Number Of Second Home Buyers Plummets: N. Arizona
The Arizona Republic has this rare report on the housing market in the north. “The slowdown that has hit the Valley’s housing market is spreading. Home sales are down and so are some prices in central and northern Arizona’s second-home communities. The number of homes for sale in Payson, Sedona, Pinetop-Lakeside and Strawberry has shot up this year as the number of buyers plummeted.”
“As in metropolitan Phoenix, overly zealous homeowners in these smaller towns are cutting prices to sell houses.”
“‘Last year, a lot of buyers mainly from Phoenix were clamoring for the same homes in Payson,’ said (realtor) Susan Keown in Payson, where the number of homes for sale has tripled in the past year. ‘Some were willing to pay more than what the houses were appraising for.’ But, she said, those buyers and bidding wars are gone.”
“That is partly because many potential buyers for houses in central and northern Arizona are homeowners from the Valley who can no longer afford second homes. Higher payments on adjustable-rate mortgages and home equity lines are cutting into the monthly budgets of more Phoenix-area homeowners. Some people trying to sell in Payson, Pine and Pinetop-Lakeside have primary residences in metropolitan Phoenix but can no longer afford two homes.”
“Also putting a damper on second-home demand is shrinking home values because of dipping prices in some Valley neighborhoods. Then there are those who want to buy but can’t because their houses won’t sell in the slowing Valley market.”
“Home listings in Arizona have quadrupled in the past year to reach almost 43,600. Valley home prices have been flat since October. Through May, used-home sales were down 34 percent from last year.”
“Home prices overall aren’t down in many central and northern Arizona towns, but sales are closing for less than the listing prices, primarily because some sellers are overpricing homes. ‘The slowdown here hasn’t been as pronounced as the one in the Valley,’ said (realtor) Cliff Potts in Payson. ‘Prices are holding, but sellers have to be more realistic.’”
“High-end home listings in Flagstaff have climbed during the past year. And, in Sedona, listings were up 129 percent in May from last year. ‘We have already seen some price reductions,’ said (realtor) Ray Jegge in Sedona.”
“But it’s still not clear whether this is the time to find the best second-home bargains in Arizona’s high country. As in the Phoenix area, real estate market watchers are still guessing when the housing market will hit bottom. ‘This is prime season for buying in northern Arizona,’ said John Foltz. ‘I doubt we will see anything definite on how much that market will slow until fall, when demand traditionally falls off.’”
‘Some people trying to sell in Payson, Pine and Pinetop-Lakeside have primary residences in metropolitan Phoenix but can no longer afford two homes.’
Many never could ‘afford’ two homes, but when prices were skyrocketing that little matter was brushed off. And since these folks are stuck, they should be happy to give up those paper profits they are holding.
Stuck in the desert, under the scortching sun with no water. And the vulchers are circling overhead. The ultimate bubble death. Real Estate without water and sands storms. Wow! I like the image. What will happen when the water runs out? Real Estate dust bowl. 1929 all over.
Question: Is N. Arizona a location where Phoenix homeowners go to relax? (e.g., mountain views, lakes, anything?) I know for Southern California, there is a ton of 2nd home buying around Big Bear, Lake Arrowhead, Mammoth, and Santa Barbara for the R&R factor. Just curious.
Neil
Neil - most definitely! Northern Arizona (Prescott, Flagstaff, Rim Country, and White Mountains) are very popular destinations for Phoenicians to escape the heat in the summer. I-17 north of Phoenix and The Beeline Highway to the Rim Country/White Mountains can be very busy on the weekends for people trying to get some R&R.
That may be, but wouldn’t it be much cheaper to stay in a hotel or one of the many resorts? Instead of raking leaves all weekend they could be at the pool. IMO, these second homeowners are speculating, even if they don’t realize it.
That’s what I’ve often wondered about second homes. Frankly, I’d rather stay in a hotel, B&B or resort and have someone else do the cooking and laundry. And not have what is often a huge financial albatross hanging around my neck, either.
I also wonder about the RV set. Why pay for expensive gas and campsites, only to have to cook your own meals, put out a great deal for the RV and have high repair bills. Seems a lot of Americans don’t really know how to relax or they’re obsessed with “owning”. Give me a B&B or nice hotel room any day.
Add my voice to the chorus. I never understood it when condos went for more than the local 5-star hotel?!?
