ASU professor Karl Guntermann has misread his tea leaves. He believes Phoenix home prices are "stabilizing":
PHOENIX – According to an ASU business study, the housing market is on its way up.
Phoenix-area housing prices are declining at a slower rate than earlier this year, the study found.
This leads some to believe the worst is over in terms of the rate of decline in house prices — since prices seem to be stabilizing since February and March.
Although the housing market itself remains volatile, the median home price in metro Phoenix looks like it already hit rock bottom.
"It appears the worst is over… house prices appear to be stabilizing," says ASU professor Karl Guntermann.
Guntermann says Gilbert and Sun City showed the mildest drop, while the worst drop was in Glendale.
Home values have slid for 27 months in the valley — that’s the longest in valley history. "It’s hard to say if this is the true bottom or a temporary bottom," says Guntermann.
A "temporary bottom"? Isn’t that called a "plateau", and not really a bottom at all? But I digress. Here’s the chart that Guntermann is using to show that the market is "stabilizing":
It’s kind of hard to look at a price drop of nearly 30% year over year and say "Yep, it sure looks like things are stabilizing," even if that beats the drops of January and February. It’s also only taking one aspect of the market into account.
It is important to remember that "past performance is no guarantee of future results". Consider the fact that around 68% of Phoenix homeowners are underwater, [Check out Reagor's headline in that link- I thought it was pretty funny.]and being underwater is one of the leading causes of foreclosures. Also consider that according to FHFA, about 40% of foreclosures are due to loss of income, and while unemployment may not be as severe as in other places, the Valley economy is hurting. [Check out the rise in unemployment here.] Then there’s this chart to consider, which I consider more significant than Guntermann’s: [Data from ARMLS]
Maricopa County SF Home Sales vs. Listings July 2009
(prices in 1000s)
Before someone shoots off an email to remind me that "month’s supply" doesn’t really mean how many months a property is going to be on the market- I know it. Face it though, when you look at the ratios [Which is after all what "month's supply" is.] the odds of you selling your $30,000 property in the Valley in the next month border on virtual certitude. Your odds of selling your $3M dollar home in the Valley in the next month, or the next, or the next, aren’t that hot.
If a seller wants to increase their odds of selling a property, the easiest way to do that is to drop the price. If a seller can’t or won’t, their lender probably will. As long as there is a big supply of upper-end homes that need to slash their prices to sell, it is going to keep downward pressure on lower-end properties.
Sure, prices can’t drop at these rates forever- but that hardly means the worst is over. There are too many factors stacked against "stabilization".
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ASU’s real estate geniuses also had the following predictions:
1. 2006, there is no bubble
2. 2008, price drops are over.
With such an illustrious track record, it is easy to see why they get more articles, but I digress.
So, strangely, when the government A. has moratoriums on foreclosures, B. drops mortgage rates under 5% by FED action, and C. gives first time homebuyers $8k, the market magically suddenly stabalizes. Gee I wonder what happens as these three policies wind down in the next few months?
AND we have nearly 50,000 homes in foreclosure in Maricopa county, up from 23,000 at the beginning of the year, and climbing loan delinquencies. Really sound stable to anybody?
azrob is right. it’s like those who think the auto industry is just fine now. sales WAY up…it’s turned a corner. when the cash for klunkers program is done next month, it’ll be right back to the lowest sales numbers in years. we’re doing everything possible to artificially prop up every struggling market. eventually we will have to sit back and witness what the “true” market is going to go through.
I believe the “back end” of the recession will be worse for foreclosures than the front-end. . .the reason is that so many people were waiting for things to “turn-around” and they are not. That related unemployment chart for Phoenix shows that – the recent runup to 8.2% was very quick, and will likely continue. Unemployment is a lagging indicator, and as more people lose their jobs, more foreclosures.
My anecdotal information here in SD (from bank friends and realtors) is that those people who were hanging in waiting for a rebound, are finally being washed out. They were paying mortgages from savings (not gone), then went to credit cards (now maxed out). People may be stupid, but they aren’t dumb. . .after paying for two years on a 500K mortgage (when the house is now worth 300K) they finally see the writing on the wall and send the keys to the bank.
