It’s Anybody’s Guess How Far Prices Might Drop: AZ
The Arizona Republic reports on the decline in Phoenix area home prices. “If you’re a Southeast Valley homeowner, don’t gloat too much about how much more your home could sell for compared with a year ago. Prices have begun falling over the past few months. In general, median prices have been coming down since September as buyers have begun balking at paying higher prices, said Jay Butler, at ASU. Home sales figures released Friday reflect that trend.”
“‘What we’re moving into is that home buyers are going to live in the house, so they are more cautious about what they will pay, as opposed to someone who is more investment driven,’ he said. ‘It’s anybody’s guess how far they (prices) might drop down.’”
“Ahwatukee Foothills still had the Southeast Valley’s highest median sales prices in January, at $357,500. But that was a drop from $386,250 in December. Tempe’s $269,900median price in January was down from $275,120 in September. Mesa’s $240,000 fell from $243,500 in September.”
“The number of sales fell dramatically in January, but that’s because last January 2005 had an abnormal amount of sales and was ‘the beginning of the hyper market,’ Butler said.”
“Butler believes people who have been moving to Maricopa and Casa Grande because homes were more affordable will start to wonder if it’s worth it because of higher gasoline prices and more traffic congestion. He said he has talked to Tempe teachers who said their commute from Casa Grande or Maricopa used to be 30 to 35 minutes and has grown to 40 to 60 minutes because of increased traffic. Parents with long commutes can’t spend as much time with their kids.’
“‘Lots of people may be saying ‘is it really worth what we’re doing for this house for two hours a day, five days a week?,’ he said.”
And the Associated Press had this report. “The Bush administration on Friday detailed its proposal to sell more than 300,000 acres of national forests and other public land to help pay for rural schools in 41 states. The land sales, ranging from less than an acre to more than 1,000 acres, could total more than $1 billion and would be the largest sale of forest land in decades.”
“Agriculture Undersecretary Mark Rey said the parcels to be sold are isolated, expensive to manage or no longer meet the needs of the national forest system. The administration expects to have to sell only about 200,000 of the 309,000 acres identified Friday to meet the $800 million goal, he said. ‘These are not the crown jewels we are talking about,’ Rey said in an interview. The public can review the land parcels that are up for sale on the Forest Service’s Web site.”
“‘This is a reasonable proposal to take a small fraction of a percentage of national land which is the least necessary and use it for those in need and achieve an important overarching public purpose,’ Rey said. The proposed sell-off would total less than half of 1 percent of the 193 million-acre national forest system.”
“A spokeswoman for the Bureau of Land Management, which previously said it will sell another 125,000 acres, said BLM land to be sold would be identified at the local level. The lands are typically part of a checkerboard pattern of small parcels surrounded by suburban or urban areas, Interior officials say.”
“BLM spokeswoman Celia Boddington said much of the land would be near urban areas with high market value. In recent years, the government has sold parcels for tens of millions of dollars in Nevada, for example, she said. ‘Lands formerly remote are now abutting metro areas. That is certainly the case in New Mexico, Arizona and Utah,’ she said. Nearly 500 parcels totaling more than 85,000 acres in California are identified for possible sale.”
Thanks to the readers who sent these links in. In Arizona, this government owned land is indeed a patchwork. Much of it isn’t connected to forest land and is leased to cattlemen. But the land is so poor, that it takes over a hundred acres to sustain one cow, so the fees don’t cover the fencing upkeep. Some of these parcels are in areas where raw land sells for hundreds of thousand$ per acre.
At least the Republic finally admitted that RE prices can go down.
I guess I don’t get the connection between the proposed sale of “forest” land and the Housing Bubble.
Does the point have something to do with more land becoming available, with money for schools, thus driving down urban prices?
SM Landlord:
I think that the lesson is that there is a realization in the govt and market that now is the time to sell RE and the return that one might receive will not be this high for quite some time. Even the government has recognized that fact.
“The number of sales fell dramatically in January, but that’s because last January 2005 had an abnormal amount of sales and was ‘the beginning of the hyper market,’ Butler said.”
________________________________
So now YOY figures dont matter?
Phoenix is bubbble city and inventory continues to ballon everyday. I recall a conversation in Sep 05 with an “investment” advior (aka stockbrocker) who had 3 rentals in Phoenix and claimed this was a cant lose deal. I think I’ll call him in a few months and see how things are working out on his negative cash flow investments!
