Real Estate Bust

"There's a psychological umbrella of fear in Phoenix's housing market now," said Tim Sullivan, a national housing analyst with San Diego-based Sullivan Group. "Buyers are uncertain."

Phoenix's housing market has some definite signs of trouble.  New data that includes used and new houses shows Valley home prices are down as much as 20 percent from last year's high. Prices aren't down all over, but some areas are showing steady declines.

The median price of a used home in Pinal County fell to $211,500 in this year's first quarter. That's down from the $220,000 the typical existing home was selling for at the end of 2005.

Home builders began offering incentives early this year to try to sell their backlog of new houses in metropolitan Phoenix.

The deals keep getting better, signaling the market isn't.

Late last year, investors began walking away from deposits on new homes because they couldn't flip houses for quick profits as they did early in 2005. Regular buyers can't sell their houses to clear the way for them to close on new ones.

More than 64,000 new homes went up Valley-wide last year, but analysts say there weren't real buyers for that many. So far this year, new-home building is down 17 percent.

So builders are offering incentives worth as much as $100,000 to unload them. 

Full article text after the jump...

Continue reading "Fear Grips Phoenix Housing Market - May Drop Another 10%" »

Posted by RE Bust at 03:14 PM | Permalink | Comments (0) | TrackBacks (0)

The Arizona Republic printed a great article yesterday about the state of the market in Phoenix.   Where there were 9,400 houses on the Arizona MLS last year, the number now stands at a record 43,000.  Houses sold in an average of 29.6 days in April 2005, compared with the 57.5 days in April this year.

Much of the problem, agents and others say, is that sellers simply haven't adjusted to the new pricing reality and are pricing their houses as if it was 6 months to a year ago.  This is the main driving force behind the glut.  

Another point: 
Some of the sellers must maintain their price points even if they are too high because they tapped into their home equity with various credit lines, [incorrectly] assuming that last year's big gains in appreciation would continue. Of course, they have not, and with interest rates going up, the cost of their credit lines has followed in lockstep.   

The owners must now sell for a certain price to pay of the debt. Some of them have already signed contracts on new home purchases and are expecting to make a target amount on their current home to keep their new mortgages affordable. These owners are stuck in an "equity trap." 

Posted by RE Bust at 09:09 PM | Permalink | Comments (0) | TrackBacks (0)

"For Sale" signs dotting the landscape, home browsers holding back offers, sellers dropping prices.. sound familiar?  Well it's currently taking place in Phoenix, a market that hit its peak late last year.  Although the situation isn't dire yet, many signals point to the start of a drop.  Housing "experts" in the region remain vigilant, though, proclaiming that Phoenix is still a "very strong" market this year.  You decide...

Continue reading "Teetering on a Bust in Phoenix" »

Posted by RE Bust at 12:55 PM | Permalink | Comments (0) | TrackBacks (0)