My two cents worth; pricing is absolutely the only factor that can make a rental profitable. The old saw of, “Don’t wait to buy real estate, buy real estate and wait,” has lost most of its suggestive glamor in the past few years.

The pool of qualified first timers is certainly limited by the continual job losses as Yossarian #10 states.

Building is no longer an industry that provides the necessary positive feedback to grow on itself; further errodeing potential buyers.

The pool of retiring folks are taking huge hits on their current home values and 401-K values, forcing many to continue working for the foreseeable future.

Inventory depletion is the only possible event that will restore values to coincide with actual new construction costs. Stable employment growth is the only possible means of providing qualified buyers.

Considering the above…my best guess for Phoenix to recover to a quasi-normal state…10 years.

http://www.bizjournals.com/phoenix/stories/2009/04/27/daily57.html

Arizona housing prices have a loong way to go, to bottom out.

Currently there are around 45,000 homes in the foreclosure process in Maricopa county (phoenix) this is up over 3000 in the past month, 7000 in the past two months. In fact, preliminary count for April
9120 NTR (notice of trustee sales) 90 days late, 90 days before foreclosure.
2470 Canceled trustee sales.
3400 Foreclosures

So, if even half of these homes foreclose, that would add 22,000 new REO homes to the inventory.

Yes, there are a lot more buyers, prices are firming up in the sub 100K range, even increasing… But are there more buyers than delayed inventory? only time will tell!

People are certainly getting more house for the $$ these days but the myopic focus of the activity leads me to believe there’s a saturation point or a leveling off that will occur. Is this area of pricing the only envelope of price that could make a rental profitable? how deep is the pool of first timers making the move into this fire sale?
Are there really that many bankrolled retirees booking their last days in the sun? …and what does that mean for the market in ~10y when they start shedding their mortal coils?

so many questions.

“Trashed townhouses: New homes in Oswego develop into trash heaps after developer vanishes
Seasons at Southbury development is left partially finished, without landscaping and trash-filled”

http://www.chicagotribune.com/news/local/chi-trashed-townhouses-w-zone-01may01,0,3224239.story

Will be interesting to see the cross currents this summer.

Outside of an unusual event, perhaps the lower end is in sight of a bottom? (Agree with above 15%’sh guess.) I’ll be really curious to see how the higher end stuff sells (or doesn’t). It has a ways to go. Equity performance ought to be a factor.

Can interest rates remain this low (and for how long?) while monetizing debt?

Stay tuned!

I don’t know how many people that room holds, but it was jammed full. When I walked by the window, I didn’t see an empty seat.

I’m guessing a mix of investors, distressed homeowners and realtors that need to know how to deal with them as well as the banks & auctions.

Good observation on your part.

These folks aren’t buying $75K homes, they are buying $125K to $150K homes for $75K to $100K. Anyone who doesn’t think so can attempt to develop the land and build the same house for $75 without someone taking a haircut.

This is a classic recovery phase, one person’s loss is another persons gain and it always starts from the bottom up ( ascending price levels).

The pivotal point in each phase is inventory depletion at which time costs return to the actual cost of construction. And, at that point sales drop like a rock.

So Twist’s point is well taken and not a perma- bear position at all…but a nice study in solid math.

In most industries when they are reporting sales figures, they do so in dollars rather than in units sold. Normally # of houses sold works just fine in the real estate industry, but there has been a dramatic shift in the mix of houses sold.

For March 2009, despite # of sales being almost 80% higher than March 2008, the sales volume in dollars is almost 20% below the March 08 figure which was considered a dismal month.

There may be a lot of houses selling in Phoenix, but there isn’t much money flowing into real estate yet.

It’ll be interesting to see the spin – will they call bottom without mentioning the prices of the homes involved?