Pretty funny hearing the explanation - selling all these tracts will net the government a whole billion for rural education. How many of those are being spent each day in Iraq? With zero rural schools being funded? I’m an independent, so I find the explanations from the Left and the Right equally amusing.
I agree. Both sides are full of it! After all, they’re politicians aren’t they!
Both sides may be full of it, but one side controls the white house, both houses of congress, and a majority of the supreme court. So from an accountability standpoint, it ought to be clear where to shoot your arrows.
I know this doesn’t have to do with Arizona, but Centex homes on California’s Central Coast are now offering $100,000 incentives - very interesting.
First advert like this I have seen in this area. We do have investors/flippers here, but not as many as FL, NV etc. so we are running a little behind other areas. Thanks for posting this link. Intellectually, I know that sanity must return to this market, too, but emotionally it is often hard to believe, especially as things continue to sell for prices way over what rents would suggest is reasonable.
I heard a similar ad on the radio in Sacramento. Centex 12 hour “sale” was up to $150K off. I’ve heard many other similar ads from other builders offering a littany of incentives including interest rate buydows, home upgrades, no closing costs, etc. While I listen to these ads I’m thinking that Centex has it right: Just lower the price!!! Also, I’m wondering if people hear these ads, do they assume that they have instant appreciation?
Yeah, that’s the ticket. Instead of curbing immigration, tear up the national forest land for more cheap shitboxes.
txchic,
You’re right. Arizona is overbuilding and we don’t even need the land. But it does serve the purpose of proving just how much is available and that the prices should be a fraction of current ‘values.’
I agree. By making this land available to developers, things will get worse. Who cares if the land is crummy? It serves as a buffer.
In any event, all of this land is home to wildlife, so I say leave it alone. If Bush is anxious to sell it, you can believe he has friends (translation: campaign contributors, friends, relatives, corporate interests) waiting in the wings to buy it.
As for the immigrant problem, nobody in either party is going do anything as long as illegals provide cheap slave labor for endless exploitation.
Maybe the gvt is reading Ben’s blog and cashing in a bit of its land while the gettin’ is good.
Could one of you Arizonans comment on Waddell, AZ? Is that an exurb of Phoenix? What’s it like?
Thanks.
Waddell is basically the same city as Surprise. It’s the far west valley. Tons of homes built out there the last few years. Each house looks identical to the one next to it. No character at all.
I dont mean this in a derogatory way… historically very high hispanic population in addition to lower middle class families.
Daily commute into Phoenix is nightmarish at best and doesnt appear to have any solution.
“Maybe the gvt is reading Ben’s blog and cashing in a bit of its land while the gettin’ is good. ;-)”
Actually, that might be true.
I mean, the part about the gvt reading Ben’s Blog.
Only an idiot would refrain from reading Ben’s Blog- especially considering the speed with which this market has turned.
I’m sticking to my original predictions, even though things are happening faster than even I thought they would. Even though builders are offering incentives, and $100k off prices in crappy places like Sactown, I still think it will be August before we start to see real price cuts- from resale home owners.
Word is still BARELY starting to filter out the sheeple. In fact, Nightline did a stupid assed piece on some realtor and overpriced condos in Manhattan last night- without mentioning ONCE Mayor Bloomberg’s alarming proclamations about too much inventory, and bad times on the way for NY real estate. Go figure.
My advice: Tell all your friends NOT TO EVEN LOOK AT A HOME UNTIL OCTOBER.
Sellers need many more months of PAIN before they start truely slashing prices. Even though the builders are starting to realize the gravity of the situation, sellers are still caught like a deer in the headlights.
In fact, I just had a conversation yesterday with one of my bosses. He bought here in HB, CA three years ago. Says prices might go down a bit- maybe 5%. I told him there were 15,000 homes for sale in Orange County, when at the height of the price increases, there had only been 5,000.
His response:
“There will always be people who want to live in Orange County.”
You can show them the fire, you can waft the smoke their direction, you can point out the fact that the sprinklers are going off over there…
…but most of these folks- unfortunately- won’t understand they’re about to be burned alive until it’s far too late…and attending their open houses only prolongs the agony of the truth for them.
txchic57,
Nope. Don’t go there. Ugly flat desert, next to Sun City, retiree subdivision, yuck.
BTW, AZ is currently battling two wildfires, the one in the north (by Payson) could spread dramatically….anyone looking to buy in AZ during this drought/wildfire year better check out all available exits. Really, the state is a tinderbox.
