What goes up like a Rocket and down like a Balloon?

August 28, 2008

Do you need 3 guesses? Probably not.  It’s Home Prices in Phoenix, AZ.

In Maricopa County, Arizona which includes Phoenix, Scottsdale, Paradise Valley, Fountain Hills, Mesa, Peoria and Chandler home prices exploded from 2001-2005; Skyrocketing more than 100% in most places.real estate housing bubble

In fact, the Wall Street Journal reported Maricopa County as the fastest growing real estate market up more than 40% in 2005 alone.

Hence, the proverbial real estate bubble.

And we know what happened next, things slowed down considerably. And most experts would say that the resulting steep decline in home prices over the following 3 years was the Real Estate bubble bursting.

However, I am going to argue with these analysts and say that the Housing Bubble did not burst in Greater Phoenix. And that’s the problem.

Lynnsy Logue describes it perfectly, “America’s housing bubble has not exactly burst. It’s just sprung a leak the size of your average mortgage banker.

Real estate is tied to a lot of personal emotions. Real Estate agents and other industry professionals would try to convince you that it is a business decision that must be made with what is the best financial result in mind. Although, in theory this may be what is best for financial health, we know this does not happen.

On Wall Street when stocks drop, they drop fast. In fact, often times, before recovery can occur there must be one significant event causing a popular Wall Street term “Capitulation’. Like hitting rock bottom.

At that point, consumers (hopefully) regain confidence and stability returns and in time, prices rise again.

Unfortunately, this does not happen in real estate. When someone wants to sell their home. They leave it on the market for extended periods of time. If the home does not result in offers, the seller typically small price reductions. Rarely, enough to initiate a quick sale.

This behavior is a snap shot of what has transpired in real estate over the past several years.

If the bubble burst, home prices would have dropped 30% and the pain would have been over and done with. Much like tearing off a band-aid. It hurts, but its over quickly.

Instead,  like air leaking out of a balloon as it slowly drops from the sky, we are watching slow 1-3% quarterly price declines. Slow torture. Very Painful.

Why is any of this important ???

If you want to sell your home, you let the bubble burst.

If you have your home on the market for a maximum of 30 days and do not receive an offer it is priced to high. Period!!

You need to lower the price of your home 3-5% minimum. If you do not receive any offers within 3 weeks. Your home is priced too high. Period!

If you really need to sell your home then let the bubble burst. It hurts initially. However, ultimately, it is the less painful option.

Here are the names of experts in pricing and selling homes quickly in today’s market.

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Copyright © 2008 James Wexler *What goes up like a Rocket and down like a Balloon?*

Contact James Wexler (480) 221-8080 for your Phoenix | Scottsdale area Real Estate needs

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Written by James Wexler · Filed Under Articles, Investing 

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