These people haven’t done any more than a superficial analysis of the numbers since the beginning of the bubble. Why should we expect them to start now? I long ago stopped assuming that having a degree meant one understood the importance of the question “why?”, let alone be able to answer it.
In the long term, reality is immune to any wishful thinking we might have.
Yes igor… scary.
Hey Twist have you looked at the Case-Shiller data? My understanding is that the back side of the graph generally reflects the front side in magnitude longitudinally so that they roughly mirror each other. I need to check the data for PHX but I know in NJ we have a long way to go.
Hi Twist and John
Here’s some more anecdotal stuff that’s leaping out of the shadows. Watch out for this and try to learn more about it. This is from the San Francisco Bay Area (although I’ve heard it’s going on many other places):
people aren’t paying their mortgages and banks aren’t foreclosing. It’s NOT so much that the banks would rather have the property lived in than sitting empty. These are houses that COULD be sold if foreclosed on. So where’s the pressure coming from not to foreclose? Washington. I have bank repo types gritting their teeth that they aren’t getting property to resell (and losing their bank jobs because of it), because the bank simply will not foreclose.
Washington under NO circumstances wants the losses recognized.
Also, this is happening with commercial real estate, which is why this big fat cyst hasn’t burst yet. The Feds are desperate for banks NOT to foreclose on CRE–it would send the economy into an even bigger tailspin. This is not a situation where there would be occupants if only the foreclosure process could be going forward.
This particular lie can go on because, even though a CRE property can be sitting 80% vacant, it is listed as fully leased as long as there is a master lessor. That, and accounting tricks sanctioned by Washington, preserve the CRE illusion.
The truth of course is that the country is being loaded with seethroughs.
More lies and BS from our Rezko hood Obama–and by the way, what IS taking flatfoot Fitzgerald (see Triple Cross) so long to indict that sucker? Tony has been talking EVERY DAY for EIGHT MONTHS.
Unless of course the rumor is true: Fitzy is also working for General Mediterranean. Alsammarae honey, as the song says:
Where are you now, are you in some hotel room?
Does it have a view?
Are you caught in a crowd
or holding some honey who came on to you?
Barack, why d’you have to be so jive…?
jryskmpr,
Wasn’t that you who promoted “ban foreclosures” in a number of posts? (Apologies in advance if I’m mistaken.) Looks like you’re having it your way now, but not as one might have expected.
We now have a semi-ban of sorts, without any legislation. Stealthy and undercover of course, like so much of what goes down these days. Interesting.
twist,
Did you lose your site’s favicon about a year ago? (You know, it’s the tiny little image that goes next to your url in the search bar.) Yours was three horizontal bars with a vertical bar on the right. Quite distinctive.
Believe it or not favicons do serve a useful, space-saving purpose on the Firefox bookmarks toolbar: they can serve as a link to the site without any space-hogging description. Don’t know if IE works the same way.
Okay, I’m sure you can tell I’m a geek. Any chance of getting the favicon back?
Avid reader for years.
Thank you
Catcher
catcher,
Indeed jryskmpr was into banning foreclosures (WARNING: link starts music). From time to time he’s been way out in front on some other issues too.
If he thinks some price-discovery stuff is about to burst the levee I’d take the news with a large grain of salt … and quietly make my way to higher ground.
We had an independent request for a favicon a few weeks ago. Looks like I may have to dust off my creaky pre-PC IT skills and figure out how to do that (Igor thinks that’s a “lame” excuse
)
Good news everyone. I had my house on Zillow for like two years, and someone finally wants to come and see it tomorrow. And, I just refinanced at 4.75 darnit!
They are stopping by tomorrow.
John M.,
Just go to create a little favicon, download it and FTP it to the root folder of your blog.
No sweat, guy. If you want me to do part or all of it for you just email me, okay
No need to post this John. Just offering help.
Catcher
[T]he back side of the graph generally reflects the front side in magnitude longitudinally…–metroplexual
Translation: the correction reverses the artificial boom to the same degree. What is worse, the “bust” often overshoots. As difficult as it may be for some to imagine, Phoenix and Las Vegas still have room to the downside.
