Phoenix Area Builders ‘Step Out Of The Picture’
The Arizona Republic reports on the housing bubble in the Phoenix area. “In metropolitan Phoenix, demand for new homes is expected to continue to slow from last year’s record pace as builders sell through ’spec’ or speculative-home inventories caused by buyers backing out of deals. Builders have been offering incentives to unload spec homes.”
“Many of those homes were under contract to be sold but buyers backed out when they couldn’t sell existing homes in a resale market suddenly flooded with listings.”
“One of the best ways to measure demand for new homes is to track the number of building permits for which home builders ask, and that figure fell sharply in March. The number of new home permits issued in Maricopa and Pinal counties dropped 24 percent in March to 4,716 from 6,203 during the same month last year, according to (analyst) R.L. Brown. Year-to-date permits are down 16 percent from 2005.”
“March sales of previously owned homes were off 26 percent from the same month last year. This March there were 9,594 resales compared with 12,911 during the same month last year.”
“Brown reported some builders are raising prices, but more are offering deep incentives and discounts. ‘The resale market will take longer to sort itself out than will the new home market,’ the Brown said. ‘Sellers will begin to get realistic on asking prices as time on the market moves from the present 60 days to the range of 90-100 days for overpriced properties.’”
“Builders are pulling fewer permits because they suddenly have more unsold homes in their subdivisions. People with contracts to buy those homes walked away from them when they couldn’t sell the ones in which they were living.”
“New-home closings fell 6.35 percent in March, another sign that buyers are getting cold feet. ‘Why cancel in the middle of construction?’ Brown asked. ‘if your confidence level isn’t high, you step out of the picture.’”
This is where the rubber will hit the road for Phoenix. Remember the layed-off home loan officer the other day, who went to a job fair and was shocked at what jobs paid in the area? One quarter less homes being built means fewer hammer swingers, cement truck drivers, etc. If about 40,000 of those guys and gals head to Texas, or some other percieved hot spot, what will that mean for the housing based economy?
The wage problem here is a huge issue. Once the speculators are squeezed out and the easy mortgage approval process tightened-up,
the housing valuations in Phoenix are heading WAY down. The PHX economy can simply not support them.
Oh, and let’s not forget those adjusting ARMS, higher interest rates, exploding gas prices, out-of-control federal deficit, recored levels of personal debt, etc, etc.
What’s a word for Beyond Ugly?
Coyote Ugly
heard throught the grapevine…. toll bros has some sales folks quitting, and atleast one community has not sold a home in a month… pretty credible source ;-0
“If about 40,000 of those guys and gals head to Texas, or some other percieved hot spot, what will that mean for the housing based economy? ”
Taking the coming Monday into account where illegal immigrants and their supporters plan on shutting down Pheonix for the day, a lot of these construction jobs are filled by them. Heading for the next cooling market isn’t going to help them much, or Pheonix for that matter when they leave their families behind to fend for themselves while they seek work.
They always have the #1 employer Sprawl-Mart
‘Sellers will begin to get realistic on asking prices as time on the market moves from the present 60 days to the range of 90-100 days for overpriced properties.’
The present 60 days range? In my subdivision there are 15 houses for sale. Exactly one has sold. In the last 6 months. 60 days my butt.
Oops, should mention my sub is in the Chandler/Gilbert area.
I also live in SE Chandler, there are about 12 houses for sale on the dog walking route we take. Most have been up for >4 months except for 3 new listings. The last sale was at the end of last year. There are also 10 listings in the KB Home subdivision behind us, but I don’t normally go that route so I don’t know how long they have been up. So that’s 22 listings in maybe 8-10 blocks and none are moving.
Is your dog crapping on all the lawns and grossing out would-be buyers?
Unlike many others in the ‘hood, our dog doesn’t poo on walks except in rare cases (and then we pick it up with baggies that we carry). One of the houses for sale used to have crap all over the front of the yard. They picked it up when they listed. Plenty of others think that the grassy runoff retention basin should be their dog’s bathroom. Every night, they let the dogs run out there and crap. That is very aggravating. I want to put it all into a bag and leave it on their doorstep (maybe I will!)
when your friendly realtors relist the home every 90 days with a “new” price, they can keep the days on market down. oldest trick in the book.
