellers wait for months, and sometimes pull their home off the market completely. Thus, preventing the spread of reducing the comps in their neighborhood. My friend had 2 price reductions this summer, in San Diego, and no offers. Her husband said, “I’m not going to eat all this equity loss”, so they took it off the market, got a HELOC, and bought an investment house in Phoenix! People try to get the most money they can from whatever they’re selling, it’s only human nature. The only way to make the prices come down, is by buyers holding out. It won’t be because sellers want to be generous and charge less for their homes.

Comment by tank-it
2006-02-08 10:14:02

This may be cruel to say, but I hope people like this Andre Bilyk go down in flames. Their greed and sense of entitlement sickens me. Living in a home does not guarantee you a financial windfall, but that is their attitude. What, $150K for doing nothing isn’t enough? Burying statues of saints in hopes of selling? Keep holding out Andre. Rational sellers will cut prices and laugh all the way to the bank. You’ll wind up crying all the way to a bankruptcy attorney. I hope one of our AZ bloggers grabs your place at foreclosure auction.

Comment by Karl Dahlquist
2006-02-08 13:09:29

Instead of burying the St Joes statue, maybe he should adopt islamic practices and just behead his realtor.

Comment by Davis Renter
2006-02-08 10:25:23

ZipRealty Price Track:
Price Reduced: 01/19/06 — $463,000 to $449,000
Price Reduced: 02/05/06 — $449,000 to $434,900
Days on Market: 88

Looks like some panic has set in. Better reduce it to it’s real value before the rest of your neighbors do (all 487 listed for sale in that area).

Comment by Davis Renter
2006-02-08 10:29:05

4832 E ARMOR ST, Cave Creek, AZ 85331 (from Zip Realty)
A simple google search on the name confirmed the address.

Comment by Betamax
2006-02-08 10:30:27

This may be cruel to say, but I hope people like this Andre Bilyk go down in flames.

Flames? I hope they get freaking napalmed. Their greed is only surpassed by their ignorance, and I hope they keep praying to their plastic saint buried upside down in the dirt while they ride the market down to the bottom.

Comment by John Law
2006-02-08 10:42:06

200K is a nice windfall.

Comment by azfamdeals1
2006-02-08 10:46:12

CaveCreek,AZ 85331…know it well…the upscale version of Kingman,AZ of the greater Phoenix metro area. Another Palookaville,USA.

Comment by Melody
2006-02-08 10:52:53

Read about Home inventory grows as sales slow in region .

“Agents said they believe a major reason for the increase in residential listings is because investors and homeowners who bought second and third homes over the past few years as investments have realized the time for the biggest gains has passed.

“The biggest cause of our glut is the investors who are trying to take their profits,” said Gina McKinley, a Chandler resident and Realtor with Re/Max 2000. “It’s making it difficult for the poor sellers who have to try to sell. Last year, the investors were making it hard for people trying to buy.”

Comment by AJ
2006-02-08 11:22:47

I have a hard time believing that only 30% of the Phoenix market were investor/flippers. 30% probably were honest and admitted to being flippers, but as a Phoenix resident, I know that a lot of flippers lied and said they were planning to be owner-occupiers in order to get a chance to buy the inumerable new builds and condo conversions popping up like mushrooms all around the valley. My guess is that, during the frenzy of the last 18 months here, 40% to 50% of the market were speculators/flippers. I was working in the bay area during that time and I had people ranging from the cashier at the chinese restaurant to my San Francisco cab driver asking me about the ‘hot’ Phoenix real estate market (when I told them I was from PHX). You know what Rockefeller said: ‘when cab drivers and shoe-shine boys are giving out investment tips, you know it’s time to get out of the market’.

Comment by homewishes
2006-02-08 13:00:59

I live in Los Angeles and was planning to buy property in Las Vegas. The agent recommended that I say it was owner occupied to get a lower rate.

Comment by ptf
2006-02-08 14:20:51

YOU ARE CORRECT…. THEY ALL LIED…. REALLY, I THINK ABOUT 50-60% OF THE BUYERS WERE SPECULATORS. I have looked at many homes that only had a mattress and a tv in them… and they owner was always….’ in the bay area this weekend’ YEAH RIGHT!!! that dude keeps the sheets just so he don’t need a hotel when he is doing more loan fraud/buying at pultexfelonybros homes.

Comment by GetStucco
2006-02-08 12:07:36

“Andre and Petrusia Bilyk are what’s known in the housing market as motivated sellers.”

Motivated seller = willing to drop the list price to a level which attracts a willing buyer at the current market price.

Comment by goose_egg
2006-02-08 12:55:01

The buried a statue of St. Joseph? Don’t they know that St. Jude is the patron saint of lost causes?

Comment by Doug O
2006-02-08 12:57:49

You know what they say. Pigs get fat, hogs get slaughtered.