Phoenix has achieved the unwelcome distinction of becoming the first major American city where home prices have fallen in half since the market peaked in the middle of the decade.
The boom in Phoenix was founded on a basic truth: it was a place where many people wanted to live. But the market turned irrational. Investors bought homes they did not even bother to rent out. They merely waited a few months until prices rose again so they could flip them.
By now, anyone who bought in Phoenix a decade ago would have lost money after inflation. Many did not get off so easily. Foreclosure notices were filed against one in 40 houses in the metropolitan area in the first quarter, according to RealtyTrac Inc. That was the ninth-highest rate in the country.
Read More: http://www.housingnewslive.com
Yes, it’s an informal ban on housing evictions, but you have to know something about the law to understand why Washington regards this as such a hot potato. Currently, housing enjoys only minimum scrutiny under the Constitution (Lindsey v. Normet). The evidence has been growing that housing is indeed an important fact, i.e. (and using the West Virginia v. Barnette test for such facts), it is a
1. fact of human experience
2. which, history shows,
3. is not affected despite efforts to affect it.
When a fact meets that test (gender legal equality does, exercises of religion do, proteced speech does), the fact is removed from the political process and power over it is turned over to the individual.
Boom. That’s it. Every lawyer and judge knows what is at stake when ANYTHING even APPEARS to raise the level of scrutiny for a fact:
1. individually enforceable rights vastly increase (the right to go into court and challenge policy); and
2. the discretion of the political system with respect to the MONEY is virtally destroyed.
Ask any lawyer you know about this. They will agree 100%. So even though the evidence mounts that housing is indeed an important fact, and even though current government policies SHOW that GOVERNMENT believes housing is an important fact (nota bene), the political system is bending over backwards to make it clear that no matter what it does in the way of an informal ban on housing evictions,
THE LEVEL OF SCRUTINY FOR HOUSING HAS NOT BEEN RAISED EVEN SLIGHTLY.
So I leave it to you to consider how ridiculous a situation this is. And the scrutiny continuum is just that–a ridiculous situation. There’s minimum, intermediate and strict (strict for important facts). This “continuum” (instituted by West Coast Hotel v. Parrish, 1937), has been much criticized. Scalia, though he is a police state monkey, makes regular and relevant jabs at it. For example, if a fact is raised only to intermediate scrutiny, does that mean it is a “semi-important fact” that is “sometimes” or “partially” affected by attempts to change it? Isn’t being a fact that’s a “little bit” important, rather like being a little bit pregnant? And so on. The logical problems with the scrutiny regime are as numerous as the hairs on your head. They would be ignored as long as everyone’s mouth was stuffed with money. But that’s over.
So the scrutiny regime has BIG logical problems. Indeed, as I say in my book The Eminent Domain Revolt (the movie will star Brangelina, my two faves), we are in the process of moving from the scrutiny regime–the doctrine of which is that policy is Constitutional if it is “rationally related to a legitimate interest” (that is the minimum scrutiny test)–to the maintenance regime–the doctrine of which is that policy is Constitutional if it “maintains important facts.”
As I say in the book, even West Coast uses “maintenance” explicitly (so does Berman v. Parker), and what the case really stood for before the Lyndon Johnsons and Robert Moses of this world perverted it, is the idea that policy is constrained to maintain important facts.
So, not surprisingly, a concept which was a minor theme of the old regime, becomes the major theme of the new regime. Plus ca changera….
As I prophesied in the book, we are now in the early stages of the maintenance regime, whether “moral hazard” types like it or not. There’s really nothing anyone can do about it.
What I’m telling you is that you have to look for some “breakthrough” language–look for something in some piece of Federal legislation, or Federal court case, which explicitly acknowledges a higher level of scrutiny for a fact which previously was held to enjoy only minimum scrutiny. This is very important, because one thing the Supreme Court says about important facts is that they relate to each other, so policy with respect to one has to be considered in policy respecting another.
