Valley Real Estate

[AZ Native]

I also receive daily emails on homes in my area (sent by myself). Many of the homes do show a reduction in price. However, when I look at the whole picture, this is what I discovered.

A home that was listed for 750K was reduced to 730K. I do a CMA (comparable market analysis) on that home. The comps come back about 700K. The owner saw how fast homes were selling so they listed their house 50k over market hoping it would sell. No offers were made so they lowered the price 20K hoping that would help. As of today, there are no offers but it has only been 5 days since the price reduction.

This has happened with many homes in my area that I have checked on. So even though there have been price reductions on these homes it doesn't necessarily mean home prices are decreasing.

There is still a huge shortage of homes in Arizona and that is one of the main reasons home prices have increased or held steady.

That being said I believe the price of homes here is not sustainable. Many potential local potential homebuyers have been priced out of the market. The interest rate has risen.

Something has to give and can see a market correction in the near future but I don't see a housing bubble burst like 2008.

The investors have driven up prices. Sad for potential homebuyers who have been driven out of the market. Don't even get me started on investors and rentals. People who can't afford to buy and now priced out of rentals too.

 

[AZ Native]

A house near me just closed. The comps on it were $827,000 and it was listed for $849,000. It was listed on a Saturday and they had an open house on Saturday and Sunday and would review all offers on Monday. They had 7 offers and accepted the highest offer and it closed for $900,500. It's still crazy out there.

 

[Folster]

A house near me just closed. The comps on it were $827,000 and it was listed for $849,000. It was listed on a Saturday and they had an open house on Saturday and Sunday and would review all offers on Monday. They had 7 offers and accepted the highest offer and it closed for $900,500. It's still crazy out there.

Damn! At 5%+ that's a steep monthly payment. But that's not exactly starter home territory. I wonder how sales in that segment are doing considering the buyers will be more sensitive to interest rate movements.

 

[dscher]

Uhh. Oof. This pill will be a tough one to swallow for overly aggressive buyers right now..... especially new home owners. A recent article pointed to rising rates being a drag on new home owners...I was like, nah, it's helping them keep out of this hyper inflated bubble.

 

[AZ Native]

Damn! At 5%+ that's a steep monthly payment. But that's not exactly starter home territory. I wonder how sales in that segment are doing considering the buyers will be more sensitive to interest rate movements.

Mostly huge down payments and some all cash.

 

[Finito]

I also receive daily emails on homes in my area (sent by myself). Many of the homes do show a reduction in price. However, when I look at the whole picture, this is what I discovered.

A home that was listed for 750K was reduced to 730K. I do a CMA (comparable market analysis) on that home. The comps come back about 700K. The owner saw how fast homes were selling so they listed their house 50k over market hoping it would sell. No offers were made so they lowered the price 20K hoping that would help. As of today, there are no offers but it has only been 5 days since the price reduction.

This has happened with many homes in my area that I have checked on. So even though there have been price reductions on these homes it doesn't necessarily mean home prices are decreasing.

There is still a huge shortage of homes in Arizona and that is one of the main reasons home prices have increased or held steady.

That being said I believe the price of homes here is not sustainable. Many potential local potential homebuyers have been priced out of the market. The interest rate has risen.

Something has to give and can see a market correction in the near future but I don't see a housing bubble burst like 2008.

The investors have driven up prices. Sad for potential homebuyers who have been driven out of the market. Don't even get me started on investors and rentals. People who can't afford to buy and now priced out of rentals too.

Right prices are still inflated but it’s clear we are on the way down.

 

[AZ Native]

See my post, #102.

 

[Finito]

See my post, #102.

So you don’t think the market has peaked?

 

[Devilmaycare]

So you don’t think the market has peaked?

I skeptical that we peaked. We might be near it though. In my neighborhood in Scottsdale prices are still nuts. A couple streets back from just had 2 houses that sold in less than a week. One which was the same floor plan as mine sold for a million even. That's nuts with the build quality of these house. For that floor plan a house that had a similar remodel sold for $519k in fall 2018, another remodeled one sold for $700k in late 2020. I wouldn't be willing to pay the 2018 price never mind current market giving the quality.

