Boom is over, bust is running its course in metro Phoenix housing market

Posted By Mike Padgett

Jan. 7, 2009

A high-tech forecast five years into the future of metro Phoenix’s housing market is planned later this month by the publisher of the monthly Phoenix Housing Market Letter.

But instead of hosting 1,000 attendees at a Valley resort, RL Brown Housing Reports co-owners RL Brown and Greg Burger will offer the conference on the Web, allowing attendees to view the presentation on their office or home computers.

“This may be the most important housing market forecast of the decade,” Brown and Burger say in their invitation. “The boom is over and the bust is running its course.”

The live Web conference begins at 10 a.m. Jan. 22. Although it will be a one-way presentation, attendees paying the $50 fee could invite their employees, associates or others to crowd around the computer and listen. Later, they can contact Brown and Buger via e-mail or phone for more information.

“For $50, they can bring in their whole team into their conference room and listen,” Burger says. “They can’t talk to us but they can see our screens on their screens and they can hear our commentary.”

Burger adds that the live Web conference will allow attendees to save time (they can stay at home or at their office) and money (the fee is less than the usual $75 registration fee, or $750 fees for tables for 10).

“We’ve got an outlook that suggests that now is the time to take the position to be ready for the new market,” Burger says. “It’s going to be a recovery that’s going to be prolonged but healthy, in our view, as it changes.”

Burger agrees with veteran builders that the rebound is most likely to begin in late 2009, or possibly in the first quarter of 2010. “We think that’s going to be a healthy environment, and that’s what we’re going to talk about here at the forecast,” Burger says.

“I see the fourth quarter (of 2009) as still being a tough quarter because I don’t think all of the programs that the government puts in place are going to have completely kicked in,” Burger says. “I personally think it’s going to be first quarter of 2010 before we really feel like this is behind us.”

Other market analysts add that this recovery period will be difficult for some homebuilders as well as for lenders and some speculators and homeowners struggling with foreclosure. At the same time, it will be a time when investors will become aggressive in buying properties for investments.

Permits for new houses in metro Phoenix peaked in 2005 at 63,570, up from 60,872 in 2004. The decline started in 2006, when the total was 42,698. In 2007, the numbers tumbled to 31,172. For 2008, the total (which is still being tabulated) is expected to be less than 15,000, Burger says.

Burger says the annual sales volume up to 2005 was a steady increase, when prospective homebuyers in those final years “were lining up at the door and the lottery sales and all of that stuff that we all remember.”

Contributing to the current inventory of vacant new houses for sale were speculators buying several homes for resale as well as buyers who, sometimes with approval from salespeople, fabricated their incomes and debts. According to many recent news accounts, and verified by industry veterans, the speculators later found they could not sell their new homes, and foreclosures were started on homes bought by buyers whose incomes were too low to match their mortgages.

“If you were breathing and you wanted to buy a house, they (sales agents) got you in the house one way or another,” Burger says.

The father-son team of Brown and Burger has been working in the metro region’s residential market, or analyzing it, for many years. Brown started his company in the early 1980s. Burger obtained his real estate sales license in the early 1990s, which is the time when the Valley’s real estate market began recovering from a slump in the late 1980s. It was in the early 1990s when the real estate market got back on its feet and soared until the current economic situation.

To register for the Web conference, click here.


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Jan 7th, 2009

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