Meaning? If the level of scrutiny for housing is raised, the level of scrutiny for medical car is raised implicitly, and from there we see the entire scrutiny regime facade fall to pieces and we are explicitly in the new era of the maintenance regime.
I have always said that this is the real struggle which is going on now, and it’s not a struggle between left and right, it’s a struggle between American homeowners and the FACTS.
Wanna see a good example of it? The medical care reform debate. No one reading this had noticed before, but NEITHER side–Obama or his critics–is advocating RAISING THE LEVEL OF SCRUTINY for medical care. That is American homeowners at work, through their lawyers. American homeowners don’t want rights themselves, and don’t want anyone else to have rights. What they want is POWER OVER FACTS.
It has worked before, so why not now? The reason is that the facts are threatening the facts, and the scrutiny regime is incapable of repelling the threats. The only alternative is to raise the level of scrutiny for the facts. QED
By the way, the case in which the Supreme Court decided that medical care enjoys only minimum scrutiny is DeShaney v. Winnebago.
So yes, I know exactly what is going on, what the current conflicts are about, what the current economic collapse is about. And you would do yourself a GREAT favor if you looked at all issues through this scrutiny regime v. maintenance regime lens.
Why? Because that’s how ALL actors in the system–from Goldman Sachs executives to county commissioners–see EVERY issue. Everything in the power structure is vetted through its lawyers before it is retailed to Joe Sixpack.
The power of the political system over ALL facts of your life–your lack of power over ANY facts of your life–comes from the West Coast Hotel scrutiny regime.
Wake up and claim your rights. Don’t sleep on your rights.
JR,
With all due respect, I would like to suggest that you may be over-focusing on “judgment” in the sense of the cognitive function “thought.” This has been typical of Western civilization since Francis Bacon’s early 17th century model for scientific inquiry became dominant in the 18th century.
I suggest you have a look at Part 5, Book XIII of Anna Karenina, in particular the descriptions of the paintings of Anna done by Vronsky and the artist Mikhailov. Tolstoy shows how Vronsky fails, having reduced Anna on canvas to a fact. In contrast, Mikhailov reduces Anna to a thing. The ontological distinction is emphasized in Part 7 when Stiva brings Levin to meet Anna and Levin reacts very strongly to the painting. Tolstoy obviously took this moment as of the first importance as this is the only time in a very long work when the two main characters actually intersect.
There are important head vs heart (indeed bleeding heart) issues going on here. There’s no getting around giving appeals to emotion a role in establishing the basis in ontology prior to entering into a judgmental examination of the facts (where indeed those facts must have the last word).
What I’m saying here is that your above discussion is suffering, to a certain extent, because debates like the one I had with Old Mike a couple of years ago have never been satisfactorily resolved.
Flavicon works fine on Opera.
Actually the median house price in the Phoenix area dropped from a high of around $265,000 to $117,00. I agree with most of the posts above that this housing bust is far from over due to the following: unemployment, resets, and mounting foreclosures leading to increased inventory.
Hi John,
I’m not a strict constructionist, but I am a strict disciplinarian. Which means, all the terms I used above are the COURT’S terms. So if you want to argue, argue with them. However, they will ALSO insist that you use the COURT’S terms.
So instead of complaining, you should actually read the cases and try to come to grips with how things are decided in the real world.
Your comment is the reason laypersons get so frustrated and never get anywhere with the legal system. You’re speaking English in a world which only speaks Urdu, so to speak. All legal terms are terms of art, and you have to know their definitions IN THE LAW, if you are to say anything.
And by the way, what ARE you saying? Housing remains at minimum scrutiny? Are you saying it is at intermediate scrutiny? Where are you in terms of how the game is played?
Don’t like the way the game is played? Too bad. Unless you can translate what you’re saying into “legalese” (and that’s not really that difficult–we’re not talking about dealing with geniuses when we’re talking about those in the legal system), you’re going to be ineffective.
At least I give people terms they can USE in their analysis. When I say “look to see if any court or piece of legislation raises the level of scrutiny for medical care, or housing,” you can be damned sure that’s important and would change A LOT. Because that’s the rules the political system has laid down.
