patrick.net

Not the "mean", so much as the edge between affordability and unaffordability.

The existing housing stock's done been built already and therefore has a present cost of production of pennies a day. Its actual cost is whatever we can collectively bid it up to (as we compete amongst each other to buy it up).

Prevailing interest rates, area household after-tax income, and demand/supply imbalances (that push the rent side up/down) determine the outcome of this auction process, not what the "mean" historically was.

This is not the 30s, the 50s, the 70s, or the 90s. Different forces at work produce different economic outcomes.

http://arizonabargainhomes.wordpress.com/2010/05/16/market-summary-for-april-2010-in-metro-phoenix-az/

interesting numbers for PHX.

^ goddamn, *if* we start getting some wage inflation or otherwise J6P recovers later this decade, all this bottom-fishing is going to be the biggest giveaway of wealth in history, especially in CA with its Prop-13 limitations on tax increases.

I lean about 60% toward the "Falling Knife" thesis (ie Japan's 13+ year decline from peak), but don't think the knife-catchers have necessarily made a mistake. I don't know what bull---- the PTB will pull to save the housing market, but i do think they will try literally anything.

Taking a random Chandler property:

http://www.zillow.com/homedetails/2331-W-Comstock-Dr-Chandler-AZ-85224/8201985_zpid/

Prices doubled from $160K to $320K 2003-2006, and have fallen back to $180K. This doesn't strike me as particularly unsustainable, given rents, the cost of money, etc. Certainly (if the past is any guide) wages will double over the next 20 years, making any investment buys now golden. The key question is whither J6P's after-tax, after-gas household income over this time period. Wages could be held down by too many workers and not enough work -- NAFTA and free trade with Chindia wasn't really thought through I think. $10 gas would also do a number on the housing market, outside the Gulf and Alaska producers at least.

Troy says

Taking a random Chandler property:

this is your problem, you're still in bubble mentality. Chandler properties aren't worth anything near what they were or are valued at. It's metro PHX that are the good buys. You have to think functionality, proximity, and economy and you certainly get that in metro PHX. Thing is that metro PHX properties depreciated along with places like Chandler, but they didn't appreciate nearly as much as those areas. These properties are undervalued.