Valley New Home Market shows signs of stabilizing

Valley new home market shows signs of stabilizing
from the East Valley Tribune, reports that following a year of slumping sales, the Valley's new home market is expected to stabilize in 2007 as builders continue to get rid of excess inventory. "2006 activity will cause the industry to pause and recognize that housing in this market area has to be affordable," said RL Brown, publisher of the Phoenix Housing Market Letter. The dramatic run up in prices during last year's housing frenzy was not sustainable, he said. Home sellers will need to price homes according to today's market or withdraw their listings. Builders must be more realistic if they plan on staying in business, Brown added. The median price of a new home in the Valley was $285,000 in December, down 5 percent from December 2005 but up 8.5 percent from January 2006. Prices should begin to stabilize to a more traditional 4 percent to 5 percent rate of appreciation, he said, adding that new home permits should be in the low 40,000's.

Homes are still hot in some places from the USA TODAY,
reports that while some parts of the country are facing a housing downturn, other areas are experiencing robust sales and price appreciation. Some of the cities noted that were doing well include Seattle, El Paso, Portland, Austin, Houston, Jacksonville, Charlotte and even Los Angeles. All posted price appreciation from the third quarter 2005 through the third quarter 2006. Cities showing gains exhibited high job growth and positive net migration figures. They were also areas in which home affordability remained close to national averages through the boom, making them less prone to the corrections and adjustments seen in overheated markets. "In the highest growth markets, there were a lot of folks who panicked when they saw prices going up by 8, 10 or 12% a year and rushed to buy in," said Kermit Baker at Harvard University's Joint Center for Housing Studies. That caused an adjustment in some markets once prices stabilized or fell, when investors got the itchy finger and started selling their properties.

Credit Crunch: Tighter Loan Standards? from UrbanDigs
Resetting into higher interest rate loans could create a credit crunch down the road that could extend the leg of the housing correction; especially for much of the country outside of New York City. NYC real estate is 75% co-op and as such, is comprised mostly of buildings who have financial guidelines and policies for prospective purchasers to pass before allowing the deal to go through. This somewhat protects NYC when discussing topics like this as most buyers of co-ops are financially able to afford their home; even if their loan does reset. Not so for the rest of the country. So, we may have a domino effect on our local real estate market should this type of scenario play out in the future; with Manhattan real estate being affected more psychologically and at a lag. ENTIRE POST HERE

Housing Bubble and Real Estate Market Tracker for 1/31
Housing Bubble and Real Estate Market Tracker for 1/30