A couple of weeks ago my local bagel shop posted a sign letting loyal customers (and presumably non-loyal, as they’d also be affected) that a “slight” price increase was coming as of mid-February, the first change in prices in four years.
Slight turned out to be about 10 percent when you include tax which, to be honest, came as quite the surprise. Not that I’m going to quibble about the 40 cents for too long – it’s not enough of a difference for me to surrender my low-fat cream cheese for the good (and less expensive) stuff, but still. It’s a touch shocking when the increase happens, even if you knew it was going to occur.
Which is why I read with a smile this quote from a New York Times article on non-bubble real estate markets now feeling the pinch:
“We would love to have a house,” said Dan Cunningham, a 41-year-old renter. “I have more than enough for a down payment. I’m preapproved for a loan. But I have to have confidence it’s not going to lose another 20 percent.” He plans to wait until he sees prices rising before making any offers.
Which would be fine and all, if not for the phenomenon known as a double dip. Or a dead-cat bounce. Or a false recovery. All are the same thing – a flattening of falling values and maybe even a slight increase followed by a continued drop.
Some could argue that such a thing has happened here in Phoenix, though it’s hard to say there’s been too much plateauing to cause the second dip. At best, some areas have found a sustainable level while others have continued to decline, albeit less drastically in some areas than others.
All in all, though, we seem to be faring a bit better than many seemingly immune real estate markets. And yes, Seattle, this means you …
From the same Times article …
The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune — economically diversified cities where the boom was relatively restrained.
In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix.
But wait, there’s more …
The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain.
In these markets new to the real estate crash, it’s less expensive to rent than it is to buy. Which means, for those of a logical bent who don’t mind having the roof over their head dependent on someone else and their rules, renting is the way to go.
That’s not necessarily the case across much of the Phoenix area. On a basic $100,000 house at the moment, a mortgage payment without PMI would be around $700 – less on a loan with 20% down, more on an FHA loan with a 3.5% down payment.
What does $100,000 look like? Scroll down to the end and you’ll see. But for now, I can tell you these same homes are renting for over $800. This is small consolation if values are still plummeting but that’s not happening everywhere …
Take it for what you will … past performance isn’t indicative of future results, yada, yada, yada. What’s interesting here is that if you’d looked at this same chart around the first of the year, you would have seen what looked like a double dip about to happen. Except it didn’t. Doesn’t mean it still couldn’t. But it hasn’t. And the national media, those folks who always are the last to realize anything, have noticed.
One final note from the article then we’ll call it a morning …
But whenever the market finally does pick up, all those accidental landlords will want to unload, putting another burden on the market. “So many sellers are waiting in the shadows,” said Redfin’s chief executive, Glenn Kelman. “The inventory is going to expand and expand and expand. I don’t see any basis for significant price increases.”
This statement comes from someone with the perspective of a different real estate market, one that hasn’t felt the full brunt of what happened here in Phoenix.
(Glenn should know about the particulars of the Phoenix market, given Redfin’s tepid and virtually unseen entry into the Phoenix market a while back – told ya the margins wouldn’t allow it to work, but what do I know. Tobey’s the brains.)
The accidental landlords which Glenn describes are in some cases so far underwater they aren’t going to be putting their homes on the market anytime soon. The only way you’ll see these homes come on the market en masse here in Phoenix is via foreclosure if the owners walk away. And, oddly enough, there still are people who have trouble with that notion.
Responsibility … what a concept.
In any event, as promised … and best of all, none of these are short sales. You wouldn’t really expect me to mention those, would you? As a matter of fact, none of these even are bank owned homes.
[idx-listing mlsnumber=”4533017″ showfeatures=”true” showlocation=”true”]
[idx-listing mlsnumber=”4461639″ showfeatures=”true” showlocation=”true”]
[idx-listing mlsnumber=”4513458″ showfeatures=”true” showlocation=”true”]
Editor’s note: this last listing has been in the MLS for a couple of days, checking to see when it will populate the database. Don’t want to replace it as it’s a home with a pool for $99,000.