Dec. 28, 2006 - Fortune Predicts Chilly 2007 |
Fortune magazine has predicted a nearly 4% decline in real estate prices for the Phoenix metro area, ranking the Valley of the Sun near the bottom of the country's 100 largest real estate markets. There's no further explanation but I presume the logic behind the prediction is the continuing withdrawal of investors from the local market, combined with pressure from builders looking to offload their inventory.
We'll be running a reader's poll later today ... currently the poll software doesn't want to recognize any e-mail address as valid.
(c) Jonathan Dalton, 2006 / Jonathan Dalton's Arizona Homes
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Dec. 28, 2006 - re: Fortune Predicts Chilly 2007 |
| Posted by Jeff Brown |
| Jon - Although that might happen, I'm thinking your market stays flat, and rebounds after the first quarter. I'll bet you think Phoenix is going to show a net increase in '07. |
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Dec. 28, 2006 - re: Fortune Predicts Chilly 2007 |
| Posted by Jonathan Dalton |
The branch manager from our Surprise office told me the local NBC affiliate said last night that the market here is expected to rebound in 2007. The sense she got was the builders were cautiously optimistic.
The builders are the key right now. After refusing access to investors "to protect the market" they have been slashing prices and offering huge incentives to entice people into purchasing the excess inventory - all to the detriment of the resale market.
Once that inventory has thinned, it wouldn't surprise me if the Phoenix market started to gain some traction for the first time in a year. People are moving to Phoenix ... I've got the queue of relocation leads as evidence of the continued influx. |
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Dec. 28, 2006 - re: Fortune Predicts Chilly 2007 |
| Posted by crabman |
| With the big jump in prices over the last couple of years, it is now much more expensive to own than rent. My place would cost about 50% more per month to buy than to rent. And with the huge current inventory, I would be surprised if prices only dropped 3.6% in 2007. |
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Dec. 28, 2006 - re: Fortune Predicts Chilly 2007 |
| Posted by Jonathan Dalton |
In many cases, crabman, you're right - it is more expensive owning than renting. There are additional benefits to ownership - interest deductions, etc. - but with the market flat the old argument of building equity doesn't have as much bite.
Inventory is relative which is one of the reasons I track the absorption rate. If homes are selling, a higher inventory level doesn't matter as much. If sales decrease, then there's a much larger impact.
We shall see what prices do ... there were dire predictions in '06 but prices didn't fall anywhere near as much as some may have thought and/or hoped.
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