A ‘Lull After The Storm’ In Arizona
The Arizona Republic has this housing bubble update. “Pinal County’s molten housing market continued its recent cooling trend in first-quarter 2006, as existing-home sales volume fell and prices stumbled. Sales volume for used houses fell 22.6 percent from first-quarter 2005, to 1,110 transactions, and marked the third consecutive quarterly decline, according to a report by Arizona State University.”
“The median price dipped by about $10,000 (3.9 percent) from $220,000 in fourth-quarter 2005.”
“Bob Rucker, CEO of Arizona Regional MLS, said the number of existing houses for sale in Pinal County had risen to 4,342. The report said new-home sales and prices were up over first-quarter 2005, although 1,000 fewer houses were sold than in fourth-quarter 2005, the first significant slip since the county’s housing market took off a few years ago.”
“‘The Pinal County resale market is slowing as is the overall housing market,’ said Jay Butler, director of the ASU center. ‘The problem is that this market doesn’t have a history so we don’t know what’s normal. This housing market only came into existence five years ago.’”
“The housing boom in the Southeast Valley spilled over into Pinal County. And, sales in the once-rural county will have a ’significant impact on how (the Valley’s housing) market plays out over time,’ Butler said.”
“Pinal County and its municipalities issued a record of nearly 20,000 home building permits last year. Sales dipped by 22.8 percent from 4,715 homes sold in fourth-quarter 2005.”
“Housing analyst RL Brown said the Pinal County market is in the midst of finding normalcy after a bustling 2005. Houses are staying on the market 60 to 90 days or more, which creates a buyer’s market. ‘We haven’t seen ‘normal’ around here in a long time,’ Brown said.”
“Some buyers were eschewing existing homes because they can often get a new house for close to the same price and a builder’s warranty. They also can frequently get purchase incentives from builders, such as free swimming pools, that are worth thousands of dollars, Brown said.”
“Real estate agent Mary Grube recently sold a new home in the San Tan Heights subdivision after builder Richmond American Homes offered incentives of about $50,000. Incentives can be used for upgrades or to reduce the price of a house.”
“The incentives are playing major role in buying decisions as are dwindling price gaps between large new and existing homes. ‘It makes it a lucrative investment to buy new, and most people want to buy a new home,’ Grube said.”
“Deborah Farhat, a broker in the city of Maricopa, said builders in the area are offering commissions to real estate brokers that are reaching 6 percent and 7 percent, and slashing speculative home prices. (Realtor) Joanne George said builders are even offering gas cards to get agents to bring clients to the county.”
“‘They’re pretty much hitting everyone on the buyer’s side,’ Farhat said. George said Pinal County is still affordable but was experiencing the ‘lull after the storm.’ Market pressures were driving sellers to list homes at fairer prices.”
“Butler said when mid year numbers come out in a few months that will give a better perspective on the market’s direction. ‘It will probably either remain stable, or decline a little bit more,’ Butler said. ‘But we really don’t know. Lots of different things are happening.’”
‘The problem is that this market doesn’t have a history so we don’t know what’s normal. This housing market only came into existence five years ago.’
This will be interesting to watch. These projects were a bet on the growth of the valley; not really based on actual demand.
‘Although Pinal County has a limited job base (45,075 jobs in April 2005 to 46,375 jobs in April 2006) and commercial real estate sector, people were willing to drive increasingly longer distances to find affordable housing. However, declining affordability, higher gasoline prices and more congested highways could begin to limit the housing market in Pinal County. Because investors were also drawn to affordable housing in Pinal County, higher prices also could be limiting their role in the local housing market. Thus, there are many reasons for the slowing market and issues that will have to be overcome for any future recovery.’
Ben, Thank you muchly for the article(s) on Pinal County. I happen to be interested in an area called Saddlebrooke in that county. Obviously after the prices come down! Any of you locals have any comments to share?
My parents live in Saddlebrook. It’s far closer to Tucson than Phoenix, but not really a suburb of either (given that its residents are mostly retired). My best guess is prices will dip there, just like everyplace else. But who knows.
Was there a few weeks ago and saw several homes that appeared to be empty with “for sale” signs posted.
“Deborah Farhat, a broker in the city of Maricopa, said builders in the area are offering commissions to real estate brokers that are reaching 6 percent and 7 percent, and slashing speculative home prices. (Realtor) Joanne George said builders are even offering gas cards to get agents to bring clients to the county.”
******************************************************************
But I thought the market was just returning to “normal.” Looks like desperation to me.
