Phoenix homes sit with big price tags

[Moneyguy1]

Associated Press (excerpts)

"Overpriced homes are clogging inventory in the metropolitan Phoenix housing market as many sellers are holding out for the top dollar that houses fetched last year. Market professionels say many owners continue to believe that the neighbor who sold for top dollar last year set the market price, not the other neighbor who cut thousands from the listing price before selling last week."

"A year ago, metro Phoenix's housing market had about 9,400 homes on the Arizona Regional Multiple Listing system in May. Now the figure exceeds 43,000. Houses sold in an average of 29.6 days in April 2005, compared with 57.5 days in April of this year."

"Some sellers are beginning to drop their prices. But others must stick to their prices even if they are too high because they tapped into their home equity with credit lines, assuming that last year's big gains in appreciation would continue."

Agents say investors, who have mostly fled from the metro Phoenix market, are dipassionate and realistic about setting prices and see the property for its potential to deliver money".

Just some parts of the article, like the visible part of an iceberg.

[speeder]

There will be a bloodbath coming in all "hot markets" nationwide. Will people learn from it? Hell no, they'll jump into the next pyramid scheme when it comes along.

[Porsche-O-Phile]

Fast-forward 15 years to the next housing bubble. . .

People will gleefully flip houses and make paper profits that they then spend like drunken sailors on the hot-ticket-in-vogue-item-du-jour - whatever the 2021 equivalent of bling-bling SUVs or power boats is. People will flood into "how to become a realtor in 30 days" classes with dreams of making millions for 10 hours of work a month. Refi places and unscrupulous lenders will explode onto the scene.

And there will be people that will pound their fists down onto the table and say with absolute conviction that "this time is DIFFERENT!!!"

And they'll be just as wrong then as now.

Can't wait. I should be well-poised to make a killing by then.

[Moneyguy1]

The killing will come much sooner than the 15 years. The entire building industry is in for a drastic change in the next two to three years.

Folks with older homes and lots of equity will have their pick of contractors to do all kinds of upgrades!!

[Jims5543]

Originally posted by speeder
There will be a bloodbath coming in all "hot markets" nationwide. Will people learn from it? Hell no, they'll jump into the next pyramid scheme when it comes along.

There is a record amount of homes for sale in St. Lucie county. The surplus is overwhelming. Prices have dropped dramatically. A house that sold for 300K last year is now going for 250K-270K depending on how long you want to wait to sell.

Builders have stopped building with huge inventories just sitting a lot of it has "for sale or rent" signs on them. Which is bad bad bad news in this town. This towns entire economy is based on building houses. It is going to get real ugly here real soon.

[speeder]

My Mom and stepdad own 3 prime homes in 3 states, (Minnesota, Wisconsin and New Mexico), all owned free and clear. No mortgages, no re-finances. I guess they never got the memo about the "boom", they're old-school and risk-averse.

They worked normal jobs all of their lives and saved, they could have a Carrera GT and a Bentley GT in the garage now, but instead it's a VW NB convertible and a Subaru. They lived through the great depression.

[Rot 911]

On the other hand I believe Motion made the call some time ago that the easy money in Phoenix real estate was over and cashed in.

[turbo6bar]

Negative appreciation is still appreciation, right?

[Joeaksa]

Houses are selling here but not at the expanded prices we saw last year. The value of my house almost tripled within six months and while its died down a bit its still at 2.5 times what I paid for it 5 years ago.

Good friend is a realtor. She is selling and buying but its just not as hot at it was. This market is too hot to die totally.

Joe A

[Jims5543]

Originally posted by Joeaksa
Houses are selling here but not at the expanded prices we saw last year. The value of my house almost tripled within six months and while its died down a bit its still at 2.5 times what I paid for it 5 years ago.

Good friend is a realtor. She is selling and buying but its just not as hot at it was. This market is too hot to die totally.

Joe A

It died here, totally.

One of my builders started 40 new homes a month for years up until 6 months ago. Now they have started 3 houses in 6 months.

Another client, a title agent that does closings, usually closes about 20 houses a week. She has been closing 1 a week, if that, for the last 4 months.

Another builder that was on fire 6 months ago just closed down and moved away to North Carolina. (hint hint)

There have been several local news stories about builders going bankrupt already. Most likely building the last house with the next houses money then suddenly there was no next house. I have seen this too many times.

2 local pool companies bankrupt.

Local electrical company that services builders just layed off 40 employees.

I have concrete contractors calling me directly begging me to rush a job so he can give his crews something to do.

Its not dying here, its dead.

[Neilk]

Well, I am in the process of buying a house. It was fun dealing with mortgage brokers. But first, I have to thank Randy P for answering all my questions regarding mortgages.

We shopped around and at first all the brokers wanted fees of around $3.5k. A friend recommended a broker who only charged $1.5K. The original mortgage brokers all bad mouthed that offer saying that something must be wrong, but they ALL came back with competitive offers. I guess they must be hurting too and just want any business.

[turbo6bar]

Kick a man, socal.

Be cautious of the "It won't happen here!" mantra. The states with the highest foreclosure rates are in the midwest, Ohio Valley, and Southeast. The local markets will react at different rates and varying magnitudes, but the net effect will be negative.

