AZ will recover because it has demographics on its side. People will continue to move out of CA,NY,MI,OH etc. and move to the Southern US. There are probably some good deals long term in AZ now. If you read the whole article is states houses are selling for between $60-80/sq ft. You CANNOT build a house anywhere near that price especially in that market. It is a CLASSIC correction in an overheated real estate boom where too many short term investors got into real estate similar to the stock market bust of 1999. If you can buy a house and rent it to cover your cost it could be a good LONG TERM investment.
I am moving to Arizona in February. I cannot buy a home yet, but I think Arizona is going to be a great move for me.
That's exactly the problem. In these overheated markets, a house with a $2400 mortgage payment will only fetch $1600 in rent a month.
"AZ will recover because it has demographics on its side."
"It can't happen here, we're special". Heard that before.
"People will continue to move out of CA,NY,MI,OH etc. and move to the Southern US."
Who are these "people"? The fabled boomers who are going to sell their overpriced McMansions and flock to the southwest for the "good life"?
Sure, IF they can sell their homes in NY, CA, Maine, Utah...you might have heard, home sales are slowing everywhere. Kinda hard to buy a new overpriced sheetrock castle when you can't sell or rent the old one to cover the mortgage.
Add into that, AZ is severely overbuilt, a lot of the homes on the market are in the middle of nowhere, with no infrastructure, JOBS, or even shopping. Sure, it's warmer, but it's hard to justify the cooling costs in AZ on a fixed income. For the worker bees, the job market in AZ flatly sucks, and that's from the people I know who live there, or tried to.
We won't go into the near-war zone conditions of southern AZ. Some of the stories have been posted here. Better have good insurance if you move there!
"There are probably some good deals long term in AZ now."
Do tell.
Where?
"If you read the whole article is states houses are selling for between $60-80/sq ft. You CANNOT build a house anywhere near that price especially in that market."
It would be pointless to build, as the state is OVERBUILT. Irrelevant. The issue is, the houses are overpriced, the local economy cannot sustain the housing prices, and prices are falling. I don't care how much a house cost to build, the only number that matters is the price it will sell for. Right now, that's less each day. How long until it stablizes? That's the gamble. Are you willing to bet $100,000? I'm not!
"It is a CLASSIC correction in an overheated real estate boom where too many short term investors got into real estate similar to the stock market bust of 1999."
Finally, something that makes sense. Yes, it is going to be like the stock market bust...but this one might be a little bigger...it was'nt just flippers who drove this market up. Lets look at the lenders who allowed "no doc" loans, stated income, gave toxic loans to people making 24K a year so they could buy $500K houses, and then look at the equity locusts from CA who have been driving up prices across the country.
"If you can buy a house and rent it to cover your cost it could be a good LONG TERM investment."
This is becoming increasingly difficult even in the softer areas, as prices have been driven so high, the only way to afford the mortgage is through toxic loans, and then the rents you can get - which will drop in the next couple of years, it's already happening in some of the worst areas (My rent, which has always fluctuated quickly in response to the housing market, as I live close to SF, did'nt go up this year. That has never happened, in the years I have lived here) - rarely cover even the principal, let alone the insurance and taxes and such. The time to buy rentals is a couple years from now, when it's cheaper to buy than to rent, because you will quickly be losing money every month if you buy now. Rentals purchased 10 years ago are money makers now. Rentals purchased now, will lose you a lot of money for a long time. AZ housing prices do NOT reflect the local economy, and the local renters cannot afford to pay your mortgage. Period.
Your advise would make sense in a different market - right now it's financial suicide, unless you can afford to get a traditional 20% down, fixed rate mortgage you can afford - and it's dumb to buy in a falling market, if you don't have to. All I see these days is a lot of wishful thinking and damned nonsense when it comes to the housing markets, and utter deja vu to the tail end of the .com implosion.
http://thehousingbubbleblog.com/
They've been right for over two years, they predicted everything that's happening now. The real estate shills and naysayers here? Most of them have been utterly wrong. Do the research. I can't see AZ as anything but utterly screwed, for quite a while.