Note: assumption: 1 could only use the 2nd house 90 days a year… So a $500/night 5-star and a $4,000/month condo about equal out…
Of course, I’m a cheap a$$, so I’m grabbing 4-stars on priceline (pick your favorite site…). Usually
Great thread! IMO, it makes sense to own only one home, and only if you bought it at/near the last bottom in real estate. At most, it makes sense to have land so that you can build your retirement home on it in the future as long as you sell your former single residence. My dad always warned me about being a slave to my possessions. And that, I’m not.
Yes, N. AZ is at 5000′-7000′ ft and much cooler than Phoenix. Much as Big Bear and such is to So. Cal. Flagstaff and Prescott also seem to be a favorite feeding ground of CA equity locusts.
I agree, many more CA folks here than Phoenix. Flagstaff especially was overrun. The real tragedy is these small rural towns don’t have high wages, so locals have no options. There isn’t a single local fireman, police officer or teacher that earns enough to buy a home today in N AZ, using regular loans. I think even many doctors and lawyers may be in the same boat.
Aren’t most of the people in PHX from Cali?
I saw a ‘bumper sticker’ on the back glass of a pickup that read:
“Stop the Californication of Arizona. If California is so damn great, GO BACK!”
Hell, I “can” using the EZ money guidelines of recent years but I won’t pay those prices. I see numerous things I’d like up there but doubt seriously I could get an offer accepted, since mine would be probably 40% under current ask.
interestingly, I spoke to someone whom they and their mother bought a house each in Prescott for $140,000 each.
How does the price they paid compare to the historical prices of real estate in Prescott over the last 6-7 years?
I am sure it is higher than historical norms of years past. But like with anything, just knowing the price is not enough to go by. Do you happen to know square footage, type of home, lot/acreage size, type of lot/parcel, view or no views, any good tall pine trees on the lot, etc. etc. Or better yet, if you know the address you can just zillow it to see what past prices were for the land if it was sold previously in the last ten years.
140K sounds like Prescott Valley, which is south of Prescott. PV is much less expensive than Prescott proper.
‘I doubt we will see anything definite on how much that market will slow until fall, when demand traditionally falls off.’”
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This guy was waiting for the Super Bowl rally - then the Spring Rally - now its the Summer Rally.
Oh Great Pumpkin Where Are You???
Right, it may be a little cooler in Payson, but it’s hot now. July 4th rally?
From what I understand there’s a concern for fires this year due to lack of rain just about everywhere in AZ.
OT
If you would like to send David Lereah some fan mail here is some info. You can thank Cereal.
Cereal did some research, and pointed me in the right direction. I will post the info here for you guys.
DL’s primary residence is in Fairfax station.
11605 Havenner Ct.
Fairfax Station, VA 22039
Bought in 02 for $570K
now worth 870K
Also has some other investment properties.
Owns a studio in DC bought in 04 for 245K, now worth around 260K
Has another studio in DC bought in 03 for 152K, now worth around 230K
Has another house in Virginia bought in 05 for 276K, not sure what it is worth now.
No conflict of interest at all there. Too bad the same disclosure rules don’t apply to him as apply to those stock shillers over on CNBC, most of whom appear not to own any of the stocks they’re shilling…
Anybody know what’s happening in the extreme far north-like St. George, Utah?
From page A1, above the fold in the Los Angeles Times, last Sunday 6/5. http://www.latimes.com/news/nationworld/nation/la-na-landbill6jun06,0,6015868.story?coll=la-home-headlines
St. George — the hottest housing market in the nation. Basically the state is pressuring the BLM to sell 25K of land to developers. I guess bejeebus is going to provide the water for the new developments. Or they’ll squeeze it out of the sandstone.
Utah, a pretty great place for white collar crime and the highest level of bankruptcy in the country. The state is always behind the curve in the housing market/bubble.
Yeah it had the highest rate of appreciation in the 1st Quarter of 2006 6.88%.
Here is where I got the info.
http://moneycentral.msn.com/content/Banking/Homebuyingguide/P85323.asp?GT1=8289
Foreclosureville (Revised. See if it sounds better)
Nibbling on Spam cake, watching the Fed break,
All of those flippers buried in debt,
Gunning for sixteen, rate hikes and counting,
Smell those deadbeats, they’re starting to sweat.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I know it couldn’t be me.
Don’t know the reason that I signed up last season,
For a balloon note I knew would come due,
But it’s a real beauty, a big sub-prime cutie,
How I missed payment I haven’t a clue.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I know it couldn’t be me.