We are seeing the final death blows as central banks around the world remove liquidity from the wheels that turn. In that climate, cash is good and assets are like concrete shoes.

[Jims5543]

Originally posted by SoCal911SC
Remember this Jim?!?

Jim "Mr. Port St. Lucie" Cesiro 10 months ago:

"I agree the RE market is probably on its way down in a lot of places. For whatever reason this area ignores the rules and charges on.

Where else can you buy a 3/2/2 for 275K in a good school district and nice neighborhoods?

Google Port St. Lucie Florida and see how it is breaking records in the USA for new home start ups and % increase in value over the last 3 years. People are flocking here for jobs and cheap homes.

PSL has everything from starter homes to million dollar homes.

I am really not too worried about what is happening to the rest of the country as far as a slow down. That usually drives more people here looking for a freash start."

Pt. St. Lucie is Different!!

I guess there's really no dodging the rules, even in all of the "unique" areas. Credit to you for not being one of the suckers left holding the bag.

Yup I remember that well, I had a backlog of work 2 months back.

I am no fool though. I did not spen spend spend like most. I also back out of a prospective flip house 6 months ago. Instead buying a vacation home in NC.


I knew it would slow down just didn't expect a complete and total stop.

What did this?

Lots and Lots of investors from outside the area, who are now sitting on flip homes and screwed. Good for them. Builders that didn't care who was buying the house or what for just taking orders and building.

What I did not expect and never saw coming was property taxes doubling and tripling and home owners insurance quadrupaling.

Yeah, I have egg on my face our recession proof city for the last 10 years is spiraling downward. Good for me I have no debt and lots of things that can be sold if necessary.

[Jims5543]

Originally posted by procon
Great more competition.

Moved to Raleigh. No worries they are obnoxious New Yorkers and will NEVER fit in. They will be run off for sure. Trust me.

[jyl]

Jim, is the sudden slowdown you're seeing a just a FL thing? Or are you seeing it in NC SC GA etc?

Any comments by others in the region?

[ben parrish]

Procon, where in western NC are you? My family has property in Otto, NC. Thinking about moving to Asheville myself.
Ben

[Jims5543]

Originally posted by turbo6bar
Kick a man, socal.

Be cautious of the "It won't happen here!" mantra. The states with the highest foreclosure rates are in the midwest, Ohio Valley, and Southeast. The local markets will react at different rates and varying magnitudes, but the net effect will be negative.

We are seeing the final death blows as central banks around the world remove liquidity from the wheels that turn. In that climate, cash is good and assets are like concrete shoes.

Dont go throwing high fives just yet...

My pulling out of that flip house was my wake up call that PSL was not going to fare well. House prices were more than double going rent. Although I decided the entire country was not going to fare well after the re-election. I made plans in 2004 to make sure I keep out of debt and have a good savings account.

What I fear most over the next year or two is the fact that I may have to lay off employees and possibly move my business out of Florida.

My only overhead with my business is my office rent/utilities and my payroll. I own every piece of equipment including my work trucks outright. No payments. I planned for these times to come. That is why my employees have all recieved 40 hour paychecks for the last couple of months while only having enough work for 30 hours a week, if that.

If it joys you an entire city is about to go belly up then yay throw the high fives. It upsets me to see an entire cirty that did not have enough vision to entice other business here. The entire cities economy is based on building homes and that is coming to a sudden stop.

Everyone has their fingers crossed it will pick back up. I think this area needs a year or two of no hurricanes and we might be back on track.

[Jims5543]

Originally posted by ben parrish
Procon, where in western NC are you? My family has property in Otto, NC. Thinking about moving to Asheville myself.
Ben

I almost bought a house in Otto. I ended up in the same area as Procon, the Sylva area. I will be up there thrashing my P-car over the 4th of July weekend.

[Jims5543]

LOL!!! USA Today news article

Naples, Fla., Salinas, Calif., and Port St. Lucie-Fort Pierce, Fla., were the three most overvalued markets, according to the report, while College Station, Dallas and Fort Worth were the most undervalued. The median price of $383,000 in Naples was a 102.6% overvaluation, for example, while College Station homes, at a median price of $94,000, were 24% less than the market could bear, it said. Overall, 17 of the 20 most overvalued markets are in California and Florida.

http://articles.news.aol.com/business/article.adp?id=20060613073109990028


http://www.usatoday.com/money/economy/housing/2006-06-13-overchart.htm

Awesome!!

[turbo6bar]

No high fives here. I am just calling the market as it moves. My biggest fear is that this will be far worse than anyone imagined. Nevertheless, it is prudent to observe the fundamentals and make moves to protect yourself. If you are searching for insight on the future, review the economic signals. Basically, without jobs, income growth, and consumer spending, you have no basis for expansion. Notice, easy money is not a driver of true growth.

Central banks are removing liquidity. You cannot twist this any other way--it is very bad for assets.

Perhaps I should have written "Don't kick the man, socal." as that is where I was heading.

Again, I have said it a thousand times; we are entering a period of higher risk. Revert to fundamentals and don't swing so hard, lest one miss the ball entirely.