WatchPersonally, I would do better if the market had stayed down for years after the crash. I have no plans to sell any of my properties, so appreciation means nothing to me, it is just a number on paper. I am buying properties for the CASH FLOW only, with plans to live the rest of my life off the rental income.
So, when i post facts about the Phoenix market, facts which I carefully study to guide my own investments, I do without a preconceived bias to look for the positive indicators.
Facts such as:
1. Low inventory, Less than 13,000 for the past couple months.
2. Strong demand, over 8000 closed a month for several months.
3. Multiple offers on most reasonably priced homes under 250K, within days of listing.
4. drops in the number of available short sales, under 900 now.
5. drops in the pending short sales, down to 13,000 from 20,000 a few months ago.
6. slightly rising rents in all areas that I own rentals.
7. 30% rise year over year in asking prices.
8. Only modest increase in foreclosures, and notice of future foreclosures, hence no visible pending tsunami of distressed properties, post robosigning scandal.
These facts galvanized me to move quickly, buying 2 more homes over the past 2 months, and putting 4 more under contracts a couple months ago, short sales as those are the best values around today.
Whenever I post my analysis, instantly, they are pounced on by brain dead idiots, calling them lies, etc. Well, if these nitwits care to share some fact and intelligent debate could occur, but instead, they sling insults and market predictions based on wishful thinking rather than analysis. Whatever, sorry your, but you might try reality some time, rather than living in a fictional world!
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Call it Crazy says
I can understand that; The thing I don't understand, is when someone discusses another market, very often they don't know even the basic facts to try to understand their market. It is all wishful thinking, either way. Which way a market is headed is very important to a buyer, and deserves a thorough study, not an emotional guess. Call it Crazy says
I'm curious about Florida. In about 5 years, I may retire from my day gig, turn over all the management of my properties to a friend, and move to Florida. The delays on foreclosures in Florida have been huge, maybe they will finally all hit the market, pushing prices down to levels that make buying there sensible. (factoring in hurricane insurance, high Florida property taxes, etc. ) Anyone on here study the Florida market in detail? Or maybe I'll move to Panama or Thailand or something...
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rooemoore says
That would make two of us. Yep, another year & a half. :o)
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PockyClipsNow says
Not this winter. There will still be no inventory to buy. You're looking at next fall or winter for the inventory to pick up. There's hardly anything that got foreclosed in my neck of the woods in the last 6 months. That means there will not be much inventory this fall, and the trend hasn't changed. So I guess there will not be much inventory in the winter either. It's time to be patient. It's currently a seller's market.
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CL says
CL,
Even with the jump in recent foreclosure filings, it is still 4% below last May according to your link. Guess what? Last May was pretty pathetic too. There's not much in the pipeline for the past several months. That means there won't be much inventory hitting the market in the next 4-6 months.
I would view the end of this year and early next year as a great opportunity to refinance due to lower interest rate and higher sale comparables, and pull out as much equity from all investment properties as possible and get ready for the next foreclosure wave so you can load up on more income properties. If it doesn't happen, that's ok too because you have essentially transferred all the risk to the lenders, and you still have all the cash in hand waiting for the next opportunity to present itself.
As usual, it's just my 2 cents. :o)
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Strategic Renter says
@Strategic Renter, so, was that just a blip in the market? it's been seven months now... David9 says
hmmm, how did that work out?
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robertoaribas says
With plans to live off the back of others while doing nothing.
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Mick Russom says
Nothing wrong that. He took a lot of risk and put his capital and played the game well. If it does not work out, then that is a risk he or the taxpayers will have to take. I am debt free, but still gotta work-my choice, but am getting tired in this soulless corporate life.
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Mick Russom says
Welcome to the economics of reality since forever. The rentier class has always existed in some capacity or another, living off of the productivity of the working class without adding any real value to the economy. Right or wrong, it is how it's always been.
Of course, when it spirals dreadfully out of control, the working class usually rounds up the rentier class (or perceived members of it) and subjects them to slow, gruesome death. But, we are a very long way off from that. As of now, the working class is too stupid to know who their enemy is and they run around shooting each other and schoolchildren rather than board rooms on Wall Street. If history is any indicator, landlords and bank tellers will be the victims of the working class' wrath, rather than the oligarchs that ruined the nation. Again, we are a very long way from that sort of social upheaval. The productive class still has a great deal of blood left to suck out.
