I am in a similar position in the same metro. To me, it is not even a close call. Yes, there are significant price declines still to come in AZ. But that is not the only factor. Neighborhood upheaval is a real phenomenon. And Phoenix area neighborhoods often do not age well, even absent economic depression.

A “good amount of savings” may prove useful in coming years.

i think it depends on your situation and budget. i wouldn’t buy anything now, especially higher end stuff. however, i don’t think it was a horrible decision for those that bought in the 100K range and got that $8k tax credit….if they plan on living there for quite a while. to me a home is a home, not an investment. so if you plan on living there for a long time, and the mortgage is less than the rent (which is still not typically the case) then i don’t feel that buying is an awful idea. again though, i’m talkin lower end houses. a $100K house can drop 10-15% more and it’s not the end of the world if you’re going to be in it for a while. but if your $500k home drops another 10-15%, that’s an entirely different story. fyi…i bought in 2004 and don’t know for sure, but am prolly a bit upside down right now (refi’d once for a better rate, but pulled no $ out ever). however, i’m ok with the fact that i may be a bit underwater as i love my “home” and have no intentions of moving in the near future. i also know that my mortgage, taxes, and various upkeep of owning (or rather “borowing”…lol) my home is very comparable to renting a similiar home in a similiar neighborhood. i have been blessed thus far though. i would definitely be in a pickle if i HAD to move for some reason.

Having said that, I understand and agree that there are non-economic reasons to own a house…as long as it is affordable.

I am a renter, and will remain so for at least another year.

So, in your opinion, (anyone with an opinion please feel free to respond), a person with a good income and a good amount of savings living in the Phoenix metro, should, at this point in time, continue renting rather than buy a modestly priced home (in relation to income?) My lease is up in December so I am trying to determine the best move. I think I know what is right and I think I know what most posters here would say, but I would love to hear from any and all of you, as second, third and fourth opinions are always very welcome and much appreciated…

And I don’t think there is any question but that the bankers, in conjunction with the Obamanabile economics squad, is counting on time and money-pumping to allow them to keep their companies, jobs, and moneymaking privileges by not forcing insolvent banks into failure. Particularly in the banking system, the privatization of profits and socialization of losses stinks like you-know-what. I don’t know why anybody would want to maintain any banking relationship with any institution that took TARP money, whether Paulson forced it down their throats or not. There is a time to say no, and specifically, some of that group of nine chickens utterly failed to man up (including some of the guys who are worshipped in the media as paragons of American capitalism. Whether you paid it back or not, Dimon, Blankfein, etc., you took it, and that, my friends, isn’t capitalism). The notion that all of the nine should take the money so that none of the nine would appear stronger or weaker than the others, IMO, would make Jefferson and Adams cringe. The government should never pick winners or losers, but that is exactly what it did here. Yes, I know Paulson was a member of the Bush League, but the problem has to do with structure, risk, and reward, not parties. Shame! Shame!

People in this country need to realize that politics is about nothing but power, and power doesn’t necessarily have the long-term economic health of the country as its primary interest. Look at the debt, people. AS A COUNTRY WE HAVE GOT TO STOP REWARDING AND SUBSIDIZING FAILURE AND BAD BEHAVIOR.

And yet now we hear utter bovine scatology about eliminating the “procyclical nature of mark-to-market accounting which embellishes the highs and exacerbates the lows,” well, good luck in finding anybody willing to invest in a bank or other enterprise that assumes risk (oh, that would be all of them). But, of course, we should have mark-to-myth accounting for every public company, that way earnings could just be what everybody wanted them to be, and home prices and stock prices could go back to the airless stratosphere.

How’s that for a late-night rant?

I don’t know, I’m just trying to figure it out. Reading the articles and blog entries here is definitely helpful.

1) Anecdotally, investors are very prevalent in the low end in both Vegas and Phoenix (Everybody should read that Diana Olick blog entry from last week regarding Vegas foreclosure feeding frenzy). I believe the reason for the heightened sales activity is investors believe they can get a decent cap rate by charging rent in an amount that old or new renters *expect* to pay on a house. In other words, you don’t find too many, if any, 1500sf houses renting for $600-$700 a month because renters will pay more and the investors know it. An equilibrium rental rate on low-end houses (to get them all occupied by an owner or renter) may be as low as $400-$500 per month, but I doubt we’ll see that level, because if we do, it will prove that the banks/lenders are even more insolvent than they are now.

2) I’m still a big believer in the idea that banks are holding back inventory with an understanding from a complicit Fed/Treasury that the big money print job will throw a floor under prices in the long run, thereby lessening the need for seizure or liquidation of a number of lenders.

Who’s buying these homes? The higher-priced homes aren’t selling, does that indicate no one is selling their homes and buying larger ones? It could be that there’s a lot of renters who finally decided to pick up something cheap, but part of me wonders if it’s only “investors” – otherwise, where is the new group of homeowners coming from, if no one is trading up? Of course, the way things are going, all the foreclosures in the high end of the market are getting loans again and buying up cheaper homes..