You have lots of shadow governments just salivating in the wings, waiting for a sign that the writ of the scrutiny regime no longer runs.
Quarreling with some who gives readers (gratis) the key to understanding the essence of the regime under which they are living, sounds like ingratitude.
“Declining at a slower rate.”
So, when I fall off a cliff and my accelerating decent slows down as it approaches 120 mph, I guess I can comfort myself in the knowledge that “it appears the worst is over” and my speed “seems to be stabilizing.” Right before I smash into ground.
Quarreling with some who gives readers (gratis) the key to understanding the essence of the regime under which they are living, sounds like ingratitude.–jyrskmpr
Conversely, uncritically accepting whatever you may hear sounds like credulity–midieval man ascribed miraculous powers to the phenomena he could not otherwise explain.
Such uncritical acceptance is not very helpful from either an analytical or practical standpoint.
John is clearly inveighing against the reductionistic tendencies evident in logical positivism generally and positive law specifically. Invariably, discussions of logical positivism lead to “talking about words” which is pretty thin air for us mere mortals to breathe.
To my thinking, the best solution to our legal impasse is greater reliance on common law. It is more humane in its application to ordinary, every-day issues.
Thanks for your comments, but I do not want to “understand” the positivistic regime so much as I want to end it.
twist -
I’m seeing one of those flavicon thingies now under Firefox. Was that Admin? (wasn’t me)
malthus -
Well, yes I was doing that too, but mostly it was a straight-up attempt at dialog. I suspect that one reason for Fast Eddie’s legendary success as a criminal defence counsel is his exquisite sensitivity to the ontological foundations of a particular case, and his ability to subtly shift the ground out from under the Crown. Everyone in the province was just in awe over his performance at the Reagan trial.
I think JR will be more effective in his efforts at RE law once he realizes that there is a genuine Thought / anti-Thought dichotomy at play in the litigation process.
Your remark about the credulity in the 2nd paragraph of #19 brings up another important point. In fact, medieval man’s attitude toward the numinous may be deeper than you suspect.
Four months ago Alice M was good enough to remind me that modern Modeling & Simulation didn’t actually get started until Stan Ulam’s post-World War Two research into the feasibility of the Hydrogen Bomb. I’ve lately come to the conclusion that the human cognitive function of “imagination” (or “intuition”) is actually performed in the brain by means of mental simulation runs. This is pretty obvious once you recall people’s insatiable appetite for random inputs, from patterns of sheep entrails and tea leaves to keno-draw graphics.
One source of confusion is that feeling is opposite to thought (Jung is correct in categorizing it as “rational”), while imagination is orthogonal to it. But why imagination is still so spooky is that we’ve only been working on the correct model for about 60 years, where we’ve been hacking away at a pretty good model for thought for about two and a half millenia.
I’m a practicing poet, so I do take words pretty seriously, but I’m also trying to make some sense of that “Two Cultures” dichotomy that arose in England starting around the beginning of the 17th Century around Francis Bacon’s ideas.
I just finished reading an important book by Graham Parry on William Laud’s efforts at ecclesiatical Feng Shui in the 1630s. I think the “moderates” who were operating in that 4-dimensional all-in cultural / religious / political cage match hold an important key to understanding how society works. I’m especially interested in Laud’s surviving diaries and the documentation that William Prynne got up against him, that resulted in Laud being executed over his church beautification policies, among other things.
or practical standpoint.
It’s called “know your enemy.” Believe me, Ruth Bader Ginsburg will run more rings around you with her terms of art, than you will ever run rings around her with your scholasticism.
She’ll make sure you lose everything you have, including your book about the flunkey Laud. Ha ha!
By the way, read West Coast Hotel–and grow up.
somehow, the intsruction to “grow up” doesn’t seem to follow a post that ends with “ha ha!” too well?
vidiot,
good point. i wonder if the slower speed would cause extra pain though. hmmm. let’s ask jrysvkm
Wow, Igor is talking 1929
“She’ll make sure you lose everything you have…–jyrskmpr
If an honest man’s property is not safe from lawyers and the law, what justification can be made for its continued existence? Away with the positivists!
Spelling correction: “medieval” man