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Per the message above, in the NE Valley where I reside, I am guessing we are down a little over 10%. And it has officially crossed over to a "buyers market".
Like Tina said ^^, if you want to understand where the PHX RE market is going, focus on the mortgage rates. If and when the mortgage rates drop back down again, I won't be surprised to see a fast upwards reversal in prices.
If I was looking for a home to buy, I might study homes that have been pulled off the market and go in and bypass a 6% RE commission plus offer even lower to compensate for some more drop. Or maybe give a low offer to people who had a deal already failed. Buy a home that you can buy for 25-30% off the high mark. Right now, there is a level of fear among some people that things will tank AND some people will have to move (relocation etc). That's the perfect seller. A buddy of mine just nailed a deal at 30% off peak in Surprise. But he was patient and bought a home that needed a little detailing (carpet, paint, etc).
For those assuming the PHX housing market is going to tank and it is just a matter of time, don't count on it.... It is fair to assume that people might expect more small decline percentages as time marches on in 2023, especially in the more price-sensitive parts of town like the SW Valley. Still, no "crash" as a lot of people are staying put with their cheap mortgage money.
This PHX RE "crash" isn't happening as some people thought. As of now, I am glad I didn't sell and anticipate some sort of massive correction. Because I would have uprooted my life, incurred a lot of selling
and future buying costs, and tossed money out the window in rent. And don't forget all those home improvements you (partially) gave away to that last buyer. I know five people that did what I said: sold and are waiting on the sidelines for this massive crash they have been hoping for. It might happen but that's not what the current crystal balls are seeing.
"A recent NAR economist report predicted a bottom in 2008, without using a specific date and percent drop. The Remax founder forecast a turnaround later in the year 2008."
The real bottom was 2011-2012. I'm not saying the housing market is going to crash I don't think anyone can predict the future. RE professionals are mostly wrong IMO.
"A recent NAR economist report predicted a bottom in 2008, without using a specific date and percent drop. The Remax founder forecast a turnaround later in the year 2008."
The real bottom was 2011-2012. I'm not saying the housing market is going to crash I don't think anyone can predict the future. RE professionals are mostly wrong IMO.
Your quote from memory lane was from Capt Bill, the internal optimist RE agent. I met Bill. A great guy who had rose-colored glasses. In 2010, I was expecting more of a drop Latest Forecast: CNN/Money Predict ANOTHER 26% Drop in Phoenix Home Prices. As in, the government's $8K 1st time buyers tax break was a false start. It was obvious.
In that era, I was reading the Cromford report as I am now. But I spent a lot more time on the topic. The actual expert (Cromford report) never predicts anything other than maybe a maximum of 6 months out.
Of course, no one knows what is going to happen. We know that PHX large builders are (currently) doing much better than they did in 2010. This round, the stock market is doing much better too. Unemployment isn't a significant factor right now, either. People are "locked" into their cheap payments, and nearly everyone isn't upside down in their homes. It's a duration thing as much as anything else. And so long as the government keeps bailing everyone out COVID-style, people aren't concerned about the economy.
As the youtube guy suggested, based on the Cromford report, all eyes are focused on what happens to the PHX RE listings in January AND the mortgage rates. We should know more in about a month from now how much depreciation will happen in the pending months. Right now, the people who were CONVINCED it was going bubble was going to pop and sold their homes are no longer as convinced...
Quote:
Originally Posted by kell490
I'm not saying the housing market is going to crash I don't think anyone can predict the future. RE professionals are mostly wrong IMO.
As I mentioned a couple of times over the years, one of my customers was a top housing economist often quoted in the press. As in, he influenced the housing policies. We had a conversation in 2005 when I sold several of my investment properties. I told him that the market didn't make any sense, and he tried explaining why I wasn't thinking about it correctly.
Certainly, the PHX run-up matched irrational pricing. IMO, the big difference this time around is big-time inflation. Wages are up and the price of everything is way up too. Or putting it another way, once everything settles, the new norm is that $1M doesn't get you much in the East Valley and a $400K is a starter home.
Last edited by MN-Born-n-Raised; 12-26-2022 at 06:52 AM..
Your quote from memory lane was from Capt Bill, the internal optimist RE agent. I met Bill. A great guy who had rose-colored glasses. In 2010, I was expecting more of a drop http:////www.city-data.com/forum/pho...t-another.html As in, the government's $8K 1st time buyers tax break was a false start. It was obvious.
In that era, I was reading the Cromford report as I am now. But I spent a lot more time on the topic. The actual expert (Cromford report) never predicts anything other than maybe a maximum of 6 months out.
