Flipper Fights Back - Media Should Ignore Phoenix Housing Bubble.

A fellow named Stephen Pauken voiced his concerns in a recent letter to the Arizona Republic about a June 18th, 2006 article in the newspaper, "How low will it go?" While I think that the original Republic article on the 18th was a rather tepid look at the coming severe correction in Phoenix area home prices, Pauper (sorry) voiced his objections:

Real estate reports hurt economy
Jun. 20, 2006
Regarding "How low will it go?" (Republic, Sunday):The real estate market is bad enough in Phoenix without The Arizona Republic publishing articles like this. The articles are doing nothing but fueling the idea that prices are going to drop and further scaring the few buyers that exist into waiting to buy because of what they read in the paper. These articles are harmful to our economy. - Stephen Pauken, Gilbert

I am not sure what to make of the letter, other than it sounds like a plea from a desperate house flipper. So, I did a little research. I only found one house purchased by Pauken in 2005 or 2006 in Maricopa County. But what struck me was the date of this purchase, 02/14/06. Let's explore:

He purchased the house at 2426 South Brighton Circle, Mesa, Arizona.

Built in 1994, it has 3 bedrooms with a den and has 2,343 square feet of living space. It was put under contract on 12/01/05 after 89 days on the market. Pauken purchased it for $330,000 after it had been reduced from its original list price of $375,000. He borrowed, you guessed it, $330,000, for the house using an adjustable rate loan. You can view a copy of the Deed of Trust.

While Pauken apparently does read the Arizona Republic, he was not aware of the direction of the metro Phoenix housing market in December 2005. Perhaps if he had read about the fast growing inventory in the Phoenix area and some Housing Bubble-related articles before December 2005, or at least before his February 2006 closing, Pauken would have opted not to buy to flip.

So, Pauken bought his house for $330K that would not sell for $375K or at other price reduction levels, and then put it in on the market two months later for $424,900!!! Unreal. Guess what? It did not sell, and is now priced at $389,900 with 69 days on market as of 06/25/06. Partner, you can keep it on there for 690 days. The house was not a wreck when you bought it. It simply was not worth $375K at the end of 2005, ergo it is not worth $389K in Summer 2006. You lost. Your lack of success in finding a fool to overpay for your house is not bad for the economy. I think that fiscal sanity by potential house buyers is beneficial for our economy.

Here is the MLS information for the current Active listing (sorry for the caps, pasting original):

BACK ON THE MARKET, DEAL FELL THRU !!!!! REDUCED AGAIN $9,000 PLUS $ 26,000 GRANITE COUNTERTOPS*** TRAVATINE FLOORS*** BLACK GLASS APPLIANCES*** CUSTOM PAINT*** NEW PLUSH CARPET **** HUGE CULTASAC/CORNER LOT** 3 CAR GARAGE**SPLIT MASTER W/ 8' SLIDER AND DUAL SINKS** LG FULL LENGTH REAR PATIO WITH GAZEBO***VALTED CEILINGS** EAT IN KITCHEN/GREAT ROOM WITH 8' SLIDER** GAS HEAT AND WATER** SURROUND SOUND**SIZE FOR RV GATE***** HOUSE IS GLAMEROUS-- BRING YOUR MOST DEMANDING AND DISCRIMINATING BUYERS !!!!!!!!!!!!!!!!!!!! GILBERT SCHOOLS******* SHOW AND SELL *** PLEASE LEAVE CARD
REALTOR® Remarks: BACK ON THE MARKET, REDUCED A TOTAL OF $ 35,000 *****VACANT ****** VACANT** LOCK BOX******** VACANT ********

While I have always wanted to live in a glamerous house on a cultasac in Mesa like some movie star, I think I will pass at the inflated price. Seriously, some folks make a lot of typos and should use a spellchecker. Some folks are also functionally illiterate.

Let's end with a sweet shot of those $26K granite kitchen countertops: