2023 Phoenix Area Home Prices (Gilbert: transplants, sale, 2015)

[Oklazona Bound]

Originally Posted by MN-Born-n-Raised

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".

You sound like a spokesperson for the NAR. If semantics make you feel better so be it.

Originally Posted by MN-Born-n-Raised

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.

The fed is trying to slow down inflation. That has already worked in many bubble housing markets, but they are just the canaries in the coal mines. But they are not what the FED is focusing on. They want a soft landing. I highly doubt the can pull that off. If getting the timing right was so easy they would have prevented the inflation we are having now but raising rates much earlier than they did. They spent months claiming the rising inflation would go away on its own. IMHO they will panic and lower rates too quickly and inflation will fire up again probably worse than now. That is what happened in the 70's.

I heard the same chatter back in 2008. Different circumstances now. In some ways we have much worse issues, in other ways laws were changed that will prevent some of the issues from 2008 from happening. We just have less tools to work with this go around. We can't keep spending our way out of financial problems like we did the last couple of downturns.

[Oklazona Bound]

Originally Posted by kell490

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.

Exactly.

[MN-Born-n-Raised]

Originally Posted by Oklazona Bound

You sound like a spokesperson for the NAR. If semantics make you feel better so be it.

Semantics should be chosen to describe the situation accurately. I thought yours were less than ideal. You said, that "Arizona real estate is very cyclical". Yet, everything about PHX RE has changed (not so much with AZ as a whole). This is a PHX thread. The demographics, the politics, the job market, and an influx of $$'s have changed the landscape dramatically. What's the saying: "Past performance is no guarantee of future results". Yes, the economy is cyclical, and by definition, so is RE across the country (softening and strengthening). The term "boom and busts" rarely occur. That was my point.

I can think of many situations where economic crap can hit the fan. And it might. Certainly, PHX (and other massive runups) have a higher risk of a faster fall. The current cards dealt in PHX suggest a continued downward trend so long as mortgage rates are high. The average Joe is priced out of the market. That is quickly corrected with a drop in mortgage rates.

But more topics can add fuel to the fire. For instance, add-in China trying to overtake Taiwan. Or a limited nuke tossed into Ukraine, or, or, or or.... So if your point is "we don't know what will happen", then I think we can agree. We don't. It's about probabilities.

In the current situation, housing isn't tanking. It is slowly deflating, month after month. All that said, from 2020 to the peak of 2022, I went UP 75% (I bought my place 20% below market). So with a 20% drop or 10% more to go, I'm still up around 45%. I'm not paying close attention to what happens in Buckeye or Casa Grande. There are several different RE markets inside PHX (yes, they are substitutes). I happen to be in a neighborhood where the majority are paying cash. And the other 40% could have.

[john3232]

Originally Posted by MN-Born-n-Raised

Semantics should be chosen to describe the situation accurately. I thought yours were less than ideal. You said, that "Arizona real estate is very cyclical". Yet, everything about PHX RE has changed (not so much with AZ as a whole). This is a PHX thread. The demographics, the politics, the job market, and an influx of $$'s have changed the landscape dramatically. What's the saying: "Past performance is no guarantee of future results". Yes, the economy is cyclical, and by definition, so is RE across the country (softening and strengthening). The term "boom and busts" rarely occur. That was my point.

I can think of many situations where economic crap can hit the fan. And it might. Certainly, PHX (and other massive runups) have a higher risk of a faster fall. The current cards dealt in PHX suggest a continued downward trend so long as mortgage rates are high. The average Joe is priced out of the market. That is quickly corrected with a drop in mortgage rates.

But more topics can add fuel to the fire. For instance, add-in China trying to overtake Taiwan. Or a limited nuke tossed into Ukraine, or, or, or or.... So if your point is "we don't know what will happen", then I think we can agree. We don't. It's about probabilities.

In the current situation, housing isn't tanking. It is slowly deflating, month after month. All that said, from 2020 to the peak of 2022, I went UP 75% (I bought my place 20% below market). So with a 20% drop or 10% more to go, I'm still up around 45%. I'm not paying close attention to what happens in Buckeye or Casa Grande. There are several different RE markets inside PHX (yes, they are substitutes). I happen to be in a neighborhood where the majority are paying cash. And the other 40% could have.

Absolutely.

My guess is there are many in the Phx metro who wanted to buy that were forced to the sidlnes the past two years. Today they are waiting. Waiting for the right moment. But when will that be? Right now all eyes are on interest rates and inventory.

At present buyers in the drivers seat. I've mentioned several times in the past about one of my renters - husband who earns well over 200k (doctor.) This family wants to buy in Gilbert. Do they buy now and get the house with little competition. Or do they wait in hopes of a 50k price drop in 2023? What if the FOMO should change? What if interest rates drop/climb?

The wife asked me earlier this year where I thought the housing market was headed and I said I didn't know. She also asked if I were interested in selling and I said no.

[john3232]

Originally Posted by MN-Born-n-Raised

Semantics should be chosen to describe the situation accurately. I thought yours were less than ideal. You said, that "Arizona real estate is very cyclical". Yet, everything about PHX RE has changed (not so much with AZ as a whole). This is a PHX thread. The demographics, the politics, the job market, and an influx of $$'s have changed the landscape dramatically. What's the saying: "Past performance is no guarantee of future results". Yes, the economy is cyclical, and by definition, so is RE across the country (softening and strengthening). The term "boom and busts" rarely occur. That was my point.

