This is my column for this week from the Arizona Republic (permanent link):
In the Metropolitan Phoenix real estate market, our long, slow slide in home prices is finally encountering demand
If you’ve been looking for the bottom of the Phoenix real estate market, it might well be upon us.
The world beyond our control — Washington and Wall Street — is so volatile right now that it’s hard for anyone to make plans.
The Federal Reserve Bank is determined to keep markets liquid, so its own interest rates are heading back toward record lows. The investment banks that brokered the mortgage-backed securities that made sub-prime loans possible are in turmoil. Meanwhile, Congress is desperate to do something — which will almost certainly make things worse.
The interesting thing about all that chaos is that it seems to be isolated to the real estate market. The larger economy is growing so fast that the twitterpated monetary policies of the Fed seem not to have had much of an impact.
That’s a good thing, and let’s hope things stay that way.
Meanwhile, in the world we have some control over — the local real estate market in Metropolitan Phoenix — our long, slow slide in prices is finally encountering demand.
Because so many people wanted to buy houses in Phoenix, our builders gleefully over-built the Valley. This caused the glut of inventory we have been trying to absorb over the past nine quarters.
Many of the resale homes that have languished on the market are by now short sales or have been taken back by the bank. Lenders don’t want to own houses, so they’re cutting prices until the homes get sold.
At the same time, our reliable inflow of population, along with investors and second-home buyers, is there to absorb these newly-affordable homes. The snow belt just got belted with its worst winter in memory, which will bring even more newcomers to Phoenix.
It could be we’ll be back to normal inventory levels fairly soon. The bad news? If your home is for sale, the price it will sell for right now is probably quite a bit lower than you think it should be. If you don’t have to move now, you might be better off staying put for a year or two.
Technorati Tags: arizona, arizona real estate, investment, phoenix, phoenix real estate, real estate, real estate marketing
Dave Phillips says:
Two comments, okay three, but one is just a poke for the fun of it. This sounds strangly like a positive piece of news – I did not think that was allowed on Blogs ;-). I think investors and first-timers are the key to getting things going again. We are starting to hear of investors coming back into the market here in Central VA and I was glad to hear they are coming back in Phoenix.
Finally, I do not worry about sellers because even if they have to sell low, they can buy low. Seems like a wash to me.
March 24, 2008 — 11:39 am
Greg Swann says:
> This sounds strangly like a positive piece of news – I did not think that was allowed on Blogs
Just wait until the b*bbl*h**ds discover it. The only consistent feedback I get on the Republic is from people insisting that housing prices have to go down forever. I don’t know that we’re at the turning point yet, but a lot of investors are betting that we are at it or nearing it. They’re willing to take a little downside risk in anticipation of upside returns. Cross your fingers, they’re right.
March 24, 2008 — 11:59 am