‘More Pain Ahead’ For Arizona Speculators
The Arizona Republic reports on the bursting housing bubble in the east valley. “The number of houses for sale in the Southeast Valley keeps rising every month as investors apparently have begun dumping the homes they hoped to make a killing on. Real estate agents say it’s not that a bubble has burst but more a sign that the market has returned to normal. They say many buyers and sellers haven’t realized it’s now a buyers’ market.”
“The number of homes for sale in the Southeast Valley, from Ahwatukee Foothills to Gold Canyon, more than doubled in the past seven months to 9,590 in December. Homes are staying on the market an average of 42 days instead of four as they did a year ago.”
“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 realtor. ‘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.’”
“Cindy Flowers, who works in Gilbert, said she was stunned to discover that when she sets a price for a listing and looks at other homes for sale in a neighborhood, from half to three-fourths of them are vacant. That indicates the homes were purchased for investments. She has noticed that in many neighborhoods. ‘That’s just shocking. That means a lot of people were moving up or sideways or going somewhere else. And there was an influx of investors,’ she said.”
“In addition to investors dumping houses, another reason listings are increasing is that it’s normal this time of year. Whatever the reasons more people are selling than buying, the number is increasing quickly. Ahwatukee Foothills, for example, went from 66 listings in the fall of 2004 to 285 last September and 470 on Tuesday.”
“As a result, sellers are having to lower prices. McKinley said, ‘All the people who bought during the crazy time are trying to sell. People who bought in the $500,000 to $600,000 range are selling in the $400,000 range and having to drop their prices.’”
“As for the future, Flowers predicts the listings will keep rising into the summer. ‘I don’t think it’s serious, but I do think we have more pain ahead of us,’ she said.”
aid she was stunned to discover that when she sets a price for a listing and looks at other homes for sale in a neighborhood, from half to three-fourths of them are vacant.
This confirms what everyone is hearing these days about certain subdivisions.
I absolutely believe that there are waaaay more “speculators” thru out AZ than the NAR and the media report. When I hear the cashier at my local supermarket talk casually to the bag boy about her home as an “investment” and how much she is “gonna make when I sell”, I can pretty much surmise that the jig is up. The true “speculators” who are experienced and “speculate” and flip properties full-time are long gone. At least in AZ…the bag holders are the amateurs, wanna-be’s and greatest fools.
I agree. Although it’s by no means scientific, my company is in the IT industry. I work with fifteen people. Two people recently bought investment homes and one just bought an acre of land as an investment. I had to plead with my wife’s brother and his wife not to do the same. They wanted to buy another home last November. They are already 100k in debt.
There was an explosion of investors from California but there are also many local amateur investors. Imagine how many real estate agents also bought second homes last year.
Hang on…. this ride is just getting started.
“People who bought in the $500,000 to $600,000 range are selling in the $400,000 range and having to drop their prices.”
“Real estate agents say it’s not that a bubble has burst but more a sign that the market has returned to normal.”
Yes, I would certainly agree that 20-25% losses for investors is the new “normal”.
Judge takes Congress to task in bankruptcy case
Legal world abuzz about tirade calling act inane, confusing.
http://tinyurl.com/8wm54
wow, FL and AZ have net inflow of people
NE is really going to tank
The great thing about markets like Arizona is there have been so many track housing developements built since the 90’s. Its interesting when you can go into a large subdivision and find 10 of the same model home for sale at different prices. Its all good when you have 40 buyers looking at 10 houses… now you have 10 of the same house and maybe 2 buyers.
If you want to try something really funny go to the open houses and when the realtor or seller gives you the asking price, look at them like you are absolutely disgusted and tell them “but the same house is on sale down the street and the seller offered to knock 25K off the asking price and throw in a flat screen tv…”
Pretty soon there is going to be so much inventory its going to be like shopping for a car…
I am a real estate agent in East Valley in PHX and the comments by these agents in the article are ridiculous(market returned to normal) and remind me of pumpers in the end of the stock bubble .This market will drop and drop signicantly in the next 6 -12 months.
