Watch1. Foreclosures continue to fall:
http://www.foreclosureradar.com/arizona/maricopa-county-foreclosures
Notice the graph for homes in the foreclosure process? Down from nearly 25,000 a year ago to 17,000 now. In fact, this number has been decreasing by 1500 a month for the past several months, and this month is following form, based on my preliminary count through today on the county website. At that pace, we are 12 months away from hitting zero foreclosures... [that won't really happen, but it gives an idea of how close to finished we are with foreclosures here.
Notice the new filings? down from the 4000 range a year ago, to 2500 now.
2. Inventory is down 20% year over year, and listing prices are rising. think about this for a second: last year, we saw prices jump nearly 30% in Phoenix, and yet inventory is still down? Low supply leads to upward pressure on equilibrium price.
3. Listed prices are rising.
http://www.deptofnumbers.com/asking-prices/arizona/phoenix/
4. case-shiller index is rising.
http://ycharts.com/indicators/case_shiller_home_price_index_phoenix
Case-shiller estimates 16% up in the past year. However, as this is being caused nearly entirely by the lower to mid tiers of the market, those tiers are actually up much more than the general index...
This is the real data for Phoenix/maricopa.
read more truth about this market at my blog site.
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robertoaribas says
First, please look up what “obstinate” and "bias" mean. Second, you protest too much. You are too sensitive and overly defensive, especially for the Internet. If this is your first time on the Internet – Welcome! Third, I missed out on nothing since I was in middle (high) school during the boom (crash). However, I’m grateful to say that my parents are currently using some of the profits from the early 2006 sale of the home they bought in the 80s to pay for my college education (at a university where the math professors use their spare time to publish papers on applications to String Theory using commutative algebra and the ones that do lecture on real estate have Ph.Ds. from Carnegie Mellon and don’t argue with teenagers online.)
So, back to my original point…You are giving advice. If a firefighter tells you your building is on fire and anyone who doesn’t leave immediately will die, is he not giving advice to exit the building? That’s what you’re doing, except in this case you’re not a firefighter. You’re a fire insurance salesman. And there is no fire. There’s not even any smoke.
I’d wish you luck with gathering reassuring data and filtering out everything that contradicts your thoughts but you’re doing a great job of that already.
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Mountain View, CA
bmwman91's website
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1. I happen to work in high-volume consumer electronics development/manufacturing. Automation won't bring jobs back here. The entire supply chain is in Asia and it is not moving here. I'd prefer it stay there. Anyone that has actually been to industrial China would. As much as Steve Jobs was a big asshole, he was dead-on when he explained to Obama why we will never produce iPhones in the USA. Supply chain. Automation could cut the production cost in half, but consumers would still pay twice as much because of the logistical problems that stem from getting all of the raw materials there to factories here.
2. Possibly. If Asia is willing to pay more for the energy than America, it will all be sold to Asia. It will go where there is the most profit, without regard for what is "good" for America.
3. Where will these "displaced workers" find employment? If you are educated in something useful you have a shot at a "better" job. Maybe if energy takes off like you say there will be job growth there. Outside of FIRE and service sector jobs that produce little-to-nothing, I am not sure where job growth will come from.
4. Convenience is, and will continue to increase. No argument here. It's all trinkety crap and no meaningful innovation. New applications of mostly existing technology. Maybe working in the industry has made me jaded, but I don't see any real human "progress" in the perfection of disposable consumer goods and the proliferation of web-advertising (*ahem* social media). Keep buying it though, it puts food on my table!
As far as I can see, the bulk of our economy is fueled by consumption which is easily outpacing production. I don't see how it is sustainable. Maybe I am totally wrong and will realize it in 5 years, I don't know. Everyone thinks that their generation is at the helm of a ship that is about to sink. Maybe the idiocy that I see rampant in every corner of our nation has always been there and is just more visible thanks to the internet, I don't know.
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I'll take real estate advice from a realtor when I take diet advice from Willy Wonka.
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Victorville, CA
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robertoaribas says
Now...just to be thorough, Robert Shiller recently intimated that Phoenix was experiencing something of a rally...IOW 16% YoY jumps are not organic market moves.