Of course, no one knows what is going to happen. We know that PHX large builders are (currently) doing much better than they did in 2010. This round, the stock market is doing much better too. Unemployment isn't a significant factor right now, either. People are "locked" into their cheap payments, and nearly everyone isn't upside down in their homes. It's a duration thing as much as anything else. And so long as the government keeps bailing everyone out COVID-style, people aren't concerned about the economy.
As the youtube guy suggested, based on the Cromford report, all eyes are focused on what happens to the PHX RE listings in January AND the mortgage rates. We should know more in about a month from now how much depreciation will happen in the pending months. Right now, the people who were CONVINCED it was going bubble was going to pop and sold their homes are no longer as convinced...
As I mentioned a couple of times over the years, one of my customers was a top housing economist often quoted in the press. As in, he influenced the housing policies. We had a conversation in 2005 when I sold several of my investment properties. I told him that the market didn't make any sense, and he tried explaining why I wasn't thinking about it correctly.
Certainly, the PHX run-up matched irrational pricing. IMO, the big difference this time around is big-time inflation. Wages are up and the price of everything is way up too. Or putting it another way, once everything settles, the new norm is that $1M doesn't get you much in the East Valley and a $400K is a starter home.
I was pointing out Capt Bills quote from remax founder said everything would turn around in 2008. Saying home prices will head back up soon is nothing more the pure speculation. Your looking at past indicators you really don't know what will happen tomorrow at all. Very difficult to predict anything in the next few years. We do know over the long haul home prices do recover if you buy good locations just like stock markets recover as long as you buy into a market and not a single stock.
If we look at the cycle of 2007-2013
1. Subprime investment banks found they owned junk overnight financial crisis started. Panic set in when Lehman brothers went BK. 2008
2. Stock market peak was 2007 started to fall in 2008 hit bottom in 2009
3. Consumers stop spending money
4. Employers started to lay off as everyone cut back on spending
5. Homeowners were upside down walked away from their homes, and others lost their employment walked away let it foreclose.
6. Government stepped in forced banks to allow loan mods, and short sales home prices fall even more.
7. Government injects trillions with QE stock market rising quickly
8. Employers start to hire but still paying low wage this was 2013
9. Home prices start to rise now slowly
10. Government still using QE with very low rates.
11. Employers start to offer higher wages as economy is recovered.
I was pointing out Capt Bills quote from remax founder said everything would turn around in 2008. Saying home prices will head back up soon is nothing more the pure speculation. Your looking at past indicators you really don't know what will happen tomorrow at all. Very difficult to predict anything in the next few years. We do know over the long haul home prices do recover if you buy good locations just like stock markets recover as long as you buy into a market and not a single stock.
If we look at the cycle of 2007-2013
1. Subprime investment banks found they owned junk overnight financial crisis started. Panic set in when Lehman brothers went BK. 2008
2. Stock market peak was 2007 started to fall in 2008 hit bottom in 2009
3. Consumers stop spending money
4. Employers started to lay off as everyone cut back on spending
5. Homeowners were upside down walked away from their homes, and others lost their employment walked away let it foreclose.
6. Government stepped in forced banks to allow loan mods, and short sales home prices fall even more.
7. Government injects trillions with QE stock market rising quickly
8. Employers start to hire but still paying low wage this was 2013
9. Home prices start to rise now slowly
10. Government still using QE with very low rates.
11. Employers start to offer higher wages as economy is recovered.
In 2007 did anyone know this would happen above?
For starters, getting a RE quote from the REMAX founder is worthless. He's not an economist AND he has a vested interest in lying.
We all eventually learned about the massive fraud: including loose lending practices causing a massive amount of subprime mortgages to be given out to anyone with a pulse. When the bubble burst, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages. That triggered all kinds of problems.
Therefore, if we all learn there was a massive amount of fraud again, I expect a repeat. Now it's about mortgage rates related to controlling inflation and the health of the economy. The longer the high rates drag on, the more air will be released out of the increased values. Officially, anything can happen. Including Russia launching some Nukes, or another virus or, or, or... I live my life by looking at probabilities. Right now, the values probably won't drop a ton more.
For starters, getting a RE quote from the REMAX founder is worthless. He's not an economist AND he has a vested interest in lying.
We all eventually learned about the massive fraud: including loose lending practices causing a massive amount of subprime mortgages to be given out to anyone with a pulse. When the bubble burst, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages. That triggered all kinds of problems.
Therefore, if we all learn there was a massive amount of fraud again, I expect a repeat. Now it's about mortgage rates related to controlling inflation and the health of the economy. The longer the high rates drag on, the more air will be released out of the increased values. Officially, anything can happen. Including Russia launching some Nukes, or another virus or, or, or... I live my life by looking at probabilities. Right now, the values probably won't drop a ton more.
The only thing we did know for sure from 2004-2008 there was an abnormal rise in housing prices.
