Posted on 04/03/2006 7:38:13 AM PDT by ex-Texan
That was certainly not the case in Massachusetts. $500,000 homes were auctioned off for $190,000 back in the early 90's. The people next door to me paid 250k in the 80's, the market dropped and they had to wait 15 years until the price of their place returned to that level. They were still losing money because the value of the dollar had declined. From what I hear it was even worse in Texas.
I had a tenant who was going to move out and buy one of those 500k houses. She decided not to, fortunately. Can you imagine paying 500k when the people next to you get a similar house for 190k?
The result will ultimately be higher long term rates as foreigners stop subsidizing the dollar. Again, fingers will be wagged and pointed elsewhere. My colleague at work who bought an "investment" property at exactly the wrong time blames "liberals and doom and gloomers" for talking down the market. No, it is really just myopia, greed, and in many cases, an excessive lifestyle.
save for later
He won't. You see, Arizona and in particular Phoenix is the El Dorado. Everybody is moving there and buying one of the new tract mansions they are building. So they are building tens of thousands more to supply that future need and the existing ones will keep rising in price. Phoenix has water everywhere (I think it's called the city of 10,000 lakes) and only a wussy man needs A/C in the summer but there's unlimited supplies of energy for that anyway.
I remember 100k condos going for 30k in Arlington MA. One guy who worked for the town making 30k or something like that had bought about a dozen of them. The whole mess was the primary factor behind the S&L meltdown which we are still paying for.
With people pouring out of California like a sinking ship, I think I'll hang on to my AZ house. Besides, I like it.
You can panic and sell yours.
Actually, yes. There are several "fronts" of new houses being built. The east valley front is about 10 miles wide and progressing about 2 miles/year. The 60 freeway was recently widened, and the Santan freeway is nearing completion to service there.
The west valley is similar. The north and south has limited itself with transportation, so there are new efforts to add freeway capacity.
So they are building tens of thousands more to supply that future need and the existing ones will keep rising in price.
Actually, yes. We're getting the people with money who are fleeing California and think that Phoenix houses are cheap. And we've recently started getting retirees fleeing the hurricanes of Fla.
Phoenix has water everywhere (I think it's called the city of 10,000 lakes)
No, that's Minnesota. It's a long way from here.
Actually, the houses use less water per acre of land than the irrigated farms they replaced. We're pumping water into the aquifer, not out of it.
only a wussy man needs A/C in the summer but there's unlimited supplies of energy for that anyway.
Like those wussy people in Virgina who have heat in the winter. You know anyone without heat in their house?
Actually, they call the energy "nuclear" out here. When California regulated themselves out of electricity a few years ago, we slammed out a dozen new electric plants on the border. We're set.
As for my house, it's a 20 year old view house in an area that will be the future "Beverly Hills" of Phoenix. The price has tripled, and there are only 1200 more acres of open land before we hit Indian reservations and public park land for as far as the car can travel in this direction. So, yeah, I think I'll stay until I'm ready to retire. I think I'd be stupid not to.
You could also install solar panels for about 20k which ought to cover your cooling needs. I could build in some passive solar. Your water comes from the Colorado river http://phoenix.gov/WATER/drtfaq.html. I have unlimited well water, even in a drought.
Your real problem, like mine, is housing oversupply. We have the same cheerleaders around here talking about the 200 people who move to this area each day. But that is ending as federal spending peaks. Your influx will taper off too for various reasons. But even before that you will see a dramatic decline in your "investment" tract mansions, Phoenix Housing Market Seen Slowing as "investors" (really get-rich-quick amateurs) bail out. I am outside of the get-rich-quick area, so my house has gone from 175 which I paid to about 225. I don't owe anything and I am grateful that my area wasn't bid up although we will still suffer in the downturn.
I've seen housing oversupply, and we don't have it. I was in Houston in the early 80's when the expansion halted and the oil industry died. Entire blocks of houses would be for sale, sometimes for years.
But they still didn't go down in price but perhaps 10%. Once people have mortgages for significant chunks of the valuation, they don't like the idea of paying someone to take the house. The mortgage companies in Houston stuck to their prices too, realizing that if they started reducing the price they'd crash the market and they owned way too many houses to do that. So they held strong.
I expect this market to do the same. The expansion is not ending, and with the immigration problem hitting So. Cal., plus baby boomers retiring in northern climates and moving, plus people fleeing hurricanes in the SE, I don't think it will. I think Phoenix seriously will be the new Los Angeles, and we've only just begun.
I couldn't agree with you more.
There are always housing bubbles, it's just a question of the location of the bubbles.
Actually you might be right about AZ. And primary residence is a different thing if you do not have much debt - the price going up or down might be not so relevant for you.
We sold our house here in WA state on January 2nd of this year. After that time, the market here went SOUTH fast!! People have failed to lower the asking price to match the drop and houses here are NOT SELLING now, after a lava hot market the past few years. Prices are now being forced down if they want to sell. The market is saturated with houses for sale here.
Here in Phoenix, AZ things have slowed a little, but the market is still very good overall. I watch the houses go up for sale in our NE Phoenix home community and with the exception of 1 really overpriced house, they sell within 3-4 weeks at close to full price. The latest rage here seems to be the multi-level condos/townhouses which START at around $250K and go up depending on the area. Those who borrow foolishly (like interests only loans) will wind up paying for it in the end.
*BINGO* !
Not only have I lived in both of those cities, I OWNED PROPERTY in them and I know what's going on now, as well! I also know what a real estate BUBBLE actually IS and what it is NOT; unlike you!
Article after article and post after post, by the doom&gloomers here, talk about this mythical REAL ESTATE BUBBLE, as though it was supposedly covering the entire United States. That, alone, should tell you and everyone else, what a fallacy it is. What is true for one area of this nation, is NOT true for ALL areas...and this is no exception.
Are there regions that have real estate "BUBBLES"? Yes, there are and there always have been. But outside of what took place during the GREAT DEPRESSION, there hasn't been a nation wide correction ( and during the GD, ALL prices went spiraling down...not just real estate prices ! ) since.
Your problem, and yes, you DO have one, is that your position on a lack of knowledge and understanding.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.