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Looks like Sacramento is also starting to see new home price reductions (as opposed to 2-day discounts).
And here’s your chance to lowball Centex:
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Sacramento Land(ing) blog
…come in today and see this award wining home!
I always wondered about “award wining (sic)” houses.
What are the awards, what is the criteria for winning,
and who hands out the awards?
This executive home…
“executive home”. What the h*ll is that? Has anyone ever seen
a home that isn’t an “executive home”.
What about homes for the worker bees like myself
who know how hard it is to earn a dollar and don’t
fall for every line of B.S. generated by the “executives”?
Jeez, what a load of crap…
Call me Nostrodamus, but I predict “Skye Isle” will be “Skank Island” in about 12-18 months, as FBs are being purged from their MacMansions, TRULY desperate housewives are going that extra mile to pay their escalating mortages.
” esteemed homebuyer “, don’t you just love the bs they sling.
What I thought was interesting is that this house supposedly as…. a basement? Oh Mah Gawd. Did California finally figure out that you could dig a spot under your house for more space?
Basements are great until they start hula hooping in a quake.
LOL
OT: Interesting story about a home selling in North Jersey.. 270+ Days on Market, $90,000 in reductions, a handful of bungled offers.
The perfect example of trying to chase down the market. If it weren’t for greed, the seller would have sold months ago for close to $50k more.
Chasing The Market
Caveat Emptor!
Grim
IMO, it’s not just greed (though that is a BIG part of it). It’s also due to the fact that the NAR and MSM kept everyone in the dark about the actual state of the market.
You are right, my in-law is trying to sell his 2nd home in north county. He keeps wanting to lower the price more, but the Realtor®†™£¢§®¥π keeps telling him he knows the market.
Oh, and I’ve got to add “knows the market better than me” — who suggested months ago they price 15K below comps. Now of course, they are there, but they must walk it down to avoid a sale.
Sounds like its time to get a new Realtor. At this point you should be able to have your pick of the crop from them. Just interview them (like you would for anyone wanting contract work) and pick the one that will sell at the price you set.
If you’ve already picked one, chances are you’re stuck with them for a bit. Most of them make you sign a contract giving them the listing for a specific period of time.
News from Nevada:
A slowdown in the housing market is rippling through Las Vegas, with layoffs by home builders, mortgage and title companies and other real estate-related occupations. But some observers suggest the slowdown’s scope and depth may not be not as far-reaching as national economists have predicted.
…”Sales are being challenged and different builders are feeling different kinds of pains,” DelGiorno said. “With in-migration and jobs, we’ll move through this inventory when people are buying their homes to live in. Now there’s a concept.”
…Nevada Title Co. has reduced its staff by about 25 percent since peaking at more than 300 employees during the refinance boom of 2002 and 2003, Nevada Title President Robbie Graham said.
…Another field seemingly poised to shrink through attrition is real estate agents.
“There’s going to be a lot of them cryin’ the blues,” Smith said.
The Greater Las Vegas Association of Realtors doubled its membership to about 15,000 over the last five years as people from all walks of life saw an opportunity to cash in on the housing boom.
Full article at
http://www.reviewjournal.com/lvrj_home/2006/May-31-Wed-2006/business/7601489.html
LV Landlord -
Please respond!
It seems like you come out here and everybody’s in the business. Realtors, title companies … everything revolves around real estate and development.”
__________________________________________________
HOW MANY TIMES HAVE WE SAID THIS ABOUT that town???
Same thing can be said about San Diego to some extent.
Probably all of Florida.
“With in-migration and jobs, we’ll move through this inventory”
“We’re just adjusting to the market position,” he said. “This is still a strong market. We’ve got strong growth and a great job market. It’s just going to take a little time to correct.”
So this article tries to say - it won’t be so bad, honest. Then it lists out how everyone is taking it in the shorts. Which one is it?
Why are so many in the press afraid to lay it on the line? Yes, I know - ad revenue from the homebuilders and RE folks, but if their business is in a downturn that is going away anyhow.
$50,000 in incentives and 6 or 7% commissions sure can keep that median price afloat.
The appraisers should be reducing the sales price by the amount of the incentives , otherwise you are giving a buyer/borrower over 100% financing on the house . In the old days we would reduce the sales price by the amount of the incentives .
ASU (Arizona State University) sold the president’s house in Tempe, AZ to a developer for $1.5M last year; several past presidents lived in there but the current president lives in his own home in Paradise Valley, AZ. It was a beautiful ranch-style home built in 1960.
