Giantaxe

With over 30,000 houses for sale in the Phoenix area (and that's not even including new houses!) I think it's very optimistic to believe that prices will not fall. Imo, they will either fall sharply in the short term or slowly deflate over the next half-decade or more - probably the latter. Too much speculation in the Phoenix area for things to remain as they are.

Who is "they", btw? The last people you want to listen to about the current real estate market are realtors and their organizations, who have a vested interest in painting as rosy a picture as possible about the market...

Pimpbot

I think the reason our housing market will remain healthy, is due to the amount of people coming into the valley. We're one of the fastest growing areas in the country. Phoenix is only just behind Philly as the 6th largest city in America.

Giantaxe

Then why is the inventory of unsold houses continuing to grow so rapidly - under 10k last July to over 30k today? And why are sales of houses declining? Plus, why is there so little upward pressure on rents? People may be moving to Phoenix, but the fact is that a large percentage of new housing (I've read 35% - 50%) has been bought by speculators hoping to flip them. Now that the market isn't rising rapidly those speculators have stopped buying, and are now trying to sell. Quite simply, supply of housing in the Phoenix area is currently far outstripping demand and the market is running out of "greater fools" willing and able to play current prices.

Pimpbot

So where are you getting your information, as you sound clued in.

Giantaxe

Do an online search of MLS listings. Alternatively there are several websites that track inventory of various "bubbly" markets. This one will work for the Phoenix area:

Inventory tracking

Notice how sales are declining at just the moment that inventory is skyrocketing.

fatbrit

Not sure I share your optimism fully, but it's pretty irrelevant anyway if you're moving quickly within the same area buying and selling your own des res. You really don't change your exposure to the market very much at all unless, of course, you're going from a one-bed condo in Mesa to a 15-bed mansion on the slopes of Camelback!

AdobePinon

Well, just found out what my place is worth and the quoted increases look to be in the right ballpark. It will be interesting to see how this is sustained - as far as I can tell, residential rentals work out at around ~$1 / sq. ft. which is not out of line with much cheaper markets. But we are surrounded by federal and tribal lands which limit new building.

So now we have a median price of $470k in a town with a median household income of $40k. And where low income housing is defined as <$250k, and $200k won't even buy you a trailer.

One year later and I would have been locked out myself.

Of course, those in California are probably reading this and thinking that Santa Fe is ridiculously cheap, but it does make me wonder where this country is headed.

Giantaxe

Well, you have the alternative of selling, renting for a while in the belief that prices will fall over time, and then buying up market. Apparently, increasing numbers of people are doing this in the priciest areas where the after tax cost of ownership is so much higher than the cost of renting. Of course, you are taking the risk that prices will continue to rise, but in the priciest areas, that's probably a relative small risk right now.

Giantaxe

And that's part of the psychology of why prices have gone up so much: buy now or be forever priced out. Realtors are very adept at pressing this line.
In terms of ratio to income, it's around the same. But you are correct that many CA's see prices like Santa Fe's and say "I'll take two please".

Me too. I live in a local area where the public schools are very highly regarded. But guess what? Rolls are falling at all the schools. The reason is pretty simple. Families with young children can't afford to buy round here so there aren't as many pupils to replace those who are of college age.

fatbrit

Agree! But if it's your home, there are emotional considerations as well. Rather play about with other investment stuff than where I hang my hat.

dunroving

Well, maybe it's headed towards a realization that, as Mick Jagger said, "You can't always get what you want .... "

I just can't understand why certain companies have to be located in a specific place. Here in eastern NC property is dirt cheap, and it's not like we're out in the swamps. The weather is nice and we're a short drive from the beach.

With the growth in electronic communication and other advances that make it less important to be physically in a particular area of the country, maybe some time soon it won't be as important to locate/live in CA or AZ.