Housing crisis may be in the rear view mirror
August 15, 2008
Here’s one man’s humble opinion on our approaching to a real estate bottom for home prices in Phoenix, Scottsdale, Tempe, Fountain Hills, Mesa, Peoria, Glendale, Paradise Valley.
I urge you to be cautious as the future is still a little unclear. 
However, if you have been planning on buying a home, can negotiate a great price and most importantly, can afford your fixed mortgage payment, this may be the time to buy that you have been waiting.
I think we have some time to go here in metro Phoenix as we are hurt by the result of over development which is a large supply of foreclosed homes.
However, if I can make a broad sweeping theory on why we are getting close (not there yet) to a bottom in housing, here is my thinking …..
In the past several weeks, many large financial institutions and major depositor banks have been giving indication into the current and future financial impact into their impact of the sub-prime debacle.
Many large banks, if not all, were extremely hard hit by exposure to sub-prime mortgages and warned of potential heavy losses going forward as a result.
Almost every major depositor bank and Investment bank has reported their 2nd quarter earnings.
These stocks and the financial sector as a whole hit drastic annual lows on and about July 15th in anticipation of severe quarterly losses .
However, since July 15th, these stocks have rebounded as a group dramatically.
- Morgan Stanley has gone from $32 - $45; up 40% in 3 weeks.
- XHB (home builder stock index) has gone from $14.70 to $19 today; up 30%
- XLF (Financial stock index) has gone from $17.20 - $22 ; up 28%
However, the effect on earnings as a result of sub-prime exposure was less than experts and analysts predicted. Analyst Alex Potter, said, “the U.S. performance was well above worst fears.”
In fact, it looks like Wall Street may have overreacted in its estimates of damage to credit markets and housing based upon these earnings reports.
What does all this mean?
Wall Street seems to interpret this, at least today 
, that although, their may be some further pressure on the housing market, that possibly the worst of the sub-prime market and the tightening of credit, may be moving into the rear view mirror.
I do have a crystal Ball. It doesn’t work. I cannot predict the bottom.
However, if you agree with Wall Street and need the benefits of a historically low interest 30-year fixed interest rate mortgage and the tax benefits, now may be the time to get in the car and look at the many opportunities to buy a home.
Call any of these real estate professionals who can help you find a foreclosed home at a great price:
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Copyright © 2008 By James Wexler, All Rights Reserved. *Sub prime and housing crisis in rear view mirror *
Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs.
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Not yet, Mr. Wexler. There are mitigating factors, other than interest rates and bottom fishing, that enter into this equalibrium. First, unemployment reached a new high from this weeks reports. That is a high for the past 6 months. Second, inflation is running at 5.6% REPORTED, that means that it is probably closer to
7%. Third, world events do not auger well for domestic consumption. Finally, the cycle of sell/buy is frozen since these must work in lockstep, unless we are dealing with first time buyers.
As a professional you are correct-there will come a time, perhaps next Spring
when we will work down inventory, and re-enter a ‘normal’ market, but that is
somewhat distant.
There are also other factors, although rarely reviewed, that are impeding housing
growth. Property taxes have, and are, escalating. The greedy little soccer moms and suv dads are calling for more entitlements for the kidos. That has to stop.
Second, the insurance industry began repricing their product several years ago
to factor in risks, eg, Katrina, wild fires, earthquakes, crime et al. In many cases coverage is difficult to secure. Finally, the ‘push’ by the federal and local governments to have everyone a homeowner is misguided. We qualified people who should rent and now the reality of ownership caught them up short.