IT’S OFFICIAL- AZ REPUBLIC SAYS ‘FEAR GRIPS VALLEY (PHOENIX) MARKET’
Despite what the soft landing crowd has been saying, a perusal of the Arizona Republic’s housing ads tells a different story. Ads are peppered with “Motivated seller,” “Lease Purchase,” “Foreclosure!” One ad in Gilbert reads as follows:
    NO QUALIFY- $0 DOWN! 3bed 3 bath, built in 2004. Take over payments $1394
Todays Arizona Republic headline: “How Low Will it go? Home prices may dip 10% as fear grips Valley market” (Click here for article)
The reality fairy has finally hit the mainstream media over the head, and it’s not going to be pretty. Ultimately, to expose the bubble for what it is will be a blessing for consumers. To hide the truth with happy talk was only serving to artificially drive up prices further. As sellers start to price their homes more in line with reality, the stand off between sellers and buyers can start to loosen. Unfortunately, the huge inventory is still going to leave a number of sellers holding the bag. In the short term, there are just not enough buyers for all of those homes.
The AZ Republic is calling for home prices to drop about 10%. However, the excess inventory problem is much more acute for higher priced homes, by virtue of the fact that fewer buyers can qualify. The result will be that the drop in upper end homes can be much, much higher.
The June 16 Wall Street Journal had an article called “The McMansion Glut” It stated “The golden age of McMansions may be coming to an end. These oversized homes – charaterized by sprawling layouts on small lots, and built in cookie-cutter style by big developers – fueled much of the housig boom. But thanks to rising energy and mortgage costs, shrinking families and a growing number of retirement-age baby boomers set on downsizing, there are signs of an emerging glut.”
One of the most distrubing aspects of the Republic’s article is the confidence that damage will be minimal, due to the robust economy. The Republic states “The combination of two ingredients makes the housing markets go bust: overbuilding and job losses. Metro Phoenix has jst one: overbuilding.”
“The Valley has one of the most robust economies in the country, with an unemployment rate below the national average. So it can likely weather the housing market’s downturn, economists say.”
This is a surprising assertion, given that earlier in the article they also state, “With the housing industry accounting for at least one of every three dollars generated in the Valley’s economy, any slowdown will hurt.”
It would stand to reason then, that a housing slowdown in Phoenix would result in an employment slowdown, with all it’s accompanying difficulties.
Traditionally the prime home selling season ends in the middle of summer, as families make their move before the start of school. This season though, is going to see the Valley with a tremendous amount of excess inventory. Only time will tell how many price reductions, and how much time it will take to clear it.
Ohio Fraudclosure
Mish's Global Economic Analysis
UK House Bubble
Bubble Meter
Northern Virginia Housing Bubble Fallout
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
Comments are now closed.