This is me from this morning’s Arizona Republic, a kinder, gentler, less incendiary Greg. (Permanent link.) That marks a year of these columns, 52 on the nose. To tell the truth, I expected to get fired a long time ago. But, if they’re not going to fire me, I wish they’d give me more space. At 350 words I have just enough room to introduce an idea without quite exploring it…
Local market is slow but not on life support
The nationally reported real estate news is dire, of course — bad news trumps good news.
The locally reported real estate news is largely defined by year-over-year comparisons, which tends to make things look worse than they really are. Is our market in excellent shape? Far from it. But neither should it be put on life support.
For the kinds of homes common on the west side of the Valley, September was a repeat of August, itself a repeat of July. Prices flat, sales slow but not awful, discounting moderate. Days on market is climbing, but available inventories of newer suburban homes are declining. (You can read more about these results at bloodhoundrealty.com/MarketBasket.php.)
But as interesting as those results are — and as promising for the recovery of our market — they speak only of sold homes. What about the homes that are not selling?
I’m looking at houses right now for an investor. He picked out one he was interested in, and, as a matter of course, I searched every similar listing in that subdivision — active, pending and sold — going back to May.
I found 10 active listings with that floor plan in that subdivision. This is as close as you can get to identical comps, like little plastic Monopoly houses, each one the twin of the next.
All of them were built between 2002 and 2004, all by the same builder, of course. All upgraded to some degree, none to the ultimate degree. No premium lots, no view lots, no pools.
What’s the spread of prices for these nearly identical homes? They run from $245,000 to $360,000, a difference of $115,000.
Which ones will sell?
The best-kept houses at the low end of the price spectrum will sell. The others will not. They won’t even be shown.
The nature of this market is that people are still seeking prices for their homes that would have been outrageous a year ago, as we neared the end of our housing boom. Whatever they might say, these people are not motivated to sell their homes right now.
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate, real estate marketing
Todd Tarson says:
I guess the editor is now gonna take angry calls from the bubble heads?? Will that be any better??
October 6, 2006 — 9:39 am
mike says:
It’s in the very nature of being immersed in a state of denial that it’s very difficult, some would say impossible, to recognize it while we’re in it.
Only in retrospect does it become clear.
Gregg, you might want to go back over your posts for the last few months with objective eyes and mind and see if you don’t think there’s a heaping dose of denial in there.
October 6, 2006 — 10:06 am
Greg Swann says:
> Gregg, you might want to go back over your posts for the last few months with objective eyes and mind and see if you don’t think there’s a heaping dose of denial in there.
You come across as a nice man, and that’s why I talk to you at all. I don’t decide anything except by objective evidence, preferably a lot of it. The houses I’m most concerned with are doing okay, not great, not awful, and — significantly — available inventories are shrinking month-by-month. I have no opinions about other markets. Phoenix is strong and will remain strong for the foreseeable future. Fact, not fancy.
October 6, 2006 — 10:21 am
winged monkey says:
oh dear god can I just give you some rope and get it over with?
good luck with the job search, you’ll never work in this town again you discredited hack
October 6, 2006 — 2:38 pm
mike says:
Ok, Greg. I guess it’s not your time for reflection yet.
I’ll check back again in a month or two, when inventory is up above 9 mos.
October 6, 2006 — 7:27 pm
2nd winged monkey says:
Dude there are three blogs following the crash in PHX.
http://www.housingdoom.com
http://housingpanic.blogspot.com
and of course ben’s blog.
Give it up and go get your Walmart greeter job already.
October 7, 2006 — 5:45 am
McDonalds Manager says:
You may want to come in soon since with all the Realtors trying to get jobs we may not be hireing next month…
October 7, 2006 — 8:17 am
Todd Tarson says:
Like I said…
October 7, 2006 — 8:31 am
Garth Farkley says:
Greg,
Many of us saw this coming, and we said so. We based our arguments on clear objective evidence. For example, I’ve long discussed the PMI Mortgage House Price Index numbers on various non-Realtor blogs. Housing Panic is one of them. Just one.
We had the temerity to talk about what we saw happening and what was to come. You, Greg, called us flying monkeys, Nazis and Stalinists. YOU, I think, are NOT a nice man. I seriously question your candor.
Remember, the original Cassandra of Troy was right. It was her curse.
October 7, 2006 — 8:31 am
Garth Farkley says:
BTW, this is just the beginning. Cassandra says it’s going to get much, much worse before it gets better.
