If you weren’t in the Phoenix area in 2005, you couldn’t possibly understand the level of insanity in the real estate market. It seemed that the phone would ring daily. Agents would call asking, “Are you thinking of selling your house? Do you know anyone who is thinking of selling their house?” Listings would be snapped up, sight unseen, by investors desperate to own real estate in Phoenix. This kind of furvor meant that people would almost any price for a property, no matter how unusual, or how inconveniently located.
L sent me a perfect example of such a property the other day. In 2005, sales were booming in the community of Maricopa, a not-so-convenient 32 miles from Phoenix. Even further away, outside of town was a large property, built it 2002. This 5346 square foot residence had four bedrooms, five and a half bathrooms, two fireplaces, and a four-car garage, all on 154 acres. Maricopa, while it does have some very nice neighborhoods, is not in general known for it’s upscale, luxury market. In spite of that, this property sold for $3.2M.
The property, like so many properties that seemed to make sense in 2005 but are “white elephants” today, went into foreclosure. The bank took it back for $770,000n January 2011. There was an auction in December 2010, but that was apparently not successful. You have to feel for the folks who purchased it in 2005 and put $1.6M down. (OK, you don’t have to feel for them. Most Doomers are financially conservative and wouldn’t have put their money here.) The bank knows that the property won’t sell for $3.2M or anything like it. It was listed last month for $1,475,000.
Here’s a graph that I found in the Tax Evaluation Summary, which provides a graph of the essessed value of this property vs. the rest of the zip code. It is a perfect illustration of what is happening to the value of these distant luxury properties vs. the average home:
There is a lot of acreage, and a nice view, but demand (and financing) is difficult to come by in this price range, this far out of town. These far-flung luxury properties, like the McMansions of the boom makes you wonder, “What were they thinking?”[Many thanks to L for his help. Any errors in the post are my own.]