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Scottsdale, AZ
robertoaribas's website
JodyChunder says
yes, obviously, home prices can't rise at that rate, year on year ad infinitum! However, another 10% by next year hardly looks unlikely, with supply down 20% from last year, and foreclosures disappearing from the market. The only wildcard is the short sales. If short sales end in the next two years or so, I'd say current conditions would push prices up 20% fairly easily from today's values...
It's a one time phenomena, this market oversold to a price way too low. Funny thing, even that wasn't low enough for the permbearbrains on here, and so they sat on their duffs waiting and waiting, now they respond with hostility because, in their heart of hearts, they know they completely blew the opportunity of a life time!
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Victorville, CA
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I agree, rental markets are uniquely hot right now siince people who were foreclosed on still need housing to wait out their credit repair -- and of course, would-be buyers with recency effect. These are usually sellers from the bubble who jumped ship and are still "hording" their equity, renting and waiting out the housing shenanigans. I do not think, going forward say, 10 years, that SFH rentals will be the going concern they are now, and plan to exit property management myself within that time frame.
To be fair, I also think, from a buy-and-hold primary residence viewpoint, there's really no rush to buy.
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Huntington Beach, CA
Who the hell cares for Phoenix prices? That market crashed hard and is unlike nearly every other RE market in the nation that's not bear Detroit, Las Vegas, or Florida.
Phoenix prices have absolutely no friggin bearing on prices in California. None. So I don't care. Good for you that you did so well. You had an incredible opportunity. Congrats. Now stop bragging!
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Regular Sales Will Rise.
Hi Roberto. How are the acquisitions going? I'm closing on another place Tuesday - but not Arizona. Good inventory is hard to come by.
In other markets I am seeing a resurgence of regular sales.
As prices rise there are owners who were underwater but not willing to do a short sale flooding the market. Many are overpriced as owners put their houses on the market for what they owe - not the current market value (list and pray).
I haven't seen this in the PHX market yet as the price decline was more severe and most who bought at the peak are still underwater. If prices keep rising you will see some - people who put down a lot or people who bought before 2001.
Where I am now the flood of regular sales have dampened demand for distressed sales. Hence I am picking up a few bargains here and there.
I do think there is still a lot of inventory underwater in Phoenix. So I see foreclosures / shorts continuing for at least 3 or 4 years. Their impact on prices will be less as there are many more 'investors' than there were in '09 or '10 willing to buy anything that looks remotely like a bargain.
Barring a fiscal cliff tragedy, I think prices will continue to itch up close to replacement cost.
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Mountain View, CA
bmwman91's website
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Personally, I have NO fears about the fiscal cliff in 2013. The can will get a big old kick at 11:59:59. I can't believe that anyone actually thinks that our inept government would pursue any course of action other than this. The republicans are retarded, but they are not so stupid as to disrupt the status quo in any meaningful way. Same goes for the democrats. They can both feign disagreement on various fiscal talking points and then get uncle Ben to make some power moves to avert the reckoning for another year or two. Then the circus comes back to town for a repeat performance. I agree that at SOME point we may finally go off the cliff as it looks like an inevitability, but I think that the status quo will be maintained this time around. All the huffing and puffing by our "leaders" is for show, I think.
Out of curiosity, what will drive the "inevitable" house price appreciation? I agree that it is inevitable if inventories stay way below historical norms like they have been. Are we in a new paradigm where housing will be dominated almost solely by yield-chasers and the individual owner-occupier no longer participates in a meaningful way?
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San Jose, CA
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FunTime says
I beg to differ. We're already seeing another housing run-up. We just completed refinance one of our investment and was able to pull out 102% of our purchase price. In the process of refinancing another investment, and it looks like we will be able to pull out 120% of our total investment on this deal. Of course, this one has a better cushion b/c we bought it at the steps.
The next market top is 2018--2020. We're not cashing in yet. Just trying to pull all of our money out of our investments to reduce or eliminate our risk.
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Belmont, CA
U6 is 15%. We have a japan style ZIRP in place with trillions in money being QEinfinity keeping the joke afloat.
This place is a mess. This is the end of the middle class. If housing pops again, it will break the back of the pack mule carrying all the freight.
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Los Angeles, CA
Water wars sounds like a great movie!
The RE bears are now inventing fiction since no facts support future price drops.
I waited too long to buy back in. Was lucky to buy last year. When i sell my house for 1.2m i will be sure to logon here with the news. Then retire to AZ where i can carry a gun everywhere like the old west.