October 7, 2006 — 8:34 am
jcricket says:
I think Greg’s as guilty as the “immiment crash” believers on the far side of the bubble argument of seeing only what he wants. He sees every increase in inventory, decrease in appreciation, etc. as a temporary blip. They (bubble/crash believers) see the same as an inexorable trend towards the next “Great Depression”.
Greg reminds me of me during the dot-com crash. I had no idea of how bad it would really get (just how much the market would fall, how many companies would go out of business and how hard it would be to get and retain a job in technology). But as we all know, it also wasn’t a permanent problem in the macro-economic sense, even if it was permanent for specific companies and many people in IT. But from this experience I’ve definitely learned that things can get far far worse than you think, and having “skin in the game” makes you very prone to subjective validation and confirmation bias.
I seriously doubt either Greg or the true bubble-believers are, stricly speaking, going to be right. Greg’s optimism is probably sorely misplaced – this isn’t a blip, the market will probably tank (even in Phoenix) within the next year, and it will take years before appreciation returns. But relentless pessimism is also misplaced – homes will continue to be bought and sold, not everyone will go broke, and nice areas (like Phoenix) will recover sooner than you think. If I had to bet, I’d say 5 years from now we’ll have a fairly normal market (barring another war with Iran or North Korea) , which might feel like a long time, but it’s not in the grand scheme of things. And most of us not in housing or construction won’t be all that affected by the housing downturn.
Since people aren’t going to stop buying and selling homes, any smart middle-man (i.e. an agent) will still be able to make some money. And if the weakest middle-men (i.e. new agents) get shaken out of the market because they have small pipelines and limited fallback savings, then more established players can ride out the downturn. Perhaps Greg’s recent business model changes will help him weather the downturn, but I expect to see mea culpa posts from him in the near future, like this guy: http://seattlerei.blogspot.com/2006/10/purge-continues.html
October 7, 2006 — 9:42 am
Greg Swann says:
Prices are holding, and inventories of the homes that drive this market have been shrinking month-by-month. But that’s not important, anyway. What matters is buyer activity, which is slow for now. Not stopped, but slower than it should be. If buyer activity picks up, the inventory won’t matter, at least not unless sellers start discounting a lot more than they have been.
I was interviewed by the Republic last night, and my expectation is that they are going to report that they are surprised to discover that many communities are up in value, year over year, even after the tough year we’ve had. I talked to them at length about why I feel that many sellers are not truly motivated — the subject of the article above.
By my measure, the homes that matter to this market are down 6% from the peak. Not wonderful news, but not the end of the world. I don’t work from analogies, mystic prgnostications or stupid jokes, I work from facts. The facts may change in the future — but you will depend on me to report them if they do.
For what it’s worth, BloodhoundRealty.com is having a great year, and it’s about to get a lot better. Worshippers of pain might have better results elsewhere.
October 7, 2006 — 10:01 am
anon says:
LOL. Everyone wants to live there. The beaches, movie stars, viwes of crappy desert. lol San Diego gets hit this hard you all are dead out there in the heat.
October 7, 2006 — 10:12 am
winged monkey says:
greg if you’re having a great year it’s proof of the stupidity of man
pt barnum had good years too
my question is how do you sleep at night knowing you’re a con man and a fraud?
life is short bud. you’ll look back on your evil ways during the late great housing bubble on your deathbed and wish you had been a better person
trust me
October 7, 2006 — 2:25 pm
Cathleen Collins says:
Crimany, Bubble Boys, what happened to you all to make you hate humanity so much? You are all so afraid of life and so afraid that you might be wrong that you’re investing your precious lives hoping that the worst will come to pass for everyone, just to validate your petty outlook.
Yeah, bad things can happen… they happen to the best and the worst, and eventually to everyone in some way or another. But goodness, grace, splendor are here in ample supply, too. Just take your noses out of the poo, lift your eyes, and witness. Why do you reach for despair when you can embrace life instead? You want a dark and desperate real estate story? I have one, a personal one that will make you tingle! My mother’s mother was widowed when the youngest of her ten children was still an infant. My grandfather died in a work-related accident during the Depression. My grandmother lost her house, which she had owned outright, to a con man acting as her real estate agent. Not only did he swindle her home away from her, he also stole her furniture and even her family’s clothes! I could go on and on with the bad. But you know what? I can go on and on with the good, too. This year we celebrated my mother’s eighty-fifth birthday, and several years ago we celebrated my parents’ fiftieth wedding anniversary. The bad happened, but the good survives.