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Mick Russom says
Not true! I plan to travel learn languages, mountain bike, kayak, and windsurf alot. I'm going to do plenty while I live of the work of others!
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REpro says
In my area fully 33% of the listings are $1 Million +. This is in an area where the median home price is $427K.
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robertoaribas says
Check out the prices around Daytona Beach, Melbourne, Lakeland, etc. They are ridiculously low and the market is flooded with property. If Californians only knew what their money could buy in central Florida, there would be a run for the exits and California prices would drop off a cliff.
My guess is that you've been focusing on Miami. Miami is not Florida. Miami is so far detached from the rest of the Florida market that it may as well be a city in Brazil.
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Call it Crazy says
Most of us don't care. I live in Coastal Cali and Phoenix, which is basically the desert that's hot as s furnace for a good chunk of the year fails to beckon to me.
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SkyPirate says
25 years ago, I lived in Melbourne beach, just south of the volleyball courts. It was a very nice quiet place to live.... 1702 e atlantic blvd... can't remember the unit number.
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robertoaribas says
I grew up in the South and we vacationed in FL every summer. As a Californian now I can say in comparison why there's a very good reason Californian's aren't "running for the exits" to FL.... Its a hole.
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Talk of a violent backlash is BS. The only time its ever happened is when a large percent of people go hungry. With modern farming it just cannot happen here.
As proof i offer the well known 'obesity epidemic' in the US every year the avg weight goes up up up. Thus we get farther from revolution not closer. And house prices are insanely cheap now in most of flyover!
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PockyClipsNow says
Median income is 26K per year therefore housing is not cheap.
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I've lived in Berkeley for 3 years of grad school, Hermosa Beach for 3 years, La Jolla for a year, and Davis for a year. And Florida for many years...
Davis was the only place of the bunch that wasn't a pain in the ass to live in. LA sux, the traffic is never ending bad. The air is much better than when I lived there in the 80's, but still sux. Evertything costs too much and is too crowded. Ditto the Bay Area, except the air.
IF I ever was willing to pay those prices for somewhere to live, I'd move to Hawaii. 100 times nicer than california ever dreamed of being.
A couple years ago, I was at a week long math conference in San Diego. Being the rich baller that I am, naturally I passed on the conferecne hotel, electing to drive out and tent camp on the beach north of there, I think maybe Solano Beach... very nice. get up in the morning, jog on the beach, get some breakfast and drive to downtown for the conference. $30 a night compared to the hotel rate of $200.
There was a great little place across the street with mango fish tacos, and discounted happy hour coronas too. I rented a surfboard for a couple of days... good times.
I started thnking, "hey, why don't I rent a place here next summer? spend 3 months here instead of phoenix?" cheapest place I could find was like $2500 a month... wtf? $7500 for the summer?
I bought a ticked to Thailand for $1200 and rented a beach front place with maidservice for $500 a month... not to mention great thaifood for dinner for like $2 every night...
screw calfiornia, it is way too expensive for what you get; If you like it there, then just put up with it, and quit bitching... you don't see me on here bitching that AZ is too hot...
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PockyClipsNow says
Property prices are stagnant in Dallas. From a word on the street perspective jobs are not plentiful. (Sure, bring on the charts and articles stating otherwise.)
Interest rates are the same there. Yes, you can buy with less than 20% down. Q4 is not excluding Texas. With all this 'help' I would expect home prices to rise, must be some reason they are not.
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robertoaribas says
I bought a house literally a few blocks from the ocean in the Bay Area. The weather today is 66 degrees. In January. My mortgage is less than what it costs to rent because money is cheap now. Within an hour or two I can either be in wine country, the Sierras, the Desert, The river delta, or of course in 5 minutes walk to the beach. I too lived all over the country from coast to coast. We all have our difference of opinion.
I go to Hawaii 1-2 times a year. It only costs $250-$300 per round trip as its only a 4 hour flight from here to there. As much as I like Hawaii, I can guarantee that it would get very old fast as there's basically nowhere to go. And its not cheap by any means.Trust me. I looked. Anything even remotely close to the water is over a million dollars, and what you get is a teardown shack. There is no industry there save for tourism.
David9 says
The jobs statement can't be understated. Trust me. A number of years ago I tried for Austin. Actually there are very few jobs and of those that are in tech,they pay poorly. Also- property taxes in TX are sky-high.