The problem with the 60 days figure is that it tells us how long the average home that SELLS takes to sell. Homes that haven’t sold are not included in this!
using your example:
14 homes in your subdivision for sale over the last 6 months have not sold
Now let’s pretend that the 15th home that DID sell, and sold after 2 months.
With this data, the average time on market for your subdivision: 60 days. (since only one has sold thus far, the other 14 are “irrelevant”, at least this formula)
it always helps to look at not only the numbers, but also what the numbers MEAN, and HOW they were derived.
And of course, there’s always the relisting game. On market x 5 months. relist, now “new” and on market for 1 day! Yay!
clouseau
Fortunately, at least in central Florida, the days-on-market is included in the listing from day one, not just after contingent or sold.
LV– try the west side of town. Those new developments in Buckeye (85338) and peoria (85383). 2nd week of April closings (most recent data I’ve got) shows resale inventory at 40 weeks and –hold on to your seat — 130 weeks, respectively. Based on today’s inventory. Ouch.
sorry for the misspeak. The inventory/sales numbers are resales. Since I’ve been gone a while, those boomtowns are new to me.
The girl I play golf with has lowered her price 20K and it is stil on the market. Almost two months now.
“Buyers walked out because they couldn’t sell thier existing home”
Yeah Right …as if thier buyers were actually going to move in.
Speculators walked because the writing is on the wall.
I wonder how many buyers walked because of Zillow.com? With the owner’s buying price so readily available, I think that we’re seeing potential buyers saying “no way” to forking over “windfall profits” to sellers. Do you think Congress will try to “tax” sellers just like they’re talking about taxing the oil companies?
They do now. Less than one year holding - taxed at ordinary income rates.
see, that’s where the rubber meets the road. A potential buyer is looking at debt slavery for years and almost certain asset depreciation so some jackass can make 200-300K for simply buying and holding a house a few years?
I dont think so!
Especially when they didn’t do anything to the property . I held on to my last house for 23 years . I noticed that when buyers found out I was the original owner they liked that .
Although the AZ stats in this article reflect a downward trend, if we did know what we know (10K inventory April 2005 and 45K inventory now) we would assume a far more benign situation in PHX than really exists.
hm hm.. clear throat… actually it was 10k in july 2005… it was arounnd 6k to 7k in April 2005.
Thanks Flip - that’s twice now I’ve messed up your numbers.
Actually I think it was 3411 in March 2005. And funny that inventory is not mentioned in”The Arizona Republic’s report on the housing bubble in the Phoenix area.” Just an oversight, I am sure. Because if it were intentionally left out that would mislead the readers. After all, inventory is the most important information that one needs to sense where the market is going.
I am sure that the newspaper will print a front page retraction as soon as they figure out that they left inventory out of their report on the “housing bubble in the Phoenix area.”
Then their readers will have the information that they need.
It is rather strange that given the record inventory Phoenix is experiencing the AZ Rep didn’t mention it. You would think that going from 3,000 active listings to 44,000 in less than a year would be a front page story. Thank God for blogs.
NPR Jason Spisak on the Valley’s real estate market
( Mesa ) KJZZ commentator and voice actor Jason Spisak talks about the Valley’s real estate market, and why he’s been forced to tattoo “Bring on the Pain” on his forehead.