Pretty soon, I noticed a sign for “Presidential Estates” - 8 brand new homes coming soon - late last year. Last month (April), the custom homes builder who had acquired the 2 acre lot razed the old ranch-style home to the ground and cleared the lot. Guess what? The 2 acre lot where there were going to be 8 new homes built, is now being offered for sale! The custom home builder (J.C & Sons of Phoenix) is selling off the lot. Forget the new homes!
OT:
Disney announced layoffs of 10% of the workforce this am, just heard it on the TV news.
Looks like the home ATM is broken and consumer spending is slowing.
LA, OC and FL should take the brunt of the Disney layoffs.
But they can’t get anyone to work at Disneyland®, perhaps there’s some “lateral” transfers in the works
This will be good for the Burbank CA homeprices to fall…..
NEW TOPIC : ?
where is your market price/date ?
DC are turning over at may/05 prices
are any markets back to 04 pricing yet ?
HOV new 52 week low. They announce after the bell.
explain why YOU won’t take a hit !
everyone sxcp gov workers will make less in 07
Nevada Title Co. has reduced its staff by about 25 percent since peaking at more than 300 employees during the refinance boom of 2002 and 2003, Nevada Title President Robbie Graham said.
…Another field seemingly poised to shrink through attrition is real estate agents.
Everyone believes government workers are safe when the fur begins to fly. I disagree. Most local, state and fed govs have been on a spending and hiring spree for the last five or six years. A serious economic pull-back will have immediate effects. I know my local government has very in the way of reserves. I already know who, in my agency, will go first. I have a second cut list and a fall back plan in place if it gets bad.
Crash1:
Not everyone, flat is just a vocal minority basing his comments on a long gone stereotype.
Since October 2001, the state of MD has been in a hiring freeze due to budget constraints, and it has not yet been lifted. So the state is rolling in tax revenues, but they can’t afford to hire new workers. Interesting…I hope there is somebody to fill the potholes in the state roads!
Several of the defense contractors in San Diego are looking at reduced year over year budgets for the next few years. .gov jobs can an do flux, even onces with heap-big security clearances.
which specific companies are you basing this comment on?
Just some anecdotal evidence I’ve noticed in the past few days that really seem to point to a shift in the market… I keep an eye on a couple of things: 1) the Countrywide REO list in California, and 2) # of listings that match my criteria for the SFV. The REO list stayed between 2-6 properties in CA for the past few months. Recently it went from 4 REOs to 62 in a matter of 3 weeks. The listings mailed to me typically show between 1-4 new properties each mail. Yesterday, there were TWENTY-NINE, followed by another NINETEEN this morning.
Looks like it is FINALLY starting to get rolling in one of the last bastions of bubble-central.
Good Info sfv…..
Yea, R.E.O’s the only numbers that matter.
Am radio this morning: the highest number of houses on the market in the Monterey Peninsula in fifteen years. Inventories have risen X2 and X3 in some areas in the past three months. This report is contrary to all news in the local papers, RE agents, etc.
If that figure is true it’s pretty alarming. Time to buckle up.
This may be a little off-topic, but has anyone else seen an increase in the number of credit card offers in their mail? I’ve been averaging maybe two a week until recently. Yesterday I had six in my mailbox in one day. Is this an economic indicator or just another way for them to irritate me?
Credit card companies are struggling because everyone used their HELOC to pay off their balances. Saw this in the news recently.
I have been getting a lot fewer CC offers.
Instead, I am seeing a lot of offers of high interest rates (5%) on deposits from CC companies, like Capital One.
Very curious. I, my wife, and both sets of parents have recently had an influx. We also last week checked our credit reports, and the number of inquiries were double.
As long as we’re OT, I’ve been getting a lot of specialty credit card offers, B&N, associations, etc.
OT but interesting:
Anyone know what happened to the awesome blog “America’s Overvalued Real Estate?”
http://overvalued.blogspot.com/
It looks like it’s been hijacked, although I didn’t look too closely.
yea,
Creepy!
Bryce Mason,
It would appear that over the long weekend somebody “hi-jacked” this wonderful site. I was a regular there and no matter how dark my day they always cheered me up by reaffirming that I hadn’t completely lost my mind. The guy was funny! Obviously some realtor took offense to it as he had his “Realtors Hall of Shame”. I’d give anything to have him back! Over at Patrick’s site we get RE Bull trolls that post using your screen name and try posting links to their “bullish spin” sites or articles. It’s getting pretty desperate out there!
