you can't call the bottom, but it is easy to see when you aren't there yet! No crytal balls required, just some understanding of real estate markets and economics:

1. price to rent is still out of whack in Tempe, and now rents are noticeably dropping.
2. supply/demand. Homes in Tempe are simply not selling at any rate at all versus demand.
3. job losses/cuts/furloughs. Buying a home requires some confidance, and a job, both of those are in short supply in Tempe. I know at least 100 people who work/live in Tempe, they are hunkering down right now, jobs are not as secure as a year ago. ASU is furlouging darn near everybody, that is equivalent to a 10% pay cut.
4. The options: Chandler/Gilbert prices dropped off a cliff over the last six months. Half a year ago, it was kind of tough finding a nice home for 200K in Chandler/Gilbert. Now, 160K gets the job done easily! Tempe prices have not slid near as far (yet) but clearly the few buyers will chose option B. until that does happen. Tempe trades at a premium to Chandler/Gilbert, but that premium is unlikely to suddenly double.
5. Foreclosures. We are behind the rest of the valley in foreclosures, but they are coming up now, and certainly aren't selling fast. Banks will cut prices till they sell, and then price discovery will happen in Tempe.

Read my blogs on the subject. This crash was easy to predict, I wrote economics papers about it in 2004.

Professor Ribas

I quite enjoyed your “rant” Stew. I found it informative and well thought out. The situation with the market very depressing and not a little bit frustrating. My frustration is compounded by the fact that I would like to buy a house in the Phx/Tempe area right now but it’s obviously not the time to do that.

Thank you Stew.

Atta boy, Stew ~ I knew somebody on here wouldn't be able to resist a "rant."

That's why Jay and I stepped aside to let you do your thing.

:))

...randy

Jim,

Regardless of the past or current presidential white house, throwing money at the problem wont resolve it.

It's been done before and also by other nations and is usually only a temporary repair and it's effect normally brings hyper inflation. When you combine the two and given the current employment conditions, it;s possible we are in for a long ride.

The US government including Obama himself has openly stated that we are still in for some bad times. So bad in fact, they are trying to figure out how many billions of dollars of our money they should spend to try and fix it.

They must know that something isn't good, right?

That being said, in our "current" market there are some wonderful opportunities for 1st time buyers to purchase a home as long as the banks are willing to lend and the old FHA loan is still around.

The majority of our employment is government, not private industry. As long as the government is willing to back employment at the local level, Tempe and in general Phoenix may pull out of this over the next few years in not too bad of shape.

And one last point, when you say "hit the bottom" that cannot be predicted just as it was not possible to predict when we "hit the top".

I think the current situation we are in should be a fine example of that.

Take a peek at the history books and start comparing centuries.

I think you'll find most of the answers you are looking for in there.

Have a wonderful week!

Stew Keene
Keller Williams Arizona Realty
Scottsdale & Phoenix Arizona

I'm pretty much with Randy on this one....

ASU, whether it has budget problems or not, isn't going away. Since Tempe is "land locked" and has no real room for growth (other than up, which has been tried to some extent), what you see there is pretty much what you get.

But call the bottom? No can do. The only sure-fire way to call a bottom is to look behind you and say, "Yep, that was the bottom".

If any agent tells you "This is the bottom and the only way from here is up" then I would run, not walk, away.

Hi Jm!

I went to look for my crystal ball and discovered that my wife had drilled 3 holes in it and was using it for a bowling ball! Her comment to me was, "Every time we gazed into it, all we ever saw was a cloud of confusion and fog." LOL

I just couldn't help bring a little levity to you, Jm. But for a serious comment, that should be no less than 5,000 words, I think I'll let me esteemed colleagues tackle this one.

All the best!

...randy