Comment by sfbayqt
2006-02-08 14:07:31

ZipRealty Price Track:
Price Reduced: 01/19/06 — $463,000 to $449,000
Price Reduced: 02/05/06 — $449,000 to $434,900
Days on Market: 88

A little something that I learned looking at ziprealty.com….I was only a member for a few weeks (maybe a couple of weeks) when I decided to log on a few days ago. For some reason my membership had expired. Sounded fishy to me…maybe they are upset because I didn’t respond to the agent to sent me email. Hmmm….

Anyway…I digress…..Before my membership expired, I was able to find a local house that had been on the market since November and it is showing up as on the market for 8 days. I looked it up to find out the true number of days on the market and was TOTALLY surprised at the 8 day information. Interesting. My conclusion: ziprealty is not giving the “true” information that some posters think. I know some of you use Domania…is it any better?


Comment by Davis Renter
2006-02-08 16:33:39

I’ve had some ugly emails from the Zip realty people. AnotherF@ckedborrower did a piece on Ziprealty and I thought it would be fun to check the state of affairs in SF. The phone calls from realtors started up non-stop. So I changed my # to my fax machine.

In less then a day I get this email:

Hi Ms Davis_renter,

I tried calling you earlier and found that the number is answered by a fax machine, so I was unable to leave a voice mail.

Since I have not had a reply from you and I do not have any information about the status of your search, can you please drop me a line and let me know whether you want to remain in the website, or whether you want to be removed?

Your prompt reply will be greatly appreciated. Thanks.

Ms RealWhore
Broker Associate, REALTOR (R)
ZipRealty, Inc.
Licensed in California

So there you have it…. either let me speak to you or I’ll have you removed from the site. If that isn’t a sign of desparation, I’m not sure what is. Combine with Centrex’s sale and the price of TOL falling and all looks good from where I sit >; )

Comment by BJ72
2006-02-08 14:52:38

To those inquiring about Phoenix builders….Phoenix builders very a bit. You’ve got your nasty nationwide track builders like DR Horton, Centex, William Lyon Home types (bare bones builders). You’ve got Hancock/Meritage Homes, local outfit imo on par with the ones just mentioned. You’ve got a slight step up to Toll Brothers (nationwide, slightly better, way overhyped and build not as good as following local builders in my opinion). You’ve got Zachar Homes (know nothing about them). You’ve got Golden Heritage (ours) and TW Lewis…local outfits that do a great build, semi-custom track homes, overall much better quality than nationwide builders. Then you have several custom builders in the area (something you don’t see in say San Diego, but see often in places like Beaufort, SC). When we moved here we made a conscious decision only to have a quality build (novel concept, eh?). We decided between Golden Heritage, TW Lewis, and a custom built. Custom was too time consuming, and finally the area and archictecture (not standard 3-4 car garage front box AZ home) we desired was with Golden Heritage.

Our home is now on the market (military transfer) we’ve had a lot of people look recently soley due to Golden Heritage’s reputation in the industry and with those who have owned. Either people “get it” as to the importance of a good build, or don’t and look soley at sq ft and trimmings. Having owned 2 different nationwide builder homes in So Cal, I never plan to again….quality was not good at all, way overpriced products.

BTW, the nationwide builders are offering incentives here. So far, the local Golden Heritage and TW Lewis do not appear to be…but they limit their inventory a bit more than the big players I think as they are truely worried about putting out a good product. If they do eventually offer incentives, I doubt it’ll be to the magnitude of the others, however, I could be wrong. I just wish the slow down would make people grab quality over quantity (sq ft). So sad to see poorely constructed, lifeless homes being built all over.

Comment by GetStucco
2006-02-08 15:21:10

“Having owned 2 different nationwide builder homes in So Cal, I never plan to again….quality was not good at all, way overpriced products.”

Coming from a builder, this comment makes me wonder whether there are any SoCal homes worth owning. The weather is sure nice here, but there is lots of geohazard risk (earthquake, flood, fire, and mudslide, to name the ones which come readily to mind) and not much choice I am aware of aside from buying a tract home from one of the big national builders. If I don’t want to own a McMansion, what choice would I have, even if prices fell back down to affordable levels some day?

Comment by feepness
2006-02-09 02:29:52

Live in San Diego, home was built in 1926.

Original character and gumwood abounds, and we are putting effort into slowly restoring it. (The room I am in has pocket doors onto the living room… a dog was obviously kept in it and there are 5 foot high scratches on the doors and both windows… sigh…)

Went under the house the other day (yes, accessible crawlspace) and it was like doing an archeological dig…

Comment by jim slominski
2006-02-09 06:58:35

Thanks to all who posted the inventory numbers and the property examples. I really feel a large inventory is the highest contributing factor to price drop. When I wanted to sell my home in our area there were 65 properties, when I could sell due to tenants there were 135, now your back down to 109. There are too many home sellers still priced for the market a year ago. At this rate with minimal decreases they will stair step the market all the way down.

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