Investor buying over the last year was heavier than reported.This housing market reminds me of stocks where buyers drive up the price based on speculation yet as always with stock speculation the pigs get slaughtered and someone gets left holding the bag.
Doesn’t Cindy realize that Realtors® sold these investors all the houses that are now vacant?
“Investors” are making it hard for people who have to sell today and they made it hard for people who were buying last year (people who just wanted a place to live).
May they all lose their asses. It would be fitting.
Yah, 25-30% price drops are never serious. I haven’t seen so many euphenisms since the Gulf War.
What’s the RE equivalent of “collateral damage”?
‘I don’t think it’s serious, but I do think we have more pain ahead of us’
C’mon. We all know now that due to the insane amount of zero down, no doc, specuvesting that ….
“It is serious, and we have ALOT more pain ahead of us”.
Phoenix
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you are welcome, sincerely, phucktheflippers
McKinley said, “All the people who bought during the crazy time are trying to sell. People who bought in the $500,000 to $600,000 range are selling in the $400,000 range and having to drop their prices.”
Im not sure what this means…Anyone care to speculate??
Information is power. Check it out:
http://www.zillow.com
That sit is awesome!
arlingtonva, Great website…Thanks
Anyone keeping track of properties going into escrow?
I have been tracking Sonoma County, CA properties over $1 million since late last year. The trend for listings I have noticed is that they grew into late Nov, then declined with I assume expiration at the end of Dec and have been slowly picking up over the last week.
What has surprised me is that a few properties on my watch list have gone into escrow in the last week. One was listed at $3.3 million. My expectation was that the high end would have very limited buyers. Now of course the Google millionaires maybe getting themselves a wine country dig
Re Zillow - Ben I’m getting the feeling these Zillow folks are seeding your blog -anyone else notice this?
I posted this on the prior item, but seems like it needs to be re-said:
I’d take Zillow with a grain of salt. It is in beta testing, but if prices still seem uniformly too high (as other bloggers are indicating so far) after its debut, bear in mind that their model calls for getting revenue from real estate advertisers.
I would not place a great deal of credibility in this service unless they post a methodology of how will arrive at their figures and whether those numbers can be corroborated somehow. When the hand that feeds them is the real estate industry, we should be extra careful with the information they are putting out.
reference:
http://www.urbandigs.com/2006/01/heard_of_zillow.html
Finally someone with some common sense. It seemed I have seen their site how it’s going to revolutionize the real estate industry like it did the travel agency is beyond me.
I think the site would be useful if they would add in all the current MLS homes for sale or pending sale info when you look at a neighborhood.
Like kids playing with fire, or drunk teens stealing pop’s car for a midnight joyride, few paid attention to the realities of supply/demand. As if the game was created brand new for them to jump into, these realtor/agent/broker/investors/speculators have sold their future (customers) for inflated profits today. And the tone at the start of the drop is one of innocence: “…but I do think we have more pain ahead of us.” It’s lemming time, and it’s such a great view when you first go over the cliff.
Comment by arlingtonva
2006-02-08 14:33:18
Information is power. Check it out:
http://www.zillow.com
Ohhh, thank you for posting that! This is a little OT but…
I just looked up my last house I sold about a year and half ago for $350K in Las Vegas. The guy who bought it from me completely redid the flooring inside it, and all the counter tops (he had to have white carpet and granite countertops, shower stalls, bath, etc.) and then tried to flip it at its new valuation, $400K. According to my neighbors, it still hasn’t sold, and now the estimated value is only $372K. Yowch. That doesn’t even cover the cost of the improvements put into the home or the mortgage payments for the length of time the buyer has been holding it. Plus if he sells anytime in the next six months he will have to pay taxes on the sale, if its not listed as “primary residence” for someone.
thanks, housegeek…
I’ve been playing with zillow and much of what I’m bringing up doesn’t jive with what really is happening in my neck of the woods. It’s a cool tool, but we should be careful about making assumptions about the “values” they are coming up for properties.