 

[AZ Native]

Peaked? It is getting there. I was just showing that the prices in my area are not on the way down. They could be in other areas.

A healthy housing market is one in which there are enough homes for sale that if no new ones came on the market, it would take four to six months for the supply to run out. Phoenix has enough for less than one month. Our inventory is extremely low so that keeps prices high. It is crazy.

 

[BigRedRage]

A house near me just closed. The comps on it were $827,000 and it was listed for $849,000. It was listed on a Saturday and they had an open house on Saturday and Sunday and would review all offers on Monday. They had 7 offers and accepted the highest offer and it closed for $900,500. It's still crazy out there.

area?

 

[Ouchie-Z-Clown]

I skeptical that we peaked. We might be near it though. In my neighborhood in Scottsdale prices are still nuts. A couple streets back from just had 2 houses that sold in less than a week. One which was the same floor plan as mine sold for a million even. That's nuts with the build quality of these house. For that floor plan a house that had a similar remodel sold for $519k in fall 2018, another remodeled one sold for $700k in late 2020. I wouldn't be willing to pay the 2018 price never mind current market giving the quality.

It will def be location specific. Right now housing prices are still skyrocketing in my neighborhood in SoCal.

 

[Folster]

30 year mortgage is up to 6%. High home values and high interest rates (relative to recent history) is a bad combo for everyone.

 

[AZ Native]

30 year mortgage is up to 6%. High home values and high interest rates (relative to recent history) is a bad combo for everyone.

Yep. And the extremely low inventory of homes in the Valley.

 

[dscher]

Yep. And the extremely low inventory of homes in the Valley.

Won't take long for excessive demand to flip and create supply... Overly aggressive FOMO in any markets is always self correcting.

 

[AZ Native]

Won't take long for excessive demand to flip and create supply... Overly aggressive FOMO in any markets is always self correcting.

I hope I'm wrong but the rising interest rate, extremely low inventory, out-of-state investors, and the flood of people moving here, I don't see it flipping anytime soon. Not saying it won't correct, it has too, the questions is it in the near future?

 

[Folster]

I hope I'm wrong but the rising interest rate, extremely low inventory, out-of-state investors, and the flood of people moving here, I don't see it flipping anytime soon. Not saying it won't correct, it has too, the questions is it in the near future.

It'll probably take a painful recession to force people's hands.

 

[dscher]

I hope I'm wrong but the rising interest rate, extremely low inventory, out-of-state investors, and the flood of people moving here, I don't see it flipping anytime soon. Not saying it won't correct, it has too, the questions is it in the near future.

Completely pricing out the middle class usually leads to dire consequences IMO. But agree, we don't know till we know... We should know pretty shortly, if I were to guess though.

 

[AZ Native]

It'll probably take a painful recession to force people's hands.

ouch

 

[Folster]

Average new home prices...

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[BigRedRage]

Open door now asking 17k less than they paid me for my house. They originally listed it for 80k more than they bought it for.

 

[Folster]

Open door now asking 17k less than they paid me for my house. They originally listed it for 80k more than they bought it for.

I can't imagine their next couple earnings calls are going to be good.

 

[Dback Jon]

Open door now asking 17k less than they paid me for my house. They originally listed it for 80k more than they bought it for.

How many of these companies are going to go broke?

 

[Folster]

How many of these companies are going to go broke?

Zillow crapped out of the house buying business and neither OPEN nor OPAD managed to turn a profit during a skyrocketing housing market. Both had sub 10% gross profit so there's not even much meat on that bone in hopes of a net profit. And how does that business even scale? Maybe that business model would fair better in buyer's market? But then they would have to hold inventory even longer.

 

[Devilmaycare]

How many of these companies are going to go broke?

A lot. All of the VC money has dried up since the Fed started raising the rate. The multiples on all of these companies have fallen through the floor due to it. We're going to have a shakeup where only the top one or two survive. Same thing with instacart type companies, delivery companies, etc. They've all been running negative to build market share. They can't survive that way now.