We can also say that from late 2020 there was an abnormal rise in housing prices even worse then 2004-2008.
The only thing we did know for sure from 2004-2008 there was an abnormal rise in housing prices.
We can also say that from late 2020 there was an abnormal rise in housing prices even worse then 2004-2008.
Mortgage loan standards and credit quality are a lightyears better post 2007. %age of homes close to or actually underwater is way way lower than 2007. This is observable. I remember a former poster here saying he bought his home in 2010 from a defaulted specuvestor who bought 50 Phoenix homes with 50 times stated "owner occupied" on his loan applications and nobody cared Those were crazy times and it required truly crazy times to create the environment for the GFC plunge. We are nowhere close to that.
For starters, getting a RE quote from the REMAX founder is worthless. He's not an economist AND he has a vested interest in lying.
We all eventually learned about the massive fraud: including loose lending practices causing a massive amount of subprime mortgages to be given out to anyone with a pulse. When the bubble burst, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages. That triggered all kinds of problems.
Therefore, if we all learn there was a massive amount of fraud again, I expect a repeat. Now it's about mortgage rates related to controlling inflation and the health of the economy. The longer the high rates drag on, the more air will be released out of the increased values. Officially, anything can happen. Including Russia launching some Nukes, or another virus or, or, or... I live my life by looking at probabilities. Right now, the values probably won't drop a ton more.
These boom and bust cycles never repeat exactly the same. Arizona real estate is very cyclical. And this time we have one driving force for sure. Rising interest rates. Something that was not a problem back in 2008. If they continue through next year almost a guarantee of big price drops. And will those drops trigger any other issues that will become apparent? Could the feds step in and try help the housing market and instead make things worse?
I flipped housing in AZ from about 2004-2007. It was a great time. But you could see the warning signs by early 2007. I sold my last investment property by May 2007. I don't have the same pulse on that market that I did before. So who knows.
These boom and bust cycles never repeat exactly the same.
You need to define "boom and bust". The great depression and great recession are examples of "boom and bust". CA also has some examples. But generally speaking, we are really talking about softening and strengthening cycles of the market. Not "boom and bust".
Quote:
Originally Posted by Oklazona Bound
If they continue through next year almost a guarantee of big price drops....
So who knows.
Which is it^^?
I will reiterate my point: Everything has been going up with double-digit inflation. All goods and services are continuing to go up a lot. I'm saying that fact is going to soften the landing.
We agree that prices will continue to soften. So long as we have low unemployment, I don't see a "big" drop. As they say, YMMV. Personally, I think a recession is needed about now. But that's a different topic.
Late Nov quoted Highlights:
1. 50-50 chance of a recession. We cannot take another unanticipated global event like a Ukraine-like invasion, etc. If so, he expects a recession and another 10% overall drop (or around 20% peak to trough).
2. There are 'known unknowns' like oil prices, what China does with the pandemic and COVID shutdowns, etc. Those known unknowns can help or hurt inflation, bringing down inflation faster or prolonging the higher interest rate punishment, thereby pushing us closer to a recession.
A good summary quote is, "I expect prices to be down 10% peak to trough, with no recession," he said. "That's my baseline. I view that as a correction, it's not a crash."
Mind you, his quoted percentages aren't talking about PHX. Earlier in the year, Zandi said: "the extremely "overvalued" housing markets like Boise and Phoenix are at the highest risk of falling home prices over the coming year. So are numerous markets throughout the Mountain West, Southwest, old South, Carolinas, Florida, and Texas.
While Zandi said he doesn't think nationwide home prices will drop, he says they're likely to see "real" home price declines. That's economic speak for inflation growing faster than U.S. home prices. from https://finance.yahoo.com/news/housi...163652503.html
The quote in bold was my earlier point. Real home prices are declining as we speak. Even when the home price doesn't go down a nickel, when wages are going up, and inflation is still going up, the home value is "declining". Remember, most people buy "payments," which was why housing prices took off so fast. Cheap payments and low supply drove up the prices. Now, wages and overall inflation of other items are slowly catching up to the new norm of high home prices. We are one thing away from equilibrium: and that is cheaper mortgage rates. If/when that happens (even at 5% mortgage rates), the affordability of payments will be in check. If it drops back down to 3-4% in a year or more while inflation continues to go up, that will support all of this massive PHX housing appreciation that we saw.
Last edited by MN-Born-n-Raised; 12-27-2022 at 05:47 AM..
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A buddy of mine just nailed a deal at 30% off peak in Surprise. But he was patient and bought a home that needed a little detailing (carpet, paint, etc). 
Those were crazy times and it required truly crazy times to create the environment for the GFC plunge. We are nowhere close to that.
