The Housing Bubble in Arizona

[colin]

This article appeared today in the Star:

Tucson No. 7 on Forbes list of overvalued housing cities

Phoenix isn't in the Top 10, which is surprising to me.

This is a long time coming. Housing prices here have gotten totally ridiculous whereas rental rates have only gone up with inflation.

The end is nigh. The bubble will burst very soon. Those 20 million or so California migrants who bought into the "real estate is always a good investment" bs will start selling their properties off like mad within the next year, and we'll soon hear residents' compaints about their property values plummeting and their inability to sell.

[uconn99]

I work in the housing industry for on of the largest builders in the nation and Arizona. They are having trouble selling built houses (SPEC), and most cases are giving anywhere from 60,000-120,000 in incentives to buy now.

The market will never run dry, however instead of 10-12 buyers a day in our design center we see 8 on a good day.

[colin]

I'm not saying that sales will dry up completely, I'm just saying that those who own property solely as an investment are going to panic and flood the market. It may not happen in Phoenix though, which is large enough that it could take the hit.

According to that article, it's already starting to happen with condos, which have been very overpriced in Tucson for several years.

[MJLO]

at this point though, the Phoenix area is still gaining residents at a rate faster than almost every other part of the country colin, I would definately thing that this influx of people would offset a housing bubble. Theres still a demand for housing.

[loftguy]

I could probably comment on this subject as I am in the trenches all day...

In the height of the boom (May of '05) we had just under 6,000 listings on the market in Greater Phoenix.

Today there are just above 45,000.

This number seems to grow each month.

I am not seeing values tank, and part of me thinks that if we were going to see a huge decline in values we would have seen it already.

Most think the worst will be in December '06/ January '07. So- I am holding my breath til then to really form an opinion.

Back in the boom, day 1 of a listing (assuming it was priced right) you would get 6 + offers.

In today's market, it takes about 3 months to sell a home, and with about 2 price reductions.

I would say that in most areas- last year you could get about 5- 10% more for your property than this year.

I do know we have 400 people a day moving to Phx. However, it seems that nobody is buying. June was the coldest month in years for Real Estate... Most of the glut is in the suburbs (outskirts of town)...

Scottsdale and Tempe and Central Phoenix seem to be cruising right along.

I have a thread in my website about this topic (news articles) if anyone is interested.

http://www.phxloftnetwork.com/forum/viewto...70&start=45

[sunbums]

Housing bubble, yes and I moved back right at the peak of it. It was almost exactly a year ago that I moved back after about a four year absence. My wife and I would start out with our realator with a list of 10 houses and before we would get to the first one half would be sold. If you saw a house you liked and didn't put an offer in then and there it would be gone as soon asyou left. Even if you offered full price the seller would wait a day or two to see if something better would come in and usually a better offer would. The worst part was the house we sold four years earlier for 250,000 was going for 525,000. It was crazy and very frustating. A year later things have changed. No that prices have dropped that much but at least the frenzy has let up. Here in Chandler prices have still gone up the past year about 10% and with Intel opening a new plant things look good..

[shrek05]

The area where I grew up and my parents still own a home in McCormick Ranch (Basically the entire region in Scottsdale nestled around Shea and Hayden has experienced crazy housing prices and it doesn't seem to be going down at all.

My parents bought their home for 250k back in the early 80s. Most of their neighbors have sold their homes for over 650k.

I remember reading in the AZ Republic saying south scottsdale is still experiencing astronomically high prices.

[loftguy]

http://housingpanic.blogspot.com/

It looks like the sky is falling down. Oh no- what will we do?

[colin]

This is in the Daily Star this morning:

$4.2 million home sale sets local Realtors record

It's at La Cholla Airpark, which is a development where people can have planes and hangars on their property and use the community runway to fly out. There's at least one similar development in the East Valley right along the south 202 west of the 101, but I don't recall the name.

Any idea on Phoenix's record for a sale? I'm sure it's more, but I'm curious as to how much more, because that may be very telling about several different things.

[colin]

Housing boom over in Arizona

Notice the gray box on the right indicating that we are dead last in that particular, ambiguous category.

You know, it's not even the market itself that dictates panics, crashes and floods and such, but rather the impression that there is a panic, crash or flood which itself is typically dictated by the media and other sources. Not that this only applies for housing, but maybe I don't know what I'm talking about.

But is it time to for Arizona homeowners, especially for those who bought into the bubble, to panic??

