patrick.net

I’m in the PHX area patiently waiting for the right time to buy a house and noticing crazy stuff from just 6 months ago. There is almost nothing to purchase and what does hit the market is gone in a flash. Good thing I’m in a nice apartment and really enjoy the community.

I only get a house that meets my criteria about once a month now. Used to be numerous houses every day would hit the market that I would consider, only I was going through some life changes and not in a position to purchase. Am looking for a newer house in Chandler, smallish with a pool, 3-car garage under 250K. I know not every house is going to match that criteria - but come on, seriously, one per month?!?

Prices are dramatically higher than they were just 6 months ago. I'm not playing that game, just watching until things settle down. I know that most current purchases are not made by a homeowner, so that tells me that there are further changes coming to this market and it would not be in my interests to gamble with it right now.

I totally agree with you. and on the other hand, Im a seller, and theyre (realterds)telling me Im still down about 50%! from what I paid in 08!

so if youre a buyer just wait... and if youre a seller just wait

in the meantime, were both in the dark

It sounds like you are looking around the Biltmore/Arcadia area. What is your price range? A lot of that area (as I'm sure you know) is a bit pricey so maybe that has something to do with it and not the "stand still" that you may think.

If there is nothing to buy prices must go up. The question is how much and for how long.
My guess...a home in Phoenix selling for $100,000 last year will be priced at $250,000 by Dec 30, 2013.
Also expect a huge construction boom.

Raw is right. The bubble is ON!

I made a so much money during the last bubble, this time I hope to double it.

I think you all need a heavy dose of reality.

Raw says

If there is nothing to buy prices must go up. The question is how much and for how long.

My guess...a home in Phoenix selling for $100,000 last year will be priced at $250,000 by Dec 30, 2013.

Also expect a huge construction boom.

I take it that's tongue-in-cheek. If not, why would they increase by anything near that amount? I saw a historical graph for Phoenix that seemed to show the decline had led to an over-correction on the down side, so in that context and given the current low interest rates and supply, strong rises are understandable in the short-term. YoY is 16% or so, isn't it? That's obviously not sustainable in the longer term. But your prediction... that's an altogether different ballpark.

I've got some news for all of you, you will never again see FHA at 3.0 for a 30 year fixed rate or 2.5 for a 15 year fixed rate loan. This is a major opportunity to make money. My first conventional loan in 1981 was at a 17.875% and guess what I made money on that triplex. Prices even in Phoenix are at 50% of replacement costs and if population continues to grow as it is eventually people will need to buy homes at replacement cost. That means a 50% increase in your values. There has NEVER been a better time to buy. Short of a nuclear war, plague, asteroid hit, those that purchased today will we showered with wealth tomorrow. For those of you who miss this train, crying about the state of affairs today, you will still be sobbing tomorrow but instead of having low rent or low mortgage payments having high rent or high mortgage payments. Bless the FED for providing an environment where my children and their friends can lock in low housing costs for the next 15 to 20 years.

Bruce Ailion says

Prices even in Phoenix are at 50% of replacement costs

Which is how much?

Bigsby says

Raw says

If there is nothing to buy prices must go up. The question is how much and for how long.

My guess...a home in Phoenix selling for $100,000 last year will be priced at $250,000 by Dec 30, 2013.

Also expect a huge construction boom.

I take it that's tongue-in-cheek. If not, why would they increase by anything near that amount? I saw a historical graph for Phoenix that seemed to show the decline had led to an over-correction on the down side, so in that context and given the current low interest rates and supply, strong rises are understandable in the short-term. YoY is 16% or so, isn't it? That's obviously not sustainable in the longer term. But your prediction... that's an altogether different ballpark.

Many homes in Phoenix have almost doubled in value. When the market collapsed, yes, there was an overreaction on the downside, but now that overreaction will be corrected followed by an overreaction on the upside. The median priced home probably won't increase that much, but some neighborhoods I think will.
In the long run I don't have much faith in desert homes appreciating beyond the inflation rate.

bgamall4 says

Raw says

If there is nothing to buy prices must go up.

