Author Topic: Arizona Real Estate (Bubble)  (Read 6730 times)

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Offline Liar Loan

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Arizona Real Estate (Bubble)
« on: March 29, 2022, 12:50:33 PM »
EDIT: I previously posted this on the Housing Analysis thread, but I think AZ deserves it's own thread, given what is happening there.

How badly will 5% rates affect the Arizona market?

Home prices heated up to start the year, with huge surges in Arizona and Florida, says S&P Case-Shiller report

Phoenix, Tampa, Florida, and Miami saw the biggest annual gains at 32.6%, 30.8% and 28.1%, respectively.

https://www.cnbc.com/2022/03/29/home-prices-reaccelerated-to-start-the-year-says-sp-case-shiller.html

Offline Liar Loan

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Re: Arizona Real Estate (Bubble)
« Reply #1 on: March 29, 2022, 12:59:50 PM »
Notice the shape of the curve on the left (2004-2005) and the shape of the curve on the right (2020-2021).


Offline Cares

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Re: Arizona Real Estate (Bubble)
« Reply #2 on: March 29, 2022, 01:14:01 PM »
I do think that these "hot" cities in tertiary areas and non-coastal states will experience a bubble at some point...Employers will clamp down on remote work and just simply stop hiring people from out of the area.

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Re: Arizona Real Estate (Bubble)
« Reply #3 on: April 07, 2022, 10:31:02 AM »
Arizona holds the top two spots in Corelogic's list of metros most likely to see a housing decline.



https://www.corelogic.com/intelligence/u-s-home-price-insights/

Offline Ready2Downsize

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Re: Arizona Real Estate (Bubble)
« Reply #4 on: April 07, 2022, 10:52:36 AM »
Arizona holds the top two spots in Corelogic's list of metros most likely to see a housing decline.



https://www.corelogic.com/intelligence/u-s-home-price-insights/

If that is a dig against me Liar, don't worry. I'm not anywhere near Prescott or Kingman and neither is Phoenix.

My particular house I'm keeping I can break even on today after selling costs, not getting anything for any upgrade I've paid for. It's a premium lot in front of a lake and there are very few of those. I was fortunate to buy before the base increased almost 19%.

My little house I'm going to sit in till that is finished is so far below base prices and includes upgrades prices would have to drop 20% in a hurry to not break even and it was my intention to not lose more than 30K because that is what rent would have cost me waiting for my house to be built and it's first time to first upgrade buyer level with more jobs coming (not remote workers, these are new jobs that can't be done remotely). The builder releases four per month and as soon as one of these hits the resale market it is snapped up, so I'm good.

But what about Irvine? Not on that list I see.
« Last Edit: April 07, 2022, 10:59:09 AM by Ready2Downsize »

Offline Liar Loan

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Re: Arizona Real Estate (Bubble)
« Reply #5 on: April 07, 2022, 11:06:00 AM »
It's not a dig at you, just another indication that unbiased professionals view Arizona as extremely high risk.  If you have 50-75% odds of losing a bet, it's not a good bet.

Irvine which is part of the LA-Long Beach-Anaheim metro did not make the top 5, which isn't surprising.

Offline irvinehomeowner

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Re: Arizona Real Estate (Bubble)
« Reply #6 on: April 07, 2022, 02:58:06 PM »
It's not a dig at you...

Sure... we all know you skew passive-aggressive with your trolling. You didn't even talk about AZ until R2D brought it up in their counters to you.

Quote
Irvine which is part of the LA-Long Beach-Anaheim metro did not make the top 5, which isn't surprising.

And there you go... AZ thread yet still pokes at Irvine.

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Offline CalBears96

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Re: Arizona Real Estate (Bubble)
« Reply #7 on: April 07, 2022, 03:30:20 PM »
It's not a dig at you...

Sure... we all know you skew passive-aggressive with your trolling. You didn't even talk about AZ until R2D brought it up in their counters to you.

