To paraphrase an old Pete Seeger song, "Where have all the owner-occupiers gone- long time passing?" Wherever they’ve gone, in Phoenix they’re not out there selling houses. That market remains dominated by the banks:
Two-thirds of the Phoenix-area homes that changed owners last month were either new foreclosures or resales of properties that had recently been foreclosures. The latest Realty Studies report from the W. P. Carey School of Business at Arizona State University explains a recovery can’t really be established until foreclosure-related activity is not the dominant force in the Valley housing market.
"Although the level of activity appears strong, the market is being driven by either homes being foreclosed or being sold back into the market by the lender," says Associate Professor of Real Estate Jay Butler, author of the new report.
Butler says the current market is similar to the mindset that created a "hyper-market" from 2003 to 2006, when investors were buying up properties, looking for a great deal followed by a big appreciation in values. He maintains a real recovery can’t happen until owner-occupants take control again.
Who’d have ever thought I’d be agreeing with Butler, but he’s right. In a world where most of the sellers are lenders and most of the buyers are investors, there can’t be any "recovery".
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In browsing listings in MLS, I have seen a number of homes that have been foreclosures 2 or 3 times. Apparently these are real smart speculators. They are buying the homes like stocks and selling them short. Butler is correct. When speculation sales are over, the real market will return. Thee is always this group of speculators who will lie and cheat to get FHA loans with little or no money down. Then they lose the homes.
Steve-
I should have said “speculators” rather than investors, shouldn’t I?
Investors who are buying for cash flow and long-term investment aren’t bad for the market. These guys that view buying and selling homes like swapping baseball cards that are the problem. They just represent the next wave of foreclosures.
twist -
the report appears to be getting a bit of press.
“Foreclosures still drive housing market”, by Colton Shone, KTAR, October 14, 2009.
People are still listening to Jay Butler? I thought he retired and went fishing with David Lereah.
Tobby,
No, he left Fannie for Move, Inc. and after a short stint there moved on to Reecon (as in RE con) Advisors, Inc. You just can’t make these things up. Eventually Reecon realized they’d been a bit too clever with the name and re-branded themselves as Real Estate Economy Watch, so now Dave is watching back, it would seem.
“Mortgage Lending Business Expected to Sink Next Year”, by David Lereah, Real Estate Economy Watch, October 14, 2009.
“The Housing Downturn and Homeownership”, by David Lereah, Real Estate Economy Watch, July 27, 2009.