Wrong. Prices are going up because the inventory is being gobbled by the 1 percent in a calculated bet to raise prices. But it is an unsustainable bubble not based on true demand. So yes, prices go up, but we will see how long they will go up and we will see if the millionaires catch wind that the billionaires are doing this.

I believe the billionaires want the millionaires to be the greater fool this time.

Gary Anderson strategicdefaultbooks.com

I like that last line...creative.
Most homes are being purchased by regular people like you and me to live in because interest rates are shockingly low. It is incredibly mush much much cheaper to buy then rent.
Betcha this bizarre scenario won't happen for another 50 years, maybe even a 100 years.

Raw, if the multibid situation gets even more crazy, when do you recommended I start killing other bidders? I really need a home, now.

bgamall4 says

Raw says

but now that overreaction will be corrected followed by an overreaction on the upside. The median priced home probably won't increase that much, but some neighborhoods I think will.

In the long run I don't have much faith in desert homes appreciating beyond the inflation rate.

I agree. Posters are already talking about the train. Well, the train may leave the station, but there is still a mortgage depression. The question is, will the average Joe be able to afford these houses once the lenders decide to lend into this appreciation. I say, no.

Gary Anderson strategicdefaultbooks.com

I would say yes. People were buying homes when rates were 5% 6% 7% 8% 9% 10% and even 17% at one time. People just prefer to own their own home, and will pay more than rent if they have to.
A home is a castle, and everyone wants one.

Goran_K says

Raw, if the multibid situation gets even more crazy, when do you recommended I start killing other bidders? I really need a home, now.

OK, here is the real solution...
Next offer you make, take "ApocalypseFuck" with you and make them an offer they cannot refuse.
I did that with 5 offers, of which 3 sellers quickly accepted, and 2 are no longer with us.

bgamall4 says

Raw says

Most homes are being purchased by regular people like you and me to live in because interest rates are shockingly low.

That is not correct. 41 percent of the real estate purchased last month in Phoenix were by cash buyers. Over 50 percent in Las Vegas. The rest are 3 percent down which have a massive default rate http://www.trulia.com/blog/sam_thompson/2012/05/high_default_rate_on_fha_loans_causes_lenders_to_tighten_guidelines_for_borrowers_in_the_600_640_segment

Fundamentally, it should always be cheaper to buy than to rent.

Gary Anderson strategicdefaultbooks.com

Most of the USA does not have this heavy demand by investors. Overall, in the whole country most people are buying homes just to live in.
Also keep in mind many cash buyers are also buying just to live in the home. Prices are so damn low it's like buying the whole thing at the cost of a traditional down payment.

Raw says

OK, here is the real solution...
Next offer you make, take "ApocalypseFuck" with you and make them an offer they cannot refuse.
I did that with 5 offers, of which 3 sellers quickly accepted, and 2 are no longer with us.

I think that may be my only hope. There is only 2 houses left in my entire county and I don't want to be left out in the cold sleeping under a bench, wet with my own urine.

bgamall4 says

Raw says

I would say yes. People were buying homes when rates were 5% 6% 7% 8% 9% 10% and even 17% at one time. People just prefer to own their own home, and will pay more than rent if they have to.

A home is a castle, and everyone wants one.

Does NAR pay you to say that? :)))) It sounds right out of the NAR playbook. I suggest no one wants a mortgage right now. If the cash buyers were not involved there would be no bubble at all.

Mortgage originations being up does not explain the bubble: http://ycharts.com/indicators/mortgage_originations They are historically very, very low still.

Gary Anderson strategicdefaultbooks.com

The NAR are lying scumbags, but even scumbags can be right sometimes.
Ofcourse, the right thing to do is throw them in prison.

bgamall4 says

Raw says

The NAR are lying scumbags, but even scumbags can be right sometimes.

No, I would not put them in prison. I would ban them from real estate though. Scumbags can be right sometimes. But what if they aren't?

BTW, Raw, the 3 percent down, doesnt' that come with mortgage insurance? So if you add the mortgage insurance, the taxes, the insurance, the payment, it is pretty close to renting right?

Gary Anderson strategicdefaultbooks.com

Still cheaper than rent. One day that home can be free and clear, but rents go on forever.