The annual ULI Real Estate Trends Conference in Phoenix is today and the economic forecasters there grimly predict another year of falling residential home prices in 2009, no growth in 2010 and 2011 and then the beginning of a recovery in 2012. These are some of the same guys that last year accurately predicted the big fall of prices in 2008. Article from the Republic is here.
This jives with what I feel is probably in store for the Phoenix residential market (although I'm no expert). With so much inventory out there and foreclosures still setting records, I doubt we will see a bottom until near the end of this year. And that bottom doesn't mean we are going to bounce back up - it simply means we will bump along about flat in values for quite awhile as the rest of the economy recovers. Until the Phoenix job market comes back, it is going to be hard to generate any momentum to get back to the normal 5-8% valuation growth rates in Phoenix. So that "recovery" in 2012 may only mean that we are seeing some sort of growth in values, but not much.
This does not bode well for the many people who are way underwater on their mortgages and may need to sell their house in the next three to five years. By the end of 2009, they will be even further underwater and for many of them, it will be a decade or more before they are back to even. This hurts mobility of the work force, prevents growing families from buying move-up housing and generally stunts the growth of the economy.
The good news is that home resale volume is up year-over-year as people are starting to snap up short sales and foreclosures. Almost all of the increase in resale volume is attributable to foreclosure sales. And people should remember that Phoenix metro has a lot of different sub-markets that may bottom out sooner or are holding their value better than others.
Nevertheless, I'd probably sit tight for at least 6 more months before wading back into the residential market - and even then, only if I got a smokin' deal in a good neighborhood. And of course, be very wary of realtors these days who tell you that you don't want to miss the bottom. The bottom isn't here yet in Arizona, and when it arrives, you are likely to have plenty of time to be selective and buy very low. There are plenty of homes out there.
We will see a bottom until near the end of this year,the
inventory out there and foreclosures is a good subject to explore thank you for ringing up this very important matters.
cletsey
Posted by: california recovery home | June 17, 2009 at 05:31 PM