INVENTORY
Phoenix
7/20/2005 10748
7/21/2005 10968
7/22/2005 11122
7/23/2005 11424
7/24/2005 11338
7/25/2005 11112
7/26/2005 11315
7/27/2005 11353
7/28/2005 11390
7/29/2005 11471
7/30/2005 11656
7/31/2005 11609
8/1/2005 11599
8/2/2005 11590
8/3/2005 11635
8/4/2005 11714
8/5/2005 11710
8/6/2005 12196
8/7/2005 12658
8/8/2005 12919
8/9/2005 13244
8/10/2005 13099
8/11/2005 13245
8/12/2005 13389
8/13/2005 13846
8/14/2005 13801
8/15/2005 13607
8/16/2005 13779
8/17/2005 13992
8/18/2005 14087
8/19/2005 14279
8/20/2005 14321
8/21/2005 14457
8/22/2005 14336
8/23/2005 14391
8/24/2005 14529
8/25/2005 14617
8/26/2005 14792
8/27/2005 15011
8/28/2005 14984
8/29/2005 14803
8/30/2005 15042
8/31/2005 15099
9/1/2005 15063
9/2/2005 15159
9/3/2005 15404
9/4/2005 15699
9/5/2005 15621
9/6/2005 15513
9/7/2005 15913
9/8/2005 16106
9/9/2005 16489
9/10/2005 16716
9/11/2005 16609
9/12/2005 16697
9/13/2005 16538
9/14/2005 16900
9/15/2005 16952
9/16/2005 17419
9/17/2005 17583
9/18/2005 17577
9/19/2005 17636
9/20/2005 17516
9/21/2005 17664
9/22/2005 17883
9/23/2005 18226
9/24/2005 18204
9/25/2005 18196
9/26/2005 18435
9/27/2005 18483
9/28/2005 18605
9/29/2005 18604
9/30/2005 19192
10/1/2005 19333
10/2/2005 19316
10/3/2005 19362
10/4/2005 19463
10/5/2005 19562
10/6/2005 19670
10/7/2005 20052
10/8/2005 20219
10/9/2005 20153
10/10/2005 20324
10/11/2005 20470
10/12/2005 20668
10/13/2005 20850
10/14/2005 21238
10/15/2005 21446
10/16/2005 21463
10/17/2005 21527
10/18/2005 21588
10/19/2005 21795
10/20/2005 21806
10/21/2005 22302
10/22/2005 22719
10/23/2005 22769
10/24/2005 22806
10/25/2005 22976
10/26/2005 23132
10/27/2005 23293
10/28/2005 23681
10/29/2005 23805
10/30/2005 23816
10/31/2005 23790
11/1/2005 23601
11/2/2005 23665
11/3/2005 24193
11/4/2005 24579
11/5/2005 24786
11/6/2005 24717
11/7/2005 24937
11/8/2005 25244
11/9/2005 25333
11/10/2005 25387
11/11/2005 25700
11/12/2005 25685
11/13/2005 25773
11/14/2005 25945
11/15/2005 25913
11/16/2005 25884
11/17/2005 26261
11/18/2005 26098
11/19/2005 26662
11/20/2005 26688
11/21/2005 26684
11/22/2005 26488
11/23/2005 26776
11/24/2005 26819
11/25/2005 26855
11/26/2005 26871
11/27/2005 26890
11/28/2005 26979
11/29/2005 26811
11/30/2005 26797
12/1/2005 26792
12/2/2005 26915
12/3/2005 27238
12/4/2005 27295
12/5/2005 27356
12/6/2005 27387
12/7/2005 27403
12/8/2005 27367
12/9/2005 27649
12/10/2005 27706
12/11/2005 27664
12/12/2005 27512
12/13/2005 27411
12/14/2005 27566
12/15/2005 27517
12/16/2005 27603
12/17/2005 27791
12/18/2005 27776
12/19/2005 27722
12/20/2005 27604
12/21/2005 27554
12/22/2005 27516
12/23/2005 27486
12/24/2005 27311
12/25/2005 27014
12/26/2005 26810
12/27/2005 26822
12/28/2005 26687
12/29/2005 26649
12/30/2005 26547
12/31/2005 26497
1/1/2006 26462
1/2/2006 26401
1/3/2006 26751
1/4/2006 27403
1/5/2006 27564
1/6/2006 28224
1/7/2006 28337
1/8/2006 28542
1/9/2006 28595
1/10/2006 28786
1/11/2006 29222
1/12/2006 29507
1/13/2006 29689
1/14/2006 29899
1/15/2006 30415
1/16/2006 30391
1/17/2006 30707
1/18/2006 30817
1/19/2006 31085
1/20/2006 31457
1/21/2006 31463
1/22/2006 31497
1/23/2006 31607
1/24/2006 31766
1/25/2006 31830
1/26/2006 32142
1/27/2006 32002
1/28/2006 32477
1/29/2006 32458
1/30/2006 32512
1/31/2006 32563
2/1/2006 32684
2/2/2006 33087
2/3/2006 33145
2/4/2006 32953
2/5/2006 33368
2/6/2006 33576
2/7/2006 33550
2/8/2006 33684
2/9/2006 33844
2/10/2006 34234
2/11/2006 34588
2/12/2006 34753
2/13/2006 34815