Zillow is a wonderful site!
A SB home that seems to be priced more reasonable now
What zillow has to say about that SB home
I dont think that the Zillow.com is getting “seeded” here today. It just appeared on cnn.com and a few other sites today, and I think that is why it is getting the attention. By the way I checked out my area. It says my 2100 square ft home is worth $2.3M. I bought it april of last year for $290k. The methodology looks completely messed up. A 2800 Sq ft house 2 houses down from mine (which sold a year and a half ago for 700k) Is showing up on Zillow at $2.1M.
This is in Salt Lake city, where there are only 109 listings on the MLS for over $1M.
SELL!!!!!!!!
Problem in east valley….nooooo…..really? Almost 2000 horribly constructed homes for sale in very desirable Queen Creek, how about 900 in luxurious Maricopa, how about 500+ in Casa Grande. These shitholes were selling for 110-140k now they want 190-250k…and are all empty. And this is nothing. Almost 34k inventory will be 50k by July.
I don’t think Zillow consistently overvalues property. For example, it has the house I’m currently renting valued at about $650,000. A comparable house just down the street (in what appeared to be only slightly better condition) sold last year for $814,000.
The valuations are all over the map, with some houses on the same block being valued at $600K and some at $900K. They’re not all that different. Even now, with inventory piling up, I suspect that if anyone on the block put his house on the market for $750K, it would be sold within two days.
I’d like to get a better handle on how the valuation model works.
Sold my Vegas house during 11/05. Zillow doesn’t show my recent sale, but the “zestimate” is within $1000 of what it actually sold for.
My gut is telling me a lot has changed in the last 4 months.
I’m eager to see what Zillow.com tells us in 8 months.
I’m in Phx. I have a house (purchased in ‘90) and am waiting to buy another house for my kids to stay in during college. I stayed out of the frenzy and am now waiting for the correction before buying.
I don’t think prices will really drop significantly until foreclosures start coming on the market. Many recent buyers owe more than their house will sell for but are too stubborn and/or can’t afford to bring the needed cash to a closing. They can’t/won’t sell for less but the bank will.
We do have a net inflow of people and that may help cushion the fall some. I have no idea why people want to move here though. Few high paying jobs, hellish summers, traffic congestion and smog. It’s main redeeming quality was affordable housing but that’s long gone now.
I wouldn’t give zillow either too much credit… or too much grief.
That are still in beta testing and in an illiquid market that is just hitting the tipping point.
No one knows what these houses are “worth” from day to day… we all know they are going down but did they figure stupidity into their model?
Wow and Thanks Flip.
It is sad that most of the buyers out there do not analyze the market like we do. They might still look over dozens of properties and compare values. They could just live in their own little world, and not think of market fluctuations. They’ll still be under the assumption of the old saying is that ‘your home is your best investment’.
I can just imagine someone like my exgirlfriend from college who lives everyday without a realty check thinks like this.
“As a result, sellers are having to lower prices. McKinley said, ‘All the people who bought during the crazy time are trying to sell. People who bought in the $500,000 to $600,000 range are selling in the $400,000 range and having to drop their prices.’”
A 20% loss already- Ouch! This is going to get ugly.
It’s as if the RE room has been dark with ignorance for years and now a light has been switched on– Man, look at all those cockroaches run for cover.
What bu!!shit. How about 180-200 days on market!
I’m an avid runner and my various jogging routes take me thru 20-30 miles of subdivisions every week. I rarely see a sold sign anymore, only the ‘for sale’ sign getting yanked only to reappear 2-3 weeks later with a new agency/agent.
I have 4 homes on my street that have been for sales since August and the realtors have stopped doing open houses because nobody shows up.
On the weekends I run past 4 differernt sales offices and I’d estimate the cars in the parking lot are 20% of what they were last June.
