Phoenix Area Housing Bubble

Saturday, September 30, 2006

Phoenix Bubble is Bursting Big Time

As one watches the Phoenix Area Housing Bubble come to a financially devastating end (devastating for many, that is), I have heard some try to convince people that prices in the Phoenix area are rising, or that a drop of 10 or 15% is the worst case scenario. Some try to convince you that a three-year boom period will be followed by a multi-"months" bust.

There are some who want you to believe that the endless range of vacant houses and even near-empty subdivisions do not exist. We do have many vacant houses in the Phoenix area. Roughly 44.6% of current Phoenix area house listings are VACANT!!!

And those thousands and thousands of new residents in the Salt River Valley each year will NOT "fix" the problems arising from the 2004-2005 speculative fervor in housing. Will people and companies still move to the area? Of course. Will as many move to the area with houses 100% more expensive? Of course not. Cheap housing was a lure. That lure is gone.

Many of those new Phoenix area jobs were in construction and housing related industries. The downturn will be cumulative.

House sales drop month after month after month. When taking a narrow view of the Phoenix area, housing inventory has grown exponentially.

When taking a wider view of the Phoenix area, housing inventory has grown exponentially.

And to address one other issue, Arizonans and Americans everywhere, please stop borrowing crazy amounts of money and using ridiculous types of loans. If you need to borrow on a 15 or 30 year fixed to buy a house as prices drop, go ahead. But that is it. Option A.R.M.s are bad. Why should you trust me? Because I am not trying to sell you a loan or anything else, I have 155 IQ points, and two degrees from two top universities. And I don't lie.

One last thing on mortgage loans and tax "benefits," DO NOT PAY THE BANK 10 DOLLARS TO AVOID SENDING WASHINGTON 3.

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