2/14/2006 34815
2/15/2006 34816
2/16/2006 34816
2/17/2006 35144
2/18/2006 35427
2/19/2006 36260
2/20/2006 35443
2/21/2006 35642
2/22/2006 35503
2/23/2006 35324
2/24/2006 35178
2/25/2006 36388
2/26/2006 36524
2/27/2006 36639
2/28/2006 36174
3/1/2006 36389
3/2/2006 36283
3/3/2006 36811
3/4/2006 36900
3/5/2006 37064
3/6/2006 37217
3/7/2006 36953
3/8/2006 37487
3/9/2006 37626
3/10/2006 37531
3/11/2006 38011
3/12/2006 38184
3/13/2006 38169
3/14/2006 38003
3/15/2006 38197
3/16/2006 38574
3/17/2006 38602
3/18/2006 39074
3/19/2006 38972
3/20/2006 38822
3/21/2006 39159
3/22/2006 38982
3/23/2006 39043
3/24/2006 39271
3/25/2006 39381
3/26/2006 39504
3/27/2006 39817
3/28/2006 39784
3/29/2006 39765
3/30/2006 39948
3/31/2006 40192
4/1/2006 40177
4/2/2006 40182
4/3/2006 40012
4/4/2006 40050
4/5/2006 40332
4/6/2006 40739
4/7/2006 40612
4/8/2006 41124
4/9/2006 41393
4/10/2006 41018
4/11/2006 42266
4/12/2006 42327
4/13/2006 42257
4/14/2006 42561
4/15/2006 42592
4/16/2006 42775
4/17/2006 42874
4/18/2006 42523
4/19/2006 42840
4/20/2006 43017
4/21/2006 43236
4/22/2006 43385
4/23/2006 43502
4/24/2006 43697
4/25/2006 43344
4/26/2006 43427
4/27/2006 44024
thanks, I passed that on to some friends who needed a good ol’ schadenfreude laugh.
i was thinking about phoenix during lunch today. inventory grew by 10% from 3/31 through today. at this rate, we’re looking at 52 - 55 thousands properties on the MLS by end of june.
by coincidence, the desert market shuts down come july due to daily temps of 109 degrees.
arm resets will just be kicking in for prior years spring shoppers.
summer gas will be $3.75/gallon
my financial training as a cpa / cfo points to only one logical conclusion: single digit appreciation. seriously, if i’m the ceo of southern arizona realty executives, i would be gathering the troops into a room and redirecting them to latch onto buyers, submit no less than 25 offers at 60% off listing, and see what shakes out. those who re-invent themselves as coniving wolves and sharks in this fashion will prosper.
” coniving wolves and sharks in this fashion will prosper.”
********************************************************************
Supurb idea! And in some form, it will happen before long.
Wow, I’m still pretty close with my prediction (44842)…and all I did was take the 3/13 inventory of 38326 and add 141.67 houses to it every day…
I did it for laughs, but now I see that it’s not too far off the mark.
At this rate, we’re still on track for hitting 50K inventory early June! (Now THAT event would make a good news article!)
Doesn’t mean that much when you consider the public is largely unaware of the incredibly housing inventory. If only the media would help out with some factual reporting for once but there is little chance of that happening.
Prediction: Once interest rate hikes are put on hold expect an all-out realtor frenzy to successfully persuade the public NOW is the time to buy.
Sadly my feeling is that this time next year home price will be on the rise again in Phoenix metro area.
nomad-
prices are gong to be mush for a long time. When these things pancake, it is a L-O-N-G time before they get back off the canvas.
This is just the beginning of the pain. When it starts to hurt so bad that even your professional hermits are hip to it, realtors will be like tap dancers in quick sand. Try as they might, it won’t much matter.