Quote
Irvine which is part of the LA-Long Beach-Anaheim metro did not make the top 5, which isn't surprising.

And there you go... AZ thread yet still pokes at Irvine.

#hatersgonnahate

Only Liar Loser and Moretroll would prefer living in Long Beach than Irvine.

Offline Ready2Downsize

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Re: Arizona Real Estate (Bubble)
« Reply #8 on: April 07, 2022, 03:33:20 PM »
It's not a dig at you...

Sure... we all know you skew passive-aggressive with your trolling. You didn't even talk about AZ until R2D brought it up in their counters to you.

Quote
Irvine which is part of the LA-Long Beach-Anaheim metro did not make the top 5, which isn't surprising.

And there you go... AZ thread yet still pokes at Irvine.

#hatersgonnahate

Why would anyone specifically mention AZ if it wasn't meant for me? No one else mentions it.

But it doesn't matter. I'm downsizing my house price. If things fall, I sold the more expensive place so I most likely "lose" less and you gotta live somewhere. In fact, it matters even less because my property taxes, HOA, insurance much less in AZ AND income tax is lower too so I stand little chance of being hurt.

I'm taking $500K capital gain exclusion to boot.

But AZ is a big place and housing is local. The places he mentions are dependent on tourism and have low population levels so it doesn't take a genius to figure out chances of dropping are much better there than other places with job creation and more household formation going on.

In a couple years we can revisit what happened to house prices. Just because MAYBE they will drop doesn't mean they will and it says little of how much and it says nothing of dropping x% and interest rates up y%. You can have houses drop but people still happy their house payment is lower than if they waited to buy.

We'll see........ in a few years.

Offline The California Court Company

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Re: Arizona Real Estate (Bubble)
« Reply #9 on: April 07, 2022, 05:13:56 PM »
why start a thread on AZ housing market which has nothing to do with Irvine? only relationship is one frequent TI poster has vested interest in Arizona housing market…
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Offline aquabliss

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Re: Arizona Real Estate (Bubble)
« Reply #10 on: April 07, 2022, 05:28:07 PM »
One 90+degree day over here and I'm glad I don't live in AZ!

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Re: Arizona Real Estate (Bubble)
« Reply #11 on: April 08, 2022, 11:24:08 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

Offline Ready2Downsize

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Re: Arizona Real Estate (Bubble)
« Reply #12 on: April 08, 2022, 11:48:11 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!
« Last Edit: April 08, 2022, 11:55:11 AM by Ready2Downsize »

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Re: Arizona Real Estate (Bubble)
« Reply #13 on: April 08, 2022, 04:25:28 PM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!

See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.  As IHO said, if you can comfortably afford the cost to own and you plan on owning for 5+ years then I just don't see any material downside in buying in good locations like Irvine and other parts of Orange County.
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Offline Ready2Downsize

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Re: Arizona Real Estate (Bubble)
« Reply #14 on: April 09, 2022, 09:17:35 AM »
We were already discussing Arizona on other housing threads.  It made sense to start a new thread because, indeed, Arizona doesn't have to do with Irvine.

Sharing information is not the same as a dig.  Arizona and Florida are the two bubbliest states right now, so R2D2 (and her husband C3P0) should go into their housing decisions with eyes wide open.  I would feel terrible if I knew housing was going to tank and didn't say something, even though I know my odds of persuading her with facts are not likely to succeed over the emotion of moving into the new build that they are dreaming about.

In 2008, when housing was already in freefall I tried warning various friends and family in the real world that it was much too soon to be jumping into the market.  There was more pain to be experienced before things bottomed out.  Nobody listened because they were caught up in the emotion/greed of homes being cheaper than they had been in a long time.  They couldn't possibly fathom that they would end up underwater after buying at such an opportune time, yet they all did end up underwater. 