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edvard2 says
Yes, I appreciate California more after living and working in other States a few years back. Wasn't all bad though, the contracts I landed really improved my job prospects and skills. I would go on a contract, when it ended, I would simply return to my Address in Dallas.
Ideally, I would like to do that here. Ironically, in previous posts I used 'Fontana' as an example of investor activity. The video in this article has a Realtor in Fontana explaining how both the banks and the investors are flipping properties there.
http://money.cnn.com/2013/01/31/real_estate/fha-mortgage-premiums/index.html?iid=HP_LN&hpt=hp_t2
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edvard2 says
Good on ya, mate! what bothers me, is not people like you, who made their decisions with both the plusses and minuses, and moved on...
It's the people who A. want to live in coastal calfiornia, and B. feel it should be as cheap as iowa, and something is morally wrong that it isn't...
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edvard2 says
Out of curiosity, where did you buy? I always thought being budget consious, you were in the east bay.
It looks like it's Pacifica, Half moon Bay.
Having said that, the beach in the SFBA (with the exception of Monterey/Santa Cruz ) is not worth that much, its actually worth less. People prefer the hills so it is a completely different dynamic vs. SoCal.
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robertoaribas says
Trust me. I griped for YEARS about the cost of real estate here. It was only after saving for over a decade and waiting for the bubble to subside and rates to drop that it actually made financial sense. Its still pretty nutty here and what's more, some parts of the BA make where we bought look cheap. As in places like Silicone Valley, SF, Marin, and the Oakland Hills. All incredibly, ridiculously expensive places.
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edvard2 says
If you live in Oahu, you certainly don't need to live around water. You get water in the north, east, south and west all within 5 miles max with no traffic problem. You can drive around the damn island in 3 hours. In LA, the freeways toward the beach gets clogged up.
The area of Waikele is very nice. It's basically north central golf community. It's probably around 600K for a 2K sq ft. home built aroudn the early 90's. My wife owns there, her pond garden has frogs.
http://www.century21.com/property/941158-hoohele-st-7-waipahu-hi-96797-REN007632652
You can also consider the condo's, a newer condo near the airport goes for around 300-400K. It's actually pretty cool to live in the 22nd floor, open the window and have fresh warm air blowing as your AC. lots of people owns condo's there as second home for the purpose of retirement.
There's also the university of Hawaii there. A 50K student college is still a large college so there's fun to be had.
Having said that, If you live in Hawaii, be prepared to buy a couple of tickets a year to get out of there and be prepared to pay crazy vegi and meat price.
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600k in HI means you probably need to make your money first because as mentioned, there are basically no jobs that pay anything close to what will buy you a 600k house. Every time we go we meet people who are basically working 2-3 jobs just to pay the rent. Its the same story with people who own there as in the Bay Area: Either they inherited it, are loaded, or they happened to buy 30-40 years ago when it was cheaper.
Oh- and you're not kidding about food. I am spoiled by the wine prices in Cali. In HI, your typical big-brand wines that probably cost a few bucks in CA cost $15 in HI. The only food that was cheaper there was fish.
I suppose the way I look at HI is that I'd imagine it'd be the same as what it was like when I moved from -10 degrees in the Northeast in January to the Bay Area with 65 degrees and sun: For about a year it was like tropical paradise. Amazing! Flowers bloomed all year! OMG... I can wear a T-shirt in February! Holy Cow! Wine is sold like soda pop here! Sure- its still great but now I go to my job, come home, watch TV and mow the lawn like everyone else. Its not like I go to the golden gate bridge, wine country, the beach, and other things the BA is famous for on a daily basis. Likewise the same would probably be true in HI. If I moved there I'm sure it would also become somewhat pedestrian. In the meantime its just a short plane trip away. Can't wait to go back...
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Menlo Park, CA
edvard2 says
Very true! Most of the people I know around here who own houses got a huge break one way or another and hard work did not count for much of anything.
* Inheriting $$ from mom and dad
* Inheriting Prop 13 tax basis from mom and dad
* Windfall profits from stock options during the dot-com bubble
* Old, and bought long ago before the great disconnect between incomes and house prices
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REpro says
No offense but have you been living under a rock the past year?