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Seattle, WA
David Losh's website
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PockyClipsNow says
As much as sales data may mean something to a buyer, those aren't the facts. It's the principle of the greater fool, and we just saw that in 2006, and 2007.
I don't really know what perma bear means, but I do know there has been a long term strategy of Real Estate market timing. You buy when people are selling, and sell when people are buying.
That market timing has, in the past, been based on a decade long cycle such as between 1976, 1986, 1996, and 2006. Those were good times to buy except that 2006 thing.
Between 1998, and 2003 the Real Estate market changed radically, and globally. It wasn't just here in the good old USofA, it was Europe, Asia, and Africa. After the crash in 2008 South America then took off as the emerging Real Estate markets.
While people here blame our government for the change in Real Estate it doesn't explain what happened in the other markets until you look at banking.
Real Estate is always a good investment. Owning rentals is a good investment, but the strategy has changed. The Housing Industry has changed.
The economy has changed.
Banks are in control of large blocks of property. They are selling today for a premium, have cleared the books of dead wood, and they may well be done. I think banks will pull out of Real Estate next year 2014, from what Bernanke has said about the Fed.
Some properties will always be good, some other will adjust according to what the market will bear.
Because of that volitility I would rather have my money elsewhere right now.
So, I don't know if that is a perma bear position, because I own property. I just also know that we will sell another place this year rather than rent it out, but keep the commercial property, and land.
While I was writing this the Dow broke through the 2007 record high. How about that Dow? In terms of short terms gain, what about those that bought in 2008? or even last year?
I understand about the leverage, but still something has changed in terms of investment.
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Nampa, ID
PockyClipsNow says
2015 is absolutely looking to be the time int rates do come back with fiery and a true bottom in RE will be established. Perhaps below the already so called established lows... Undoubtedly price will let us know, it will speak for itself.
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Mountain View, CA
ROBERTA!! WHY ARE YOU DELETING MY WITTY AND POIGNANT POSTS??
I'm glad you've edited your comments though. No need for such underhanded remarks.
I do enjoy the moniker, David Lush. That's funny and I know David Lush is a good sport, like all of us here.
CameronCrazy says
BRILLIANT!!
You, sir, have just won a box of organic yams.
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Scottsdale, AZ
robertoaribas's website
darrell, so sorry to let you know this, but what your chart shows is a slowing increase... NOT a decrease... So I'm only making money more slowly then I was before... [For calculus literate, the second derivative is negative, but the first derivative is still positive... thus the function is increasing at a slower rate... that doesn't predict anything about the future...]
also, since you keep quoting fistserv, and the good doctor shiller, lets examine a couple of points:
1. NEITHER fistserv, nor Dr. shiller predicted Phoenix prices to go up 30% a year ago. In fact, fistserv predicted prices to fall, which I pointed out on another thread the last time you brought this up...
2. SINCE that prediction was made, Phoenix prices have continued to climb... Not a good start to a price drop, when prices move up 5% in the next 3 months... Start a journey down by going up for a long while?
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San Francisco, CA
As much as this report tries to be cheery, the fourth graph on Page 2, showing houses held off the marke,t shows we're at 4 million houses being held off the market. What's that about? I think the system is still being gamed. Be careful all you small-timers, and we're all small-timers, the big money is in control.
http://portal.hud.gov/hudportal/documents/huddoc?id=sept_nat2012_sc_final.pdf
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JodyChunder says
This is my viewpoint until recently. I used to think it is better to have the flexibility in case I lose my job. Now I figure maybe it is better to "own a loan" so that I can squat for two more years. Talking about a messed up sysem and the influence on me... The key is whether I can get a 3.5% down payment FHA loan.
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Seattle, WA
David Losh's website
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FunTime says
In Arizona especially big money will take over the housing industry.
I have heard the stories of buying condos for $40K and renting them for $800, then $600. It's a great idea until some one gets hurt, or the home owners association can't take on any more rentals, until there is no bank financing for the building, but I digress.
There are millions of housing units in Arizona and room for millions more. How could there ever be a shortage?
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Atlanta, GA
Sheesh people, stop with the ad-hominem attacks. There are two sides to every coin and I for one want to see both. Some people are investing in this market and others are very bearish. No need for insults.
Good story ptiemann.