Marin Housing bubble did a post on this.
I think Ben has that site on his link bar.
There were a few casualties including Piggington.com.
It is getting desperate.
Isn’t hacking a federal crime?
It would be pretty easy to have NAR pay some local hacker in cash just to mess with bubble bloggers.
OK, tinfoil hat off.
Sunsetbeachguy,
Oh I’m not fitting you for a tin foil hat in the least. Besides, commercial realtors are tough, sharp and literate! Why would some CR in Chicago of all places slop together such a half a$$ed web site and then have the URL start out with OVERVALUED! Will the “real” Mr. Overvalued please stand up and be counted? If anyone knows how to get a hold of this gentleman please encourage him to set up shop elsewhere so we can enjoy his wit, charm and insightful observations again please?
Computer intrusion is a federal crime. However, the ‘federal’ part is the kicker, most professional hackers are safely off-shore in Russia, Ukrain, Korea, China, etc.
What a pathetic thing to do. As though defacing or even destroying the content on those sites could possibly make any difference in stopping rising inventory and escalating defaults?! The bubble blogs are just the best seat in the house for watching the RE and loose credit insanity play itself out.
I hope that Overvalued will reclaim his site. I’m missing my daily doses of laughter from his commentary and wry sense of humor. Are you out there somewhere, Overvalued?
I was really glad to see that Rich got Piggington back on its feet again.
Bryce,
The way that the author writes leads me to believe that it was done by a 3rd. grader or just someone that really, really struggles with english. There is basically no content there just a thinly veiled attempt to suppress the truth! Did you people see some of the listings there! Tragic I tell you! Converted garden sheds selling for 750K on Long Island? LA homes with bars on the windows protecting a 650 sq. ft. dump? And the “write ups” by the realtors were priceless. This guy was just exercising his FREEDOM OF SPEACH! If realtors are losing their grip on the MLS (and reality) well let’s just say I hope the guy finds the culprit.
Yes, people have been commenting on that at over at . I flagged it for objectionable content, thinking I could leave a comment on the hijacking. Turns out that just flags it– but maybe with the complaints blogger.com must be getting it will make them take faster action.
Okay, that didn’t work. I was trying to refer to the Bubblemeter blog. DinOR –interesting– I hadn’t noticed on Patrick’s site, but there is an anonymous poster who signs himself ‘Bryce’ on the Bubblemeter blog site, too. He claims to be a lover of DC, but the author of the Baltimore bubble blog keeps having to delete his posts there as well.
Hm, very interesting. I don’t know who took the site down or why but I do know that I miss it so! Any realtor that is either so busy or so lazy that they take pictures of a “home” while still in their car deserves everything they get and then some! The frantic environment has lead so many home owners attempting to cash in on the “bull run” in REthat it has created the kind of content that comedy writers pull their hair out to come up with! Some of his “listings” were so ridiculous not even “The Onion” could have made them up!
If you see a pictures taken from a car. Most of the time being busy or lazy is not the problem. The problem is what is not in the picture just outside of the car.
I am not that Bryce.
If he finds out who hijacked it, he could sue for damages! I know I would.
OT but hearing it on the radio pisssssed me off, just another reason to leave CA. Seniors not passing the exit exam, don’t worry, you don’t need a diploma to go to college.Funding for the underprivileged should be available for anyone wanting to go to a JC (for how many years? Do you have to get a degree or is it just more welfare money?).
Now here’s the rub. If your kids study hard and you make above a certain limit you pay the full fare. Solution: since you don’t need a HS diploma to get into a JC,transfer your kid into a JC in their junior year and by the time it would have taken them to get a HS diploma they’ll have an AA degree. Since all the brighter kids will be in college that leaves more time for the schools to educate the less gifted so that they can pass the exam.
It’s just a proposal and IIRC died in commitie. But yes, there is a connection. Housing demand calculus in California includes the very low cost of college education. It extends to localities as well. We paid more for our school district because the alternative would have been private school at the cost of many thousands. 12 million guesses as to what makes for a good school district.
I second C&C: LV Landlord -Please respond!
BTW, was down in Bakersfield Sat and saw your sign out Rosedale Hwy.
LOL. I am not affiliated with them. Did you notice all the 4-sale signs here??
