Is there really a "bust" in Phoenix's urban housing market?

[combusean]

I thought this was interesting: compare the median prices and units sold for the last 4 weeks for downtown/midtown zipcode 85003 (west of central) for the same period last year.

County           Week ending    Past 4 weeks		4 weeks last year
Maricopa	 09/14/2007 	25 	$398,427 	9 	$511,900
Maricopa	 09/06/2007 	23 	$398,427 	14 	$377,500
Maricopa	 08/28/2007 	19 	$403,473 	17 	$275,000
Maricopa	 08/22/2007 	12 	$514,738 	17 	$325,000
Maricopa	 08/20/2007 	11 	$554,475 	18 	$330,000
Maricopa	 08/07/2007 	19 	$611,146 	14 	$340,000
Maricopa	 08/01/2007 	27 	$556,827 	10 	$345,000
Maricopa	 07/24/2007 	25 	$611,146 	10 	$292,500
Maricopa	 07/16/2007 	28 	$617,994 	9 	$385,000
Maricopa	 07/06/2007 	32 	$519,912 	10 	$387,500
Maricopa	 06/28/2007 	24 	$413,952 	16 	$387,500
Maricopa	 06/18/2007 	15 	$415,000 	12 	$399,500
Maricopa	 06/11/2007 	10 	$407,500 	10 	$400,370
Maricopa	 06/04/2007 	8 	$454,000 	9 	$410,000
Maricopa	 05/25/2007 	7 	$475,000 	8 	$407,500
Maricopa	 05/18/2007 	5 	$550,000 	9 	$405,000
Maricopa	 05/11/2007 	5 	$550,000 	10 	$368,150
Maricopa	 04/30/2007 	11 	$300,000 	7 	$356,301
Maricopa	 04/23/2007 	13 	$300,000 	16 	$306,688
Maricopa	 04/09/2007 	14 	$417,500 	24 	$328,678
Maricopa	 04/02/2007 	11 	$415,000 	32 	$349,803
Maricopa	 03/26/2007 	8 	$432,500 	28 	$356,250
Maricopa	 03/19/2007 	8 	$382,500 	21 	$354,596
Maricopa	 03/12/2007 	13 	$415,000 	26 	$354,798

http://www.azcentral.com/realestate/...gAction=Search

tells us that units have been selling at Tapestry and Portland place at a rate of 3 - 6 a week apiece for the last two months, double the pace from shortly before. So what gives? Is "one a week/month" just overblown, out of date, or specific for nothing special/small scale/marginal area units?

[sundevilgrad]

From what I hear, sales rates of new/existing homes have fallen since the boom, but they haven't fallen below pre-boom numbers. To me, that doesn't sound like a slump, just a return to normal market conditions. Yes, there is a glut of homes on the market but I think a lot of it has to do with investors and people who got in over their heads trying to dump... The one thing that the Valley has going for it, that many places in the country don't, is that there are thousands of new residents moving here from out of state every month, which should keep sales from falling to far... Just my opinion (I'm definitely no exper).

[andrewkfromaz]

I've heard that the multifamily market is actually doing much better than single-family, standalone homes. This has some interesting implications if it is in fact true.

[Drew-Ski]

Originally Posted by sundevilgrad

From what I hear, sales rates of new/existing homes have fallen since the boom, but they haven't fallen below pre-boom numbers. To me, that doesn't sound like a slump, just a return to normal market conditions. Yes, there is a glut of homes on the market but I think a lot of it has to do with investors and people who got in over their heads trying to dump... The one thing that the Valley has going for it, that many places in the country don't, is that there are thousands of new residents moving here from out of state every month, which should keep sales from falling to far... Just my opinion (I'm definitely no exper).

My wife works for a locally based Home builder and business is real slow. Sales are way down and invetories are piling up. The Home Developers are offering huge incentive programs ( price discounts, Cars, Appliances, and even paying your mortgage for a Year) to help lure possible buyers. There is strong speculation of several Builders going out of business and others are simply going to close down sales offices in non-performing communities. There have been substantial layoffs in many Home Building Companies and they are now beginning to rent out standing inventories of Homes. The price ranges effected the most are the "move up homes" $300,000 and up. Potential "Move up" buyers are finding it difficult to sell pre-exhisting homes. The Starter Homes and Upscale homes are faring much better. This Market correction has not yet bottomed out and probably won't begin to stabilize and improve for a couple more years. This is the opinion of her employer. Her company is in the process of cancelling and/or delaying many projects. There is a possibility that Medium Home Prices may settle back to 2002-03 pricing. A very noticable issue my wife encounters is finding Qualified Buyers. Now that the Mortgage Companies will no longer offer "Creative Loans", fewer people are now able to qualify for Loans. These are tough times.

[soleri]

There's been a large number of units at the Tapestry on the market. The Encanto-side buildings are mostly complete now. I'm not sure of the exact number but I'd suspect at least 90 came into the market.