Bottomfisherman and others -
To be fair though, this quote:
“As a result, sellers are having to lower prices. McKinley said, ‘All the people who bought during the crazy time are trying to sell. People who bought in the $500,000 to $600,000 range are selling in the $400,000 range and having to drop their prices.’”
was actually misquoted. The real quote (you can click on the link yourself to verify) is this:
“”All the people who bought during the crazy time are trying to sell,” McKinley said, adding that homes priced in the $400,000 to $600,000 range were having to reduce their prices.”
That is a subtle yet big difference in the meaning of the mis-quote and actual quote - not a loss of 20% as was misquoted.
Hope that helps.
-Waiting_for_Roadkill_in_PHX
I think zillow is NAR’s conspiracy to infalte the prices and keep the illusion (high prices) of owners and buyers alive for little longer.
Never ascribe to malice, that which can be explained by incompetence.
Another thought - did the newspaper change the quote between the original posting and now? shrug
I looked up a house on Zillow that I’ve been watching. It’s been sitting on the market since June, asking $324,900. The identical house next door sold for $275k last year. Zillow has the first house valued @ $387k.
Comment by euphonism
2006-02-08 18:04:54
Homes are staying on the market an average of 42 days instead of four as they did a year ago
What bu!!shit. How about 180-200 days on market!
I’m an avid runner and my various jogging routes take me thru 20-30 miles of subdivisions every week. I rarely see a sold sign anymore, only the ‘for sale’ sign getting yanked only to reappear 2-3 weeks later with a new agency/agent.
I have 4 homes on my street that have been for sales since August and the realtors have stopped doing open houses because nobody shows up.
On the weekends I run past 4 differernt sales offices and I’d estimate the cars in the parking lot are 20% of what they were last June.
The last realtor I had (the one that sold my house) had a discussion with us should our house not move in two months. Since we were not relocating out of town immediately and did not the equity as a downpayment for another home, he explained to us that it would either be relisted when it expired, or he would simply pull it from the market and send it to another agent in his office (I’m pretty sure they were giving each other kickbacks). That way a house would get sold, without it looking like it was a bad listing on the market. After hearing that, I am pretty sure that homes are not selling as quickly as the mainstream media and real estate related propaganda is reporting.
Not serious?! How can they say it is not serious; so far, prices have only been going up - remember, RE only goes up, never down. That means, nobody has so far really made big losses. Just about everybody has been enjoying their new, growing equity. The economy has been boosted by this in so many ways, money that has been made hasn’t all stayed in the houses. Remember the house ATMs. The RE industry. Everything around it.
Now, the prices are dropping in overheated areas of the country, and in other parts the prices have flattened. No more boost to economy. No more profits for the RE sector and no housing-ATMs to the private house owners. We see the first wave of losses hitting us, and it is not serious? NOT SERIOUS?!
LMAO, just tried zillow.com. Clearly I now understand why our home hasn’t sold. We listed the week before Thanksgiving for $689,000 and dropped in December to $650,000. We have been told by many that is a very reasonable price. Just have not hit the one (some want larger lot, some pool) Have several interested as of last weekend, but all are contingent and listing homes now, might take a bit. However, zillow has us at $851,000, clearly we just aren’t shooting high enough and are in the wrong market
(sarcasm noted)….I think it is due to some of the Toll Bros homes that sold in the $850 range…same sq ft, no view, same upgrades, less character imo….not sure how they pulled that one off personally as I don’t think the build is as good, but out of towners only know Toll Brothers, not Golden Heritage. They have good marketing I guess. We also have custom million dollar homes in our community probably skewing it. Geez, wish that were right though 
Perhaps I need to put that one on my flyer….maybe one of the CA buyers will gooble it up 
Yes this is what I have been thinking about zillow. It has been launched to delay the bust of housing market. Owners can say with pride/confidence Look my house is worth a million dollars (go look at zillow) so how are you offering only 500K for this?
My love life was the pits and I was flat broke until I logged onto Zillow.com, now I have a trophy wife, wear real expensive clothes and jewelery and live in a mansion
/s/ Sighted Happy
ps now spam here
What the heck? I retract an earlier posting. that quote in the article is back to what it was originally just how Ben posted. Weird!