OT maybe, but a FASCINATING THREAD!:
A quote from California (Sacramento) a few days back said prices are softening in the lower price ranges, but not in the stratospheric range. I think that may eventually spell good news for those of us who would eventually want a modest home (3/2 1500-1700 sf) in a decent neighborhood with good schools. Do others fall in that camp??? For example, I know that here in Ashland,OR affordable low to mid range homes have been very scarce the last few years, and still were going quickly until recently. Yet despite low end demand,it seems the developers have gotten greedy and keep building the McMansions ($600k-1M range).
Now, I have heard several scenarios with past bubbles, 1) the upper end collapses, 2) the lower end collapses, 3) they all fall together.
Anyone have a read on whether low-mid homes are softening across the board, or whether some of these overbuilt high end homes may, due to overproduction, drop into the middle echelons (~$200-350k). I am interested in hearing about patterns in the various price ranges in different markets. Opinions or facts on this thread would be appreciated.
Now, I have heard several scenarios with past bubbles, 1) the upper end collapses, 2) the lower end collapses, 3) they all fall together.
Answer: Everything falls together, not just real estate!
I am amazed by the number intelligent people on this blog that don’t understand that the current real estate bubble is a global liquidity bubble occuring as a result of fiat currencies manipulated by their respective reserve banks, and as a result of easy credit policies and massive increases in debt. It’s really a game of liar’s poker, i.e. who’s currency can be inflated before the other’s playing the game will notice. Would you trade a dollar for a yen, or a euro for a pound? Every asset class in the world is inflated when measured against any fiat currency in the world. Got it?
C&C, yes I did but I didn’t have time to look around a lot. I need to contact my BIL and find out what builder his son worked for. I know that when he quit several months back he said they had run out of buyers but were still building.
all of the homes will fall together. TOo many McMansions built that the few GFs won’t be able to afford, or only those with a brain that realize what happened will buy at a fire sale price. A lot of the McMansions close to where work is will become the starting houses. The exurbs will be toasted as people will be tired of commuting. Anyway you put it, California BLOWS chunks.
Where I live, around Baltimore (in the county though, not the city proper), they’ve built so many $500K and up homes that they’ll NEVER sell them all at those prices. They are all 2500-4000 sq ft with lofted ceilings, and with our pending 72% electric rate hike coming July 1, I cannot even imagine what the AC bills for those things will be.
I think they were built hither and yon for the up and coming flippers. However, it looks like rather than another cohort of equity nomads, much of that group will be in bankrupsy.
But you are right. How many folks want or can afford to heat and cool a 4000 sf house?
What really bothers me about this mad rush to build all of these houses here in Phoenix is the fact tat you get very little yard now. They just stack the houses almost on top of each other. Its really kind of sad because this is also greed as far as the homebuilder is concerned. Basically when this whole thing crashes we will have a bunch of just crappy homes sitting around that all look the same.
Here’s a couple excerpts from articles about non-US RE markets:
The Thai property sector has declined 4 per cent this year from last year, due to high oil prices and interest rates, says Manop Bongsadadt, chairman of the International Real Estate Federation (Fiabci, the organisation’s French acronym) Thailand.
He said demand for new housing had dropped slightly this year, because homebuyers were delaying their buying decisions, since interest-rate hikes and rising oil prices had increased their cost of living.
…”As we host the Fiabci World Congress in Bangkok from May 26-31, joined by 600 property developers and agents, we’ll meet with foreign investors who are interested in expanding their investments in Thailand, especially office buildings, hotels and condominiums,” he said.
Article at
http://www.nationmultimedia.com/2006/05/30/business/business_30005210.php
And from Canada:
Prices nearing danger level
TORONTO - Just when the U.S. home-price boom is abating, Canada’s housing market is accelerating to a potentially dangerous level, a senior investment bank economist warned Tuesday.
He said the American real-estate surge is drawing to a close after sales peaked last summer, “but just as U.S. housing is finally cooling down, there are signs that the Canadian housing market is actually heating up, potentially dangerously so.”
Canadian price increases have surged ahead of U.S. trends, Porter writes, because Canadian interest rates are lower and because the boom took longer to get rolling in Canada, while Canadian employment growth has more than doubled the U.S. pace.
Full article at
http://www.canada.com/edmontonjournal/news/business/story.html?id=156a8777-711c-4e57-8917-479f0f161298&k=3691
Howdy! I know this is kinda off topic however
, I’d figured I’d ask. Would you be interested in exchanging links or maybe guest authoring a blog post or vice-versa?
My blog covers a lot of the same topics as yours and I
think we could greatly benefit from each other. If you are interested feel free to send me an e-mail.
I look forward to hearing from you! Wonderful blog by the way!