[MJLO]

No not at all! It's time for them to realize that this housing bubble, and the astronomical rate of housing inflation are coming to an end. It won't even be as bad as the adjustment the economy took during the burst of the "tech" bubble.

Arizona residents should not freak out if their housing prices and rates come back in line with the rest of the country.

[loftguy]

http://armlslistings.marketlinx.com/Search...ailKey=53658495

Figured I'd post some "top secret" Realtor stuff!

These are the most expensive homes recorded on the MLS- I think some homes have sold for 15 million just not through MLS though...

I put in the active stuff over 10 mill too...

And the expired & cancelled stuff.

Crazy huh?

[colin]

Wow!

A lot of those places look like hotels, or at least like they belong to drug lords.

[loftguy]

http://www.azcentral.com/business/articles...ng15-ON-CR.html

http://www.azcentral.com/community/ahwatuk...es0811Z14.html#

http://www.bizjournals.com/phoenix/stories...html?from_rss=1

-Still not worried values will tank-

I'm not even sure that things will get much worse than they are now.

-More foreclosures- sure-

As for the bottom falling out- Never..... just an ugly time in the market when it took 75 days to sell your home... But hey- this crap sells newspapers!

Still 400 people a day moving here- still good weather- still a construction boom in all major metropolitan areas.... Still hot ass chicks in Scottsdale!

But 46,000 listings on the market and everyone too scared to buy anything....

Oh Real Estate- come back!!

[colin]

Yeah, I shouldn't be so damned doomsday oriented.

But I agree with you totally about foreclosures. People who couldn't really afford the property investment made it anyway with the assertion that they would make a profit. They're not going to, or they won't be able to sell quickly enough, so they'll just lose it. Sad but true.

I just worry about this "the growth will always remain the same" concept regarding the housing market in both Phoenix and Tucson. People seemed to have really bought into that (literally) and are now going to freak when they can't sell that property for the 200% profit they had expected.

I guess that this is just the market's way of evening itself out with the rest of the country. The disparity between the prices in suburban California and suburban Arizona was too great for it to last forever.

I'm just sure hoping that the rents don't follow suit anytime soon.

From what I've seen and heard, Californians are now headed to Texas as the next frontier. Housing prices in Houston have remained incredibly constant throughout this madness. My dad's house in suburban Northern Houston has increased in value by about 2% in the past 5 years. That's almost consistent with inflation! And he lives in one of the more desirable areas.

[MJLO]

Found something in the republic that I thought was interesting. The republic says that companies have passed over the valley for locations because there is a shortage of warehouse space. Apparently warehouses aren't as pretty as other developments so valley cities haven't wanted them to be built. It's just like valley cities to want all of their developments to be picture perfect. Without any un pretty things such as economic engines to keep them going .

[colin]

I wanted to point out that, while just walking around Chicago, I've seen some very nice condos (sometimes brand new) in very nice neighborhoods (close to Downtown too) going for near $300k. I'm not talking about Downtown towers with lake views and such, but rather the less bourgeois stuff. It's a little disconcerting considering that this is not that much more than what they're going for in Tucson.

[loftguy]

http://www.azcentral.com/business/articles...sales07-ON.html

[MJLO]

Signs that the new home market will stabalize this year. Developers build less homes and sell off inventories.

The dramatic run-up in prices during last year

[colin]

I read another article that says demand for apartments is much higher.

[MJLO]

it's hard to say. I see for sale signs, but with so many people moving here, they have to live somewhere.

[colin]

Huge database aims to include photo of every Tucson house

I don't know whether or not these people realize how many homes are built in this state every month.

It's a good idea, however MLS already has a photo archive. Of course, it only archives for a month, so that would leave out quite a few.

[MJLO]

hmm somethings funny about that.

[colin]

Slump in housing hurts many Pinal buyers

Pinal County is so heavily reliant on home sales too.

[colin]

Red Rock's bargain homes drawing plenty of lookers

Those are the cheapest new housing prices I've seen in Arizona. I had posted info on this development a while back, but it's on I-10 about 40 miles northwest of Tucson at the Red Rock exit.

Red Rock Village was built on what used to be farmland surrounding a townsite. There's an existing elementary school and even a little bar by I-10. My main concern was the fairly well-preserved ghost town on the other of the Santa Cruz, Sasco. It's general safety hazards and liability mean that it may either get fenced off or leveled in the next several years because of the encroach of development.