It's driven only by speculation/investors. Not first time buyers.
http://www.zerohedge.com/news/2013-01-22/guest-post-real-housing-recovery-story
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Facebooksux says
LOL ! LIke Like Like (Yes, no offense)
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Facebooksux says
Phoenix is ranked I believe 6th in the entire US for job growth right now. Population growth is estimated at 1% yearly, which is quite low for historical rates, but growth is still growth. The state budget had a surplus last year... We are actually CUTTING the temporary state tax increase that was implemented during the recession.
At no point have investors ever been the majority, though today there are about 30% investor purchases each month; Obviously some zips more than others.
I'd say the phoenix recovery is motivated by (directly)
1. very low inventory
2. price/rent is still way to low. way below parity.
3. signs of economic recovery, we are ahead of most of the US.
4. underwater homeowners. You could be $100k underwater today, and STILL paying less than rent; you can't sell without a short sale, but you aren't losing money month to month, so even as prices rise, inventory may not rise as much as one would expect.
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Patrick says
Well, not ALL of us anyway. We just did it the old-fashioned way and save for a decade.
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E-man says
Wow. Looking back at this comment 8 months later and I got 6 dislikes for it. Reality is a bitch isn't it?
Well, things were even worse in the 2nd half of 2012 and YTD. Basically, the distress market is even more pathetic than the 1st half of 2012. There will not be REO inventory in the next 6 months. The housing inventory will have to come from regular sales if any. So depressing because there's nothing to buy.
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You can thank Ben Bernake and the Fed.
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E-man says
What is your expectation for the second half of 2013.
There is a general thought that you sell in a seller's market and with pathetic inventory, it is as seller of a market as ever. Kind of like Fall 2011 but opposite. Buyers market but buyer had cold feet. It's never a mistake to buy in a buyers market and sell in a seller's.
On the other hand, bull market don't last one year. Why the hell would seller's sell in year one when the retail buyer is about to hop on in huge numbers.
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@SFace,
I expect the market to do well into the fall, and then we will see consolidation in the 4th quarter of 2013 to at least summer 2014. I wouldn't be surprised if we continue to consolidate till early 2015. Then we should see a nice move up for 3 years. That'd be my guess.
The number of regular sales have been dominating the market for almost a year now where distressed properties used to dominate. As the market is moving up, I see pent-up sellers as well as pent-up buyers. Pent-up sellers due to they cannot refinance their 6%+ interest rate for various reasons. I guess I don't have to explain the reason for pent-up buyers.
A couple of years ago, banks were foreclosing at a pace of about 500 homes/month in Santa Clara County. If you factored in the short sale market, you're looking at about about 750 distressed properties/month. Santa Clara County absorbs about 1,300 - 1,400 properties/month. Then the number of foreclosed properties gradually dropped to 300 properties/month, then 150/month, and now we're looking at 80 properties/month. That's a significant drop. The number of NODs have been dropping significantly too, which explains the drop in short sale inventory.
One month doesn't make a trend, but the number of regular listings has been increased at a healthy pace in the last month or so. If this continues, it will slowly add more housing inventory to the pipeline. By year end, we might see 2-3 months worth of inventory instead of less than 1-month.
Another year of nice appreciation coupled with increasing inventory will likely dampen the rally. That's why I predict the housing market has a good chance of going into consolidation mode starting later this year.
It's hard for me to see the market keeps on going up like this for another 3 years without any consolidation. If history is any indication, I have a decent of being correct.
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@Goran_k , @thomas.wong1986, @Strategic Renter
you guys care to come back on this thread??? hello???
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What do you want from me Professor Roberto?
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Goran_K says
how predictive of arizona's future was your chart?
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I don't know honestly. After I bought my own house, I sort of stopped looking at housing trends for a long while.
How is the Phoenix market doing? My guess is low inventory still, but I suspect a lot of underwater people, and squatters as well.
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robertoaribas says
Here's the chart from Feb 2013.... looks like 40% is still the correct number!!
*
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Call it Crazy says
no way in hell that chart has been updated then. Phoenix prices have jumped 25% since then, which absolutely takes a lot of people above water, plus there have been foreclosures and shortsales, several thousand since then. Hell I bought 4 more short sales myself in the meantime...
And, anyways, in a rising market, having a bunch of homeowners underwater actually helps the market... They can't sell so they have to sit and wait... I hope you are right, actually!!!!