Blew out my credit, jammed with a reset
Trashed my FICO, couldn’t cruise on back home
‘Cuase I am a victim,
I’m being evicted,
That ruthless banker won’t let me hang on.
Wasting away again in Foreclosureville,
Searching for my lost equity,
Some people claim that it’s Bernanke to blame,
But I thought the money was free.
Yes, some people claim that it’s Bernanke to blame,
And I know it’s my own default.
You’ve got some good stuff going here. Maybe there can be a blogger CD at some point. I love funny songs.
I’ve been thinking the same, and have got a mental list of songs which I think could be re-lyricised. Mostly 60’s-70’s which I suppose shows my age :).
So far I’ve posted “Yesterday”, and one verse of “Where have all the buyers (= flowers) gone”, and I think “House of the Rising Sun” and “The Times They are a Changing” would also be candidates.
Rainman’s done some good stuff as well. Maybe it’s time for another thread on this subject.
Bravo! Bravo!
One thing I learnt yesterday I want to share
Using ziprealty — find addresses listed
Using Zillow - find zestimate, sales history
GO to VenturaCounty propertytax site and use the parcel number from zillow and find out if the current owner is behind in taxes
I found 2 out of 5 listed in my development are behind in taxes
Also others that were sold for high during FEB-MAy 06, havent had their new assesment yet. They will find out that the taxes have doubled or tripled
You’d think such a real estate guru would know that studio apartments are always bad investments. No one wants to live in a studio apartment.
I have for 3 years in LA. My own preference is to find the most expensive studio apartment and live there. I prefer to live among quiet professionals, rather than people who blare rap “music” at odd hours or vampires who wake up at 10am and make noise until 3 am.
I was considering Payson and some of the Rim Country towns as possible retirement destinations, but, after watching their daily temperatures on my homepage for the last 9+ months, I have pushed them down the list.
My cousin’s friend, who lives in the Tonto Basin area, advised that the atmosphere has deteriorated perceptibly during (but not as a result of) his residency there; staler, hotter air, fewer breezes to move it, etc. Evidently it was much more pleasant when Zane Grey used to stay in Payson.
Unfortunately there were some fires in the Tonto area. The whole state is in a serious drought, so I am sure air quality is deteriorating. When we aren’t in a fire ’season’, the forest service is conducting prescribed burns.
I believe that Tom has been noticing the deterioration over several years, and attributes at least part of it to unprecedented migration into the state.
Even if the heat seems to have intensified recently, the Rim Country appears to be so beautiful that its still a very desirable destination.
I live in Payson and the big difference is the night time temps…it really cools off here compared to the Valley…it is nice to sleep with the windows open and a cool breeze coming in! The #7 tee a 30 second walk from my front door is nice too for those late afternoon 9’s in the setting sun when it is cool…
A realtor friend of mine told me that he regularly gets calls from out-of-state “investors” who don’t know the area and only specify that they want something “x” dollars or lower. It isn’t about value for these folks, its about price.
Maybe I should stop buying $15/pound steak and buy worms instead. Wow, these worms are so cheap compared to the steak I used to buy!!
(Obviously these worms are undervalued, I think I’ll buy a whole bunch and flip them.)
My buddy took a look around one of the seven real estate offices in Williams, AZ this spring. The lady kept telling him how much interest there was in properties, and how all the prices would keep going up. A lot had to do with the speculation that the Grand Canyon Railroad and Hotels (which are for sale), would develop a huge theme park in Williams…. I kept trying to picture a Magic Mountain in Williams Arizona, but it was a disconnect in my head! That would definitely ruin the area….I couldnt believe how much dirt shacks were going for in downtown Flagstaff…and that they had such bad traffic.
great analogy
A “sic flags in Williams”. Somebody really wants to take a flippin’ blood bath. That area is either really hot or really cold. Always windy. Not enough locals there to support one. And why would Grand Canyon folks go there? I would rather go to LA or somewhere in which a amusment park makes economic sense, and that would be the purpose for the trip.
Seven real estate offices in Williams? Why don’t we just run further out to Ash Fork and open up another 10. That desert might get filled up with McMansions all over? Then Intel, Microsoft, IBM, Whole Foods, and the entire federal government might decide that is the place to move all of their jobs. And I am seeing monkeys fly out of people’s back ends. Stop passing around that cheap whiskey and other funny stuff.