Of course it will. But you may only see it in print if you publish your own newspaper. It seems the local newspaper failed to mention anything at all about inventory here:
”
The Arizona Republic reports on the housing bubble in the Phoenix area.”
Atlanta Midtown condo market is cooling. Just opened Spire, a 28-story building with 388 condos has 104 units on the market–26% vacant.
The builder, Novare, sold out Spire quickly, after enjoying great success in 2002 with the 498-unit Metropolis across the street, but Spire’s 96 resellers (flippers?) and 6 owners hoping to rent out their units are in deep trouble.
Prices range from $167k to $768k for 1 & 2bedroom units.
http://ianmarshall.mlsb.com/mls/results_fields.cfm?ClientID=2671&SearchType=Address&HOUSE_NUMB=860&STREET_NAM=peachtree&CITY_NAME=%276198%27
New stuff sells in Atlanta because Atlantans are willing to pay a premium for the latest & greatest–but as Metropolis resellers are finding out–that premium doesn’t last long.
Atlanta’s condo market is probably going to have a soft landing. New buildings are probably going to do well–just not as well as before. But existing condo owners inside the Perimeter can forget about making a fast buck. In fact, Fulton County property records show that many condo dwellers had to sell for 10 to 15 percent less than what they paid if they purchased at inflated prices during the 1999-2001 period.
The problem with many condo buyers is that their purchasing decision is based on what they can afford for a monthly payment instead of a realistic resale value 2 to 4 years later. Many find that prices declined two years later instead of rising.
Not to speak of the rest of ATL–just the Midtown area has no less than 1,200 units coming on line and 4,200 in the planning stages. Let’s name a few mega projects: Atlantic Station, Plaza Midtown, Centennial Park, Onyx, Aqua, 13th St conversion, and we’re not even considering all the new supply in Buckhead and elsewhere inside the Perimeter.
Single-family homes inside the perimeter are selling well, but the resell market for condos is really bad. It’s going to be an expensive summer for condo resellers who hold out for 95% of asking price. If that magical offer comes, it will have been at a very high holding cost–but most resellers have this myopic view that its better to lose $10k in monthly payments than to lower their price by $5k to unload their property. This is not a luxury that many can afford thanks to option-ARMS and cash-strapped speculators.
Who’s hiring? Who’s relocating here? I suspect a lot of Atlanta’s recent job growth is explained by tourism and conventions coming here instead of New Orleans. That could explain some of the success of the new Georgia Aquarium. Moreover, Atlanta got several thousand evacuees, who are here to stay. Ticker counters can’t afford a Midtown condo.
Midtown white-collar condo-paying jobs are booming right? No. Atlanta has a great long-term future, but the short-term is dismal. Besides the announced closure of Ft. McPherson, there are mergers, layoffs, and shutdowns affecting GM, Ford, ATT/Bellsouth, Cingular, Hewlett Packard, Delta—just to name a few.
Hey Ben, have you cleaned your desk…hehehe
don’t kid yourself. the guy’s a clutter monster
Bakersfield update:
This week inventory up 4.059% x 52 = 210.60%
This month inventory up 13.71% x 12 = 164.40%
Soft landing?!?!?!?!?
Oops - annualized not correct: weekly up 211.07%, monthly up 164.52%
Saw a sign overlooking Hwy 101 from a subdivision in Los Alamos, Ca (inland and north of Santa Barbara), $5000.00 of Free GAS. Developers getting serious.
what?!! Only 1 free tank w/purchase?
Another tidbit from the Southeast Valley of Phoenix (Chandler, Gilbert, et. al)–inventory went from 1,000 to nearly 14,000 over the past year:
Glut of homes for sale appears to be market correction
Arizona Republic
Apr. 28, 2006 12:00 AM
Brace yourself, home sellers. The Arizona Regional Multiple Listing Service says the number of homes for sale in the Southeast Valley hit 13,836 in March.
A year earlier, it was 1,068.
The number of homes for sale - a 10 percent jump from February - could be a record.
The market apparently is still correcting itself after the frenzy of the past two years when investors began buying up homes and homeowners who wanted to move decided to stay put because it was so hard to find a house. Now, they all seem to be selling at the same time….
Anyone have any info on Tucson?