I can think of many situations where economic crap can hit the fan. And it might. Certainly, PHX (and other massive runups) have a higher risk of a faster fall. The current cards dealt in PHX suggest a continued downward trend so long as mortgage rates are high. The average Joe is priced out of the market. That is quickly corrected with a drop in mortgage rates.

But more topics can add fuel to the fire. For instance, add-in China trying to overtake Taiwan. Or a limited nuke tossed into Ukraine, or, or, or or.... So if your point is "we don't know what will happen", then I think we can agree. We don't. It's about probabilities.

In the current situation, housing isn't tanking. It is slowly deflating, month after month. All that said, from 2020 to the peak of 2022, I went UP 75% (I bought my place 20% below market). So with a 20% drop or 10% more to go, I'm still up around 45%. I'm not paying close attention to what happens in Buckeye or Casa Grande. There are several different RE markets inside PHX (yes, they are substitutes). I happen to be in a neighborhood where the majority are paying cash. And the other 40% could have.

I agree. Yes, overall housing prices in the valley are in decline. But 85205, 85234 and 85286 for example are different markets.

[locolife]

Originally Posted by john3232

I agree. Yes, overall housing prices in the valley are in decline. But 85205, 85234 and 85286 for example are different markets.

Overall housing prices are in decline across the entire country. " Prices fell in every one of the top 20 U.S. cities from August to September"


https://www.spglobal.com/spdji/en/in...clid=undefined

[MN-Born-n-Raised]

Originally Posted by john3232

I agree. Yes, overall housing prices in the valley are in decline. But 85205, 85234 and 85286 for example are different markets.

I live in a 1000+ home development. A cheap home under 1700 square feet is worth $800K. A spendy one is >$3M at around 3000 square feet. It is fair to assume everyone is a millionaire. I'm in the lowest quartile, as some people have ultra-deep pockets with three impressive homes. People buy $100K golf memberships at the drop of a dime. Many are retired in their 50's. I'd say over 1/2 of the people in their late 40's and 50's are retired.

Sure. 25 resale houses are sitting on the market. Some people are delusional as to what they are asking. I can point to 5 people who added $600K- $800K on top of the $800K they paid for, without putting in a nickel in the home. I'm talking they don't have a yard or drapes or anything. And others refuse to sell if they don't get their number. It's as if a lot of the inventory I'm seeing is for people who will only sell if they get their price?! Strange but true.

But nice homes with the right view sell for cash or $1.7M. That home might have been listed for $1.9M in May. I'm very sure it's a different ballgame in Buckeye. But surely, perception helps become a reality. People buy off of a sense of urgency. Many people also refuse to buy if they smell blood. It's certainly will be interesting to see how everything unfolds.

[john3232]

Originally Posted by locolife

Overall housing prices are in decline across the entire country. " Prices fell in every one of the top 20 U.S. cities from August to September"


https://www.spglobal.com/spdji/en/in...clid=undefined

Yes, however I'm more concerned with the Phx metro and particularly areas where I own property as opposed to say 94116 in S.F.

[john3232]

Originally Posted by MN-Born-n-Raised

I live in a 1000+ home development. A cheap home under 1700 square feet is worth $800K. A spendy one is >$3M at around 3000 square feet. It is fair to assume everyone is a millionaire. I'm in the lowest quartile, as some people have ultra-deep pockets with three impressive homes. People buy $100K golf memberships at the drop of a dime. Many are retired in their 50's. I'd say over 1/2 of the people in their late 40's and 50's are retired.

Sure. 25 resale houses are sitting on the market. Some people are delusional as to what they are asking. I can point to 5 people who added $600K- $800K on top of the $800K they paid for, without putting in a nickel in the home. I'm talking they don't have a yard or drapes or anything. And others refuse to sell if they don't get their number. It's as if a lot of the inventory I'm seeing is for people who will only sell if they get their price?! Strange but true.

But nice homes with the right view sell for cash or $1.7M. That home might have been listed for $1.9M in May. I'm very sure it's a different ballgame in Buckeye. But surely, perception helps become a reality. People buy off of a sense of urgency. Many people also refuse to buy if they smell blood. It's certainly will be interesting to see how everything unfolds.

No question FOMO is a driving force in the Phx metro housing market. And with today's techonlogy it can turn almost overnight.

[MN-Born-n-Raised]

Originally Posted by locolife

Overall housing prices are in decline across the entire country. " Prices fell in every one of the top 20 U.S. cities from August to September"


https://www.spglobal.com/spdji/en/in...clid=undefined

Correct. No one is debating that higher mortgage rates knock out buyers. If you watched the video that John posted, the video stated that just 25% of the PHX area residents could afford the price of the home AFTER the massive mortgage rate increase and after the massive increase in housing. It should be around 60-65%. So by definition, that point alone shows that the average housing price has nowhere to go but down.

The question remains: What will happen to mortgage rates and how many properties will come up for sale. Currently, the price depreciation has slowed because not a lot of homes are going up for sale compared to what was imagined. And currently, the values are "sticky" on their way down. A recession can undoubtedly accelerate the decline.

Still, as John pointed out, some zip codes are much more resilient than others. Follow the money. His doctor customer isn't worried about being laid off. Nor are most of my neighbors. And the level of depreciation is slower because of it.

And if we suddenly learn that thousands of iBuyers are going to dump properties, well, we are in for a new storyline. Anything is possible, including a meteor that pummels the earth. lol