The Phoenix Real Estate Advisor

Here’s a very interesting article I came across last week. I know the agents in the field can “feel” the difference right now but is it really over? 

May 7, 2008, 11:08 am
The Wall Street Journal

The Housing Crisis Is Over?

Is it time to start house hunting? Cyril Moulle-Bertaux opined that April 2008 marked the bottom of the U.S. housing market. And in his R.O.I. column WSJ’s Brett Arends makes a similar argument. He looks at the data on housing starts since 1972, which shows that new housing starts slumped below the one million mark in March. Every time that has happened in the last 50 years, Mr. Arends writes, it proved to be the bottom of a recession.

“It’s bottom-fishing time, I think,” says Wellesley College Prof. Karl E. Case in the column. Mr. Arends says that he is one of the leading experts on the housing market in the country. “There’s got to be bargains in Florida, Arizona and Nevada.” Mr. Arends points out that Bill Wheaton, a legendary real-estate professor at the Massachusetts Institute of Technology, has also suggested that fears about the real-estate crash were overdone. And he points to a private portfolio manager in London, who said the homebuilding stocks on Wall Street were at last a “buy.”

In the Journal editorial, Mr. Moulle-Bertaux suggests that the housing market will revive, as more first-time buyers are lured in by falling prices and lower mortgage rates. “Homes on average are back to being as affordable as during the best of times in the 1990s,” he writes. “Numerous households that had been priced out of the market can now afford to get in.”

To be sure, as Mr. Arends points out, there is no guarantee that this downturn will follow the patterns of the past. And he notes that prices in many areas are far from a historic bargain. And where there is a glut, prices — obviously — are likely to stay lower for longer. But in many areas, prices are low and buyers may be tempted.
Readers, are you tempted?

OK, what’s going on with the market? Over the last few weeks I’ve noticed an increase in the number of homes selling here in Phoenix, Arizona. Does this signal the Phoenix market is changing or just a spring sale blitz?

I think the market is on it’s way to making a come back. When homes in Surprise and Maricopa sell in a few weeks (sometimes days) this means either the buyers are finally coming back or the home prices are finally catching up with the market.

I’ve had buyers in the Surprise area looking for a single story home, 4 bedrooms, 3 baths and under $260,000. A couple of months ago this would have been easy but now the homes are receiving 2 and 3 offers over a weekend. Most of these homes are forclosures so the bank will look at all offers over a few days and make a decision which one to accept.

I’ve been on both sides of the decision so I’m telling my buyers it’s time to get real with their home purchase. As a buyers agent, I want to make sure my buyers get in while the prices are low so they can see the greatest equity gains over the next couple of years.

Right now buyers need to start thinking, is this the bottom? Should I be out looking for a home right now? And most important, if I wait until the print media starts talking about this will I be too late?

On Monday the 7th RE/MAX Integrity had their annual golf outing at Arrowhead Country Club in Glendale, Arizona.  Every year for the last 16 years they’ve had this outing and even in these tough times for agents over 94 golfers played. In the past they usually sell out around 140 golfers so this year was not up to par (pun intended) with other years.

The benefactor for this outing is the Children’s Miracle Network and specifically the Phoenix Children’s Hospital. We were blessed to have a young survivor from a major illness that is now around 10 years old. This little girl sang a song near and dear to her heart, Somewhere Over the Rainbow. What a beautiful voice and I just know someday we’ll see her on American Idol, if the show lasts that long.

So we spent 5 hours in the beautiful Arizona sun, temps in the mid 80’s and played a fantastic course at the Arrowhead Country Club. The best part is we raised over $9,000 for the Children’s Miracle Network. All this from an outing put on by one company, which makes me proud to be part of RE/MAX integrity!

Ok, we all know that the media likes to take a subject (like the real estate industry) and beat it to death. Over the last year or so the only stories worth writing about were how the market is so bad, home prices are dropping, etc. Unfortunatley they had good reason to write about this because as we know here in Phoenix, Arizona things have been a little off.

So if the media is now spending their time talking about how the market is getting better, does that mean it is? Are they ahead of the story? Do they know something we don’t?

My feeling (tell me what you think) is once the media starts talking about a subject like this, things will change. Is it because of them or are they simply reacting to what the market is doing. Your guess is as good as mine but that seems to be the reality. It’s pretty clear that home prices have not started to climb yet but I think we can all agree that things “feel” different. Sales numbers in Arizona are up and it feels like something is about to break lose.

And while we’re on the subject of prices. Is it really that bad that some homeowners have not seen an increase in propery values in say…1 year? For a few years the prices of homes were growing by 20, 30 40% and more each year. Wouldn’t you expect to see the prices come down as quickly as they went up? How about a person that bought in 2000 and now 7 years later only nets 5-10% increase on their home..is that really all that bad?

Bottom line with this is a lot of people are sitting on the sidelines saying “I’m waiting for the bottom to hit” and my guess is these are the same people that usually wait until it’s to late. Don’t wait…real estate in Glendale and Peoria have already started to show signs of life. Other areas around Phoenix are also starting to see increased sales so the longer you wait to buy, the better the chances of saying “I should have bought last……”.

Tough question but one we’ll all need to consider soon. The state of Arizona (and many other states) has looked into taxing homeowners when they sell their home. The worst part is they will tax you based on the sales price not the equity gain on the home. So they tax the employer you work for, they tax your income you use to buy the home and then they will tax you on the amount you got for your home. Sounds even worse then double taxation!

How will this effect people? First it will hurt the people who are selling their home with little to no equity…something that is happening a lot right now. There are  many people that do not have a lot of equity and a tax on the sales price could eat up more of the $$ they would have after the sale. Secondly, since it costs more to sell a home, the buyer will then take on the burden of the tax since the homeowners will most likely try to pass this cost onto the buyer in the form of a slightly higher price.

What do we do?  The Arizona REALTOR Association has started a petition drive to collect signatures that would allow them to place this question on a ballot so we can all decide. This petition asks for the permission to vote on amending the constitution of Arizona thus canceling any options for the government to go after this new tax. Bottom line is the state needs money but not at the expense of the homeowners that are already taxed enough.

I’m asking for my readers to speak out! Let me know what you think and I’ll pass it along to the REALTORS Association.