My aunt & uncle probably fared the worst because they rushed into buying a new build on a golf course that, had they waited longer, they could have gotten a more premium lot, which is what they really would have preferred, for less money.  Later, when they were ready to sell some years down the road, it was a huge shocker that they were underwater because they now had to compete against re-sales that were priced much lower than new homes.

So lets see.

I sold my irvine house in 2016 for a net gain after fees, etc of around 1.1 million and took a 500K cap gain exclusion. I moved to legacy and that house will have about an 800K gain minus another $500K exclusion.

I have no mortgage or any other loan for that matter.

I'm not waiting around to see if prices drop and heading out of town to lower prices and taxes. Unfortunately rent has skyrocketed and I'm not a rent type of girl anyway so I'm buying a spec home to sit in while my "real" house is being built. So happens that the base is now higher than my purchase price with lots of upgrades in it. Win for me.

The little one is right under 2000 sq feet 4 bed house in a nice neighborhood within walking distance to a great park with pool etc. Nice to have in the az heat. Cost to live there, property taxes, HOA, insurance etc $5-6K for a YEAR........... sub $500 per month. Meanwhile my "real" house gets built.

The real house has gone up 20% just for the base price since they got my deposit. I have no idea how much upgrades have gone up. Chose those already.

Paying cash for both. What do I care? No uhauls behind a hearse. Kids are going to get all my cash, etc anyway and they would love to get those two properties free and clear.

The little temp house rents for over $2500 per month. Easy rental for that flooplan within walking distance to schools and they do walk there, moms with strollers in tow. Irvine used to be like that too but now it's too expensive to have a stay at home mom. Too bad. U don't get time with the kids back.

I plan on selling it but say rents drop to $2000 and the property tanks too along with the equity I've got. That is $24K per year. Costs are $5-6K. Accounting for vacancies, it's still not going to be a problem for me.

If it sells for a net loss of $30K I'm even on the rent I'd be paying, so most likely I'm good.

Now the main house is much lower than Legacy house. In fact I could buy another one of those plus these two houses for what I'm getting here for cash. Total outlay for that house is maybe $8K - $9K per year........ $750 per month.

ADD UP BOTH HOUSES! $1250 per month letting them sit. Rent the one and I'm um.............. making money. Yes I have cash just sitting but I don't need cash. I've got lots of cash plus the money I made selling Legacy house.

But maybe I should STAY HERE in my house I own now in Legacy because what is the other option? Sell and buy some ridiculously priced house here with higher taxes? I think not. What if prices drop as you say? Well..................... which is going to hurt me more? $1250 per month with rental income that completely pays for that or paying property taxes, HOA, insurance etc here which is more than that? And don't forget, I'm taking a $500K exclusion and CASH even after buying the two properties in AZ and I get to be near two of my kids.

AND to top it off income taxes are L O W E R in az. I make money from stock trading and it's going to save me 10% in income taxes.

HELLO! I think I got this covered!

See that's the thing, LL provides general recommendations which don't cover different individual situations that buyers and sellers have.  It's not black and white in real estate, there's many shades of grey, and like you mentioned all local markets are different.  As IHO said, if you can comfortably afford the cost to own and you plan on owning for 5+ years then I just don't see any material downside in buying in good locations like Irvine and other parts of Orange County.

Irvine will always be a great location within the OC.......... always. The Irvine company has lots of rentals and when there is no more land will still be here and a force in keeping up the city. The city itself has one of the best balance sheets in the entire country and if there are issues with school funding there are outside sources which will pour money in. Most of the city has HOAs and they will most likely keep up their own areas.

And then there is the location........ smack dab in the center of the county near freeways and jobs.

UCI will fuel tech here. Plenty of medical facilities.

If/when a housing downturn comes, Irvine probably will go down too but when people want to buy they will buy in the better areas. Why buy crappy when everything is down? Irvine and view homes is what you want if prices significantly drop. Avoid value when things go down. It's like value trap stocks. They lag on the upswing.

 

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