Today marks the release of The Arizona Republic‘s semi-annual run-down of home prices. I’ve never liked this treatment because it is based on median prices — which tells you nothing about particular homes — and is sorted by zip code — arbitrary and enormous spaces. Here’s the Cliff’s Notes. You can pursue the links from the page linked above for details. 1. Not as good as last year. 2. Prices down somewhat or barely up, year over year. 3. Lots of inventory. 4. The sun will come up tomorrow.
The biggest news might be that Catherine Reagor has discovered new reasons for hope. In a goofy home movie made for Channel 12, she actually rhapsodizes about appreciation potential. She predicts a Valley population of 20 million (our carrying capacity is 8 million), so she’s not down to Earth on all ten toes, but her progress is laudable.
I was interviewed for this year’s rundown. I spent about an hour on the phone from my patio one afternoon, maybe twenty minutes from the car the next afternoon. I also referred two of my favorite investor clients, one of whom was interviewed for about twenty minutes as he was standing in a store. All of that turned into one mangled sentence in three sections of the paper.
The actual news is this: Our fundamentals are sound. In-migration continues apace. There is a lot of inventory on the market right now, but many sellers are not actually motivated to sell at current market prices. Those homes can be thought of as ghost inventory. A perfectly normal number of buyers are buying homes at or above list prices, with deep discounting being rare. The surfeit of inventory will take some time to work out, but I see no indications of looming catastrophe. The news isn’t great, but it certainly isn’t awful…
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate marketing
Lenny Gurvich says:
The “actual news” sounds just like the state of the market here in Tampa. Lots of inventory that doesn’t need to be sold. Sellers (timers) trying to catch the end of the top of the market. Our listings inventory actual decreased last week for the first time in a long time, while pendings increased. I believe some of the “ghosts” are beginning to expire.
October 22, 2006 — 7:51 am
mike says:
The article: “…housing prices dipped in more than half of all sip codes in metropolitan Phoenix during both July and August. Several areas saw significant monthly drops of 10 percent or more.”
And the Bloodhound summary: “Not as good as last year. 2. Prices down somewhat or barely up, year over year. 3. Lots of inventory. 4. The sun will come up tomorrow. … Our fundamentals are sound. [much of the record inventory] can be thought of as ghost inventory. A perfectly normal number of buyers are buying homes at or above list prices…”
For some reason, I’m reminded of Kevin Bacon’s character at the end of Animal House. 🙂
Seriously though, Greg, you seem like a smart guy; surely you must realize that at some point (if it hasn’t happened already) continued denial is going to permanently damage your credibility.
October 22, 2006 — 3:13 pm
Greg Swann says:
> For some reason, I’m reminded of Kevin Bacon’s character at the end of Animal House.
Never saw it. No need to explain. I never will see it.
> surely you must realize that at some point (if it hasn’t happened already) continued denial is going to permanently damage your credibility.
How would it damage my credibility to tell the truth? Some neighborhoods down, some up, overall down 6% from the peak. These are facts, not opinions, not dreams, not fantasies. Things might get worse, but they haven’t been very bad so far. I’m sorry if that disappoints you. I don’t say anything I can’t defend and I never have a problem admitting it when it turns out I’ve been wrong. For what it’s worth, I’m having a great year. Not as good as 2005, of course, but much better than 2004.
October 22, 2006 — 6:07 pm
mike says:
From my POV, the Phoenix market is rather bad and getting worse each month. There’s no real bottom in sight until ’08.
Frankly, I’m amazed that you see this differently, but you obviously do.
Ok, well, adios for now … I’ll be back in a month or so when the next round of foreboding Phoenix data is released, to read your rosy take on it.
October 22, 2006 — 10:38 pm
randy says:
There are now about 55,000 “existing homes” listed for sale (including those under contract) in the Valley (Maricopa/Pinal counties). There are estimates of another 50,000 in unsold “new home” inventory in the Valley, for example, the ghost-town-neighborhoods in cities like Queen Creek, Maricopa and Surprise. Do you have any info to confirm the number of unsold, new homes?
October 23, 2006 — 11:32 am
Mike Bliss says:
Look, folks.
The truth is if you have a view, a great location, etc., you will ALWAYS have a great investment. What? A total economic meltdown happens and you have yo wait 5 years until your propery returns double-diget returns? Oh, poor you! You lived in a great house and you made money! What a HORROR! Give Greg or another great realtor a call and get INTO REAL ESTATE NOW! “When there is blood in the street (as there is now due to unrealistic panic) BUY!!!”
October 24, 2006 — 5:55 pm
Belch-o-monkey says:
So Greg Swann reads this ugly forecast as so-so and his mouthpiece, I mean Mike Bliss, reads this as “blood in the street”? Which is it fellas? Time to take out the playbook and get your stories aligned maybe?
The funniest thing about this comment: “if you have a view, a great location, etc., you will ALWAYS have a great investment”. I spent the first 21 years of my life in Phoenix. The view is dirt. Brown dirt and, if you’re lucky, some off-green scrub bushes. Unless you live in Scottsdale, in which case the view is crappy golf links and wanna-be rich people. There’s not a thing that’s great about Phoenix. It sucks. The point of life there is to own a cookie-cutter home in a cookie-cutter suburb and not go outside between March and November and…that’s it. Yeah, sign me up for that good stuff, what a deal! Phoenix should be ceded to Mexico, and in fact that is already in progress one person at a time. Enjoy the dirt view guys! !Bueno!
October 24, 2006 — 10:11 pm
mike says:
Give Greg or another great realtor a call and get INTO REAL ESTATE NOW! “When there is blood in the street (as there is now due to unrealistic panic) BUY!!!
Hah! Good one. I almost thought you were serious.
October 27, 2006 — 1:01 am