According to Forbes magazine, Phoenix is the second best metro area in the United States to buy a home. They used a formula based on sales activity to come to that conclusion.
One would think however, that a good housing market would be one with the least possible downside risk and the greatest upside potential. While individual homes and areas may be holding their value better than others, the Phoenix area in general remains a risky place to purchase a home. Even former permabull Jay Butler, director of Realty Studies at ASU admits the risk:
There is increasing hope that the housing troubles are beginning to ebb, and the bottom, along with a potential recovery, are in sight. However, many problems continue to exist that could hinder the timing of any recovery. The impact of foreclosures on the market has been the primary concern of the last year and will continue to be in the coming months, especially with the end of many hiatus programs and the weak job market.
It is fair to say that the huge number of foreclosures are the worst threat to the stability of the housing market in Phoenix, and the situation is deteriorating: [Hat tip Freedom's Phoenix!]
[T]he number of pending foreclosures, properties on notice for a trustee sale but not yet sold, has increased steadily without exception since April 2006. In the past year, it has climbed by anywhere from 500 to 5,000 properties each month.
As of Friday, there were 45,709 total pending foreclosures in Maricopa County, according to the Information Market. Those are in addition to the roughly 73,000 foreclosures completed during the past three years.
Also as of Friday, the county was on track to reach 5,000 foreclosures by the end of this month, which would be the second-highest monthly total on record, having reached a high of 5,240 in February.
Even if 5,000 properties complete the foreclosure process this month, an even greater number will enter it.
As of Friday, lenders had served pre-foreclosure notices on 5,700 additional properties, a net increase of at least 700 in pending transactions for the month.
Actual foreclosures in the past three years total about 73,000.
While sales are at record levels [6,950 homes in Phoenix in May according to Butler.] Butler is right [Wow does that feel strange to say.] foreclosures will continue to play havoc with the market. Potential buyers in Phoenix need to exercise caution.
If Phoenix is the second best place in the nation to buy a home, we’re in deeper trouble than I thought.
Chart from Arizona Republic
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Mish's Global Economic Analysis
Northern Virginia Housing Bubble Fallout
Bubble Meter
UK House Bubble
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so i guess according to forbes that “there’s never been a better time to buy!” seems like there always some source at ANY time that can claim it’s a great time to buy????? and who knows….maybe it is….if you have a lot of cash and can wait 10-20 years to get any kind of decent return on your investment? the foreclosures are gonna keep comin and the higher end homes’ values are still a long way from the bottom in my opinion. i guess though if you can get a 3 bed 2 bath for 100K in a decent neighborhood then it sounds tough to beat? i beleive that’d be around 700-800/mo for mortgage taxes and insurance. not bad? it’s at least getting comparable to renting?