And now I’m a real estate agent, helping my clients achieve their dreams. I love what Greg and I do. And not just Greg and me. Take a look at the fine work being done by the real estate agents represented in our Blogroll. Tell us that you don’t like us because we help people who want our help. Or tell us that you don’t like our beautiful Sonoran desert, monkey-men. None of that matters. Your Rancor has no power against our Joy. Just too bad for you.
I’m very involved with animal welfare and advocacy, so you might imagine that I get flooded with appeals that describe inhumane treatment of animals, but I never, ever read the detail that describes the extent of human depravity. And I never slow down to gawk at accidents. And this is the only attention I will give to the decadence that is spewed by people in love with the idea of other people’s misery. For any who wish to love life, it’s yours to love. To those who do not… that’s your choice, too. But I’ll waste no more time on you.
October 7, 2006 — 11:50 pm
DavidInLA says:
Todd Tarson,
You’re realy boring using the same old tired arguments that anyone who does not agree with you’re denial of the bubble must be angry.
October 8, 2006 — 1:51 pm
mike says:
Here it comes, better buckle that seat belt …
ASU report: Greater Phoenix prices fall for the first time in 10 years.
Story: http://www.poly.asu.edu/news/2006/10/10/
October 11, 2006 — 2:11 am
PHX seller says:
Cathleen
Thank you for your post. It describes a truly horrible story about your Grandmother and her dishonest treatment. I am positive that if she had family and friends guiding her she might not have been caught up in such an awful real-estate transaction.
I am sure the realtor who took all of her money and assets felt bad but he had to feed his kids to. The realtor had a job to do and did what desperation called for. This is what desperate liars do; they survive off the misery of others.
Comparing what is going on now to what happened to your family might be a stretch but hear me out. First off I will assume that you are a good person who would break your back to help people. So I will avoid using you as an example of what I see. I will use the “average realtor” for discussion purposes.
Right now there is a realtor selling someone a house in the desert. The client is unqualified and uninformed. He, just like your grandmother, doesn’t have the proper information to make a sound decision. He trusts the realtor to help educate and inform him on the process of real-estate.
The realtor will do anything to get him qualified to buy this house. He will bring in a broker with a teaser rate, he will help him fill out loan docs and he will be sure this deal closes. He has kids to feed and is desperate, greedy and a liar.
In a few months the loan will start to default and the buyer will start learning what just happened. The realtor may even visit to get a listing if there is any equity but if there isn’t they will be on to the next victim.
Just think if the buyer could get real advice from his friends and family he might not do the deal. Just as your grandmother was taken so will this individual. It is sad but history repeats its self. With no equity and knowledge this individual will lose his house and other worldly possessions. Just as your grandmother was prey, he to will suffer serious pain.
Information is the great equalizer. If this poor buyer had the access or knowledge to research his decision he might have found a different opinion. The opinion he might have found could even be on the internet or even on this thread. By looking at two sides of the argument he might even alter his decision. Not to say either is right but he might become more informed.
I assume that you would do anything you could to go back in time and give your grandmother advice on her transaction. You would probably advise her not to complete the transaction. I am sure you would back it up with facts and an educated opinion. In the end it is still her decision. She might have altered her actions or not but at least it was an informed decision.
You are now at a crossroads in your career. You can invite alternative opinions and let people make informed decisions or you can fight to hide conflicting thoughts. You can defend your right persuade individuals into profitable transactions or you can do the right thing and help them to become informed.
Your grandmother was hunted down by a bloodhound realtor who looked at your grandmother as a meal ticket. He attacked consumed and ran to feed his young. He got up the next day and did it again.
Tomorrow when you get up and talk to a potential buyer are you going to spew your “the market has hit a speed bump but you should buy now” speech. You might even add in some misinformation that this market is different and I can tell you 21 reasons why. Can you keep a strait face and not let them see you sweat.
At the end of the day go and visit your grandmother. I hope you have the courage to look her in the eye. If you can, I hope her expression is not the same as the guy you sold a house to last year.
Now get up early get out the blood hounds and go hunting. The prey is getting smarter and harder to find. If you corner one don’t let him go. Close the deal and bring home grandma her just reward.
By the way I feel that it is not time to buy in phoenix. I feel that a prospective buyer should rent at this time. It is my opinion and if asked this is what I will say. What do you think?
Happy hunting
October 11, 2006 — 10:20 pm