I stopped at Portland Place last week to see how Phase II is going. They still don't have their public report yet, which they expect in December or January. At that point, they'll begin taking contracts. Those places don't come cheap - something like $385K for the cheapest 850sf low-floor unit. There does seem to be a lot of interest, so I'll be curious to see how that goes. You can only imagine how great some of those views will be. Still, this market is still in a downdraft.

If the market was not in a bust cycle (which inevitably follow booms, and seem to last longer for some reason), we would not have one project after another cancel. A lot of projects currently under construction got their financing prior to their bust, so it's can be a little deceptive looking at sales figures, not to mention the hoopla that surrounds ongoing construction. IMO, the next six months will tell the story. If you start seeing entire projects taken back by the lender and units being auctioned, that's a sign the bust cycle is near its nadir. Maybe that can be finessed in the overall housing market but I'm afraid some urban projects will go bankrupt.

The good news is that prices are coming down to more realistic levels. I saw an open house at Executive Towers this afternoon. It was on the 10th floor, had east and south views, and they were dynamite. The unit was about 1100sf and was completely upgraded. Price was $325K. I took a list of units either for sale or rent in the complex and it must have been close to 10% of the entire building. The listing agent I talked to emphasized how desperate some of the sellers were.

[sundevilgrad]

Originally Posted by Drew-Ski

My wife works for a locally based Home builder and business is real slow. Sales are way down and invetories are piling up. The Home Developers are offering huge incentive programs ( price discounts, Cars, Appliances, and even paying your mortgage for a Year) to help lure possible buyers. There is strong speculation of several Builders going out of business and others are simply going to close down sales offices in non-performing communities. There have been substantial layoffs in many Home Building Companies and they are now beginning to rent out standing inventories of Homes. The price ranges effected the most are the "move up homes" $300,000 and up. Potential "Move up" buyers are finding it difficult to sell pre-exhisting homes. The Starter Homes and Upscale homes are faring much better. This Market correction has not yet bottomed out and probably won't begin to stabilize and improve for a couple more years. This is the opinion of her employer. Her company is in the process of cancelling and/or delaying many projects. There is a possibility that Medium Home Prices may settle back to 2002-03 pricing. A very noticable issue my wife encounters is finding Qualified Buyers. Now that the Mortgage Companies will no longer offer "Creative Loans", fewer people are now able to qualify for Loans. These are tough times.

A lot of the builders are feeling the pressure, but I wonder how much of it is do to greed on their part. During the boom they were building as many homes as they could, as fast as they could. It didn't matter if they had a buyer or not. When the market started to slow down they were left with a huge, unsold inventory of homes. Now that the sales of residences are back down to pre-boom rates (number of homes/unit time) it takes them that much longer to sell the inventory that they foolishly built up, without buyers, during the boom. That's why they need to offer crazy incentives. Their cash reserves/flow is low because they spent everything building up their huge inventory during the boom. Now they're just trying to get rid of the excess homes as fast as they can so that they can keep cash coming in to stay afloat.

So, what I'm saying, or what I'm questioning, is the market really that bad? I don't think so. The current rate of sales is consitent with pre-boom numbers. Yes, inventory is high, but that's because builders, investors and would be flippers bit off more than they could chew. For the most part, right now, only "residents" are purchasing homes. We don't have all the investors and flippers to buy the excess inventory, which means it'll take longer for what's there to sell.

[kevininlb]

Originally Posted by Drew-Ski

My wife works for a locally based Home builder and business is real slow. Sales are way down and invetories are piling up. The Home Developers are offering huge incentive programs ( price discounts, Cars, Appliances, and even paying your mortgage for a Year) to help lure possible buyers. There is strong speculation of several Builders going out of business and others are simply going to close down sales offices in non-performing communities. There have been substantial layoffs in many Home Building Companies and they are now beginning to rent out standing inventories of Homes. The price ranges effected the most are the "move up homes" $300,000 and up. Potential "Move up" buyers are finding it difficult to sell pre-exhisting homes. The Starter Homes and Upscale homes are faring much better. This Market correction has not yet bottomed out and probably won't begin to stabilize and improve for a couple more years. This is the opinion of her employer. Her company is in the process of cancelling and/or delaying many projects. There is a possibility that Medium Home Prices may settle back to 2002-03 pricing. A very noticable issue my wife encounters is finding Qualified Buyers. Now that the Mortgage Companies will no longer offer "Creative Loans", fewer people are now able to qualify for Loans. These are tough times.

New home sales are a horriblie, inaccurate measure of the economy and the housing market. HORRIBLE. Ask any economist and they'll tell you. New home sales account for a tiny fraction of homes in the market, and companies like your wife's can control supply (they got greedy, so they now have more supply than demand; that reflects overloading supply, less so declining demand).

Really, the housing market in Phoenix is doing just fine. Yes, there is a little bit of correction going on, but in the longrun that's a good thing. Check out median prices elsewhere in the country (in fact, virtually everywhere else). Talk about shocking. Let's just be thankful we're here.

[DowntownDweller]

I have noticed no appreciable drop in prices in historic districts. There are ever present outliers, but for the majority, they are still selling, and at 95% of asking. The TOM is up, but not horribly.