Waddell, AZ.?…fugetabauit..”There’s no there, there”.
Palookaville,USA.
Any reports on the Flagstaff market? I was thinking about moving there a while ago but lost interest due to the lack of employement opportunities in my field. Still at the back of my mind, though.
Tom,
I follow Flagstaff closely. Prices are way out of whack with rents, but the tell-tale signs are emerging. I now see brand new homes for rent at half of what carrying cost should be. They are planning to build a thousand homes on the edge of town. Should go down like Phoenix.
Ben did you get the thing I sent you from the Sedona realtor, who says there is no bubble there? Sheesh.
A thousand homes, eh? That will swamp the market. My guestimate is that “Greater” Flag has only about 30K homes as it is.
Where are they going to put them? And more importantly, where are they going to get the water for the owners to use?
Geez, Clinton merely rented the Lincoln bedroom, the Bushies are selling the whole country!
The government should not own ANY land. The US is not a socialist country. That the feds still own almost one third of all the land is immoral.
I have to drive through Flagstaff between ABQ and SF Bay (will be doing regularly for a few months). Can’t tell you specifically about the housing, other than looks like a lot of big new homes visible from I40. I was trying to figure out where the high paying jobs are. Only seems like some retirees (it is in the mountains), and service jobs to support travelers on I 40 or I 17 passing through. A big new attraction just opened a few exits west of the 40/17 crossing - are you ready - a deer petting zoo. Signs said it was “fun for the kids, (and free). I think I will stop (not). Also a bunch of spec homes in Kingman (a couple hours west, and definitely not an attractive area for speculation). Don’t know who is buying those McMansions (which all looked the same - ugly). I read somewhere Flagstaff was running out of land. Maybe the 200 miles of empty desert to the east and west (haven’t been north and south) might not be available, unless Bush is selling that. Ciao, hope something here helps, or just me spouting. Everytime I drive through miles and miles of empty land, I keep thinking of the realtor’s crap spewing of “they aren’t making anymore land - so it will always go up”/ . I will agree, there is probably a big water issue. Flagstaff did have a few miles of nice evergreen trees to the west.
We live in Litchfield Park, AZ….tiny 3 miles city between Goodyear and Glendale. It does have some different homes in the communities here that do not all look like the same AZ homes (mainly in The Village…though there are some Toll Bros McMansions here too, The Greens, and downtown Litchfield). Commute isn’t bad, lots of ammentities. Housing isn’t as insane as east valley either. I’d consider coming back after dh retires…but that is at least 8 yrs off, so a lot will happen by then.
Anyway, really reason I’m posting is I finally saw where Casa Grande is…seen a lot of postings about it and new housing. We drove from Litchfield to Tuscon on Thursday to pick up a Civic for my husband (wanted a htf EX MT w/Nav, only 1 in state). His current commute is 4 miles door to door, so his MDX was fine, however when we transfer to the east coast it’ll go up significantly so he’s downsizing and going for mpg….yep, we owned the MDX outright, haggled & got it below invoice…no snide remarks please
Anyway, one of the other pilot’s wife (from our squadron) has been eyeing his MDX and a while back we mentioned at a dinner that we were thinking of downsizing eventually. She asked her husband to buy it…he said no, but then surprised her yesterday for Valentine’s Day as he is leaving for a detachment for a while. So, since we had him begging us to sell it, we jumped on the chance and went for the Civic and $10,000 back in our bank account. It was fun while it lasted 
Anyway, I digress, sorry.
The drive down to Tuscon…about an hour out into the desert from the last point of civilaztion in Phoenix (edge of Tempe) on the I-10 we start to see signs for new homes in the $100s. Supposedly with ammentities….if you count a tiny golf course and a roughly 5 store outlet mall down the road a bit. A lot of the homes looked empty….I think it’ll be a tough sell. Plus there are mobile homes just down the road that aren’t too pretty. However, I did figure that if you are a retiree that blew all your money over the years, didn’t save and had the choice of a mobile home closer to town and an actually house built an hour out in a semi planned community…the house might seem a good option especially if you are one of the millions of Amercians that just sit around and watch tv anyway. Personally, I’d rather live in the mountains of West Virginia I think than there, but that’s me. Drove another hour to Tucson with little except a few truck stops/McD type one-stop towns. The word barren comes to mind for Casa Grande. Anyway, wasn’t terribly impressed with Tuscon either…but to be fair we just drove in and out rather quickly, so I might not have seen the nice side of town.