Construction Market - PHX Area

[conraddobler]

I quit telling people we are at bottom in prices, (I'm a Realtor). What I am telling people is that mortgage rates are killer right now, and they will NOT stay that way. With all the newly printed money hitting the system, inflation is just around the corner. Three things are saving our collective butts, imho, the individual savings rate, and the trillion or so dollars big business is sitting on and not investing/spending, and the high unemployment rate. If consumers start spending, business might start investing and hiring, which means more people to spend, and so on, and so on. Businesses are also afraid to invest not knowing if taxes will go up, but if business don't spend, and people don't spend, there won't be any money going into the tax coffers, so governments, local, state, and federal will start raising taxes. We need some spending for our governments sake and to help keep our taxes low, but then we will get inflation if we do spend and mortgage rates will go through the roof!

Mortgage rates are not going through the roof without destroying our financial system.

When rates go up that drops the value of every other debt instrument out there as well as drives down housing affordability, driving down prices.

There is no jobs recovery, businesses are hoarding cash because they have nothing better to do with it.

The best time to buy a house is when you want one and can afford one in any other time than a severe bubble.

I have a hunch people are going to be shocked by where rates go, shocked senseless but it's just a WAG.

 

[82CardsGrad]

Mortgage rates are not going through the roof without destroying our financial system.

When rates go up that drops the value of every other debt instrument out there as well as drives down housing affordability, driving down prices.

There is no jobs recovery, businesses are hoarding cash because they have nothing better to do with it.

The best time to buy a house is when you want one and can afford one in any other time than a severe bubble.

I have a hunch people are going to be shocked by where rates go, shocked senseless but it's just a WAG.

Agree with your post, with the exception of the bolded part... Business are hoarding money, knowing full well they can deploy it in very productive, meangingful and profitable ways. However, they aren't parting with the Trillions of $$ solely due to the massive amount of uncertainty that exists throughout the world, but mainly here in the U.S. Obama has freaked out Big Business. To the point where they will now wait him out, or, at least wait until the mid-terms are done to see if the Repubs do actually take back the House and/or Senate...

 

[Yuma]

Agree with your post, with the exception of the bolded part... Business are hoarding money, knowing full well they can deploy it in very productive, meangingful and profitable ways. However, they aren't parting with the Trillions of $$ solely due to the massive amount of uncertainty that exists throughout the world, but mainly here in the U.S. Obama has freaked out Big Business. To the point where they will now wait him out, or, at least wait until the mid-terms are done to see if the Repubs do actually take back the House and/or Senate...

I agree with the why of big business not spending. I just left out the reason why because I thought we all knew this.

High rates aren't always bad. If you are retired and have your house, motor home, and cars paid for, or at low interest rates, and you invest your retirement funds in double digit CDs, you will be living like a king. Back in the late seventies, I golfed with lots of retirees that LOVED the high interest rates. Us working stiffs that have to buy stuff on credit will be hating it! LOL!

I think the reason rentals are not fully occupied is I am seeing people move back in with their family and friends to save money. I am also multiple families renting houses more now than ever. Hard times, people avoid renting, or split costs when they can.

 

[conraddobler]

Agree with your post, with the exception of the bolded part... Business are hoarding money, knowing full well they can deploy it in very productive, meangingful and profitable ways. However, they aren't parting with the Trillions of $$ solely due to the massive amount of uncertainty that exists throughout the world, but mainly here in the U.S. Obama has freaked out Big Business. To the point where they will now wait him out, or, at least wait until the mid-terms are done to see if the Repubs do actually take back the House and/or Senate...

Great then we can get 1300 page bills instead of 2300 page bills and call it deregulation!

Seriously, the metrics at work here are cumulative and having cash is great but the problem is the consumers don't and won't, that's game over for our economy, 70% of spending is tied up fighting economic trench warfare against debts.

It'll take about 10 years for consumers to repair their damaged balance sheets.

I expect a financial near death experience in there within the next two years as this reality slams home.

 

[conraddobler]

I agree with the why of big business not spending. I just left out the reason why because I thought we all knew this.

High rates aren't always bad. If you are retired and have your house, motor home, and cars paid for, or at low interest rates, and you invest your retirement funds in double digit CDs, you will be living like a king. Back in the late seventies, I golfed with lots of retirees that LOVED the high interest rates. Us working stiffs that have to buy stuff on credit will be hating it! LOL!

I think the reason rentals are not fully occupied is I am seeing people move back in with their family and friends to save money. I am also multiple families renting houses more now than ever. Hard times, people avoid renting, or split costs when they can.

This trend is accelerating and will continue to do so, the pressure this puts on the housing market prices is epic.

I've been shopping at several stores, the only busy place I've encountered was Walmart, the rest of the stores we so nice it was frightening and had no lines to checkout and no customers and a lot of stuff was half off.

This usually spells impending doom to that business.

 

[Duckjake]

Mortgage rates are not going through the roof without destroying our financial system.

When rates go up that drops the value of every other debt instrument out there as well as drives down housing affordability, driving down prices.

There is no jobs recovery, businesses are hoarding cash because they have nothing better to do with it.

The best time to buy a house is when you want one and can afford one in any other time than a severe bubble.

I have a hunch people are going to be shocked by where rates go, shocked senseless but it's just a WAG.

Reminds me of the time in the 1970's when a local builder advertised his specially negotiated low mortgage rate....15.5%.

Hard to believe that there was a time when the prime rate was around 20%. Our clients were making more money on their "sweep accounts" than they were building.

 

[conraddobler]

Reminds me of the time in the 1970's when a local builder advertised his specially negotiated low mortgage rate....15.5%.

Hard to believe that there was a time when the prime rate was around 20%. Our clients were making more money on their "sweep accounts" than they were building.

I didn't know at the time why that was so and for years afterwards.

It was a demographic driven phenom, all the boomers were buying houses, rates didn't matter because the demand was still there, they all did still buy houses.

This is the opposite of that, so as odd as it may be the demand for money by qualified people is so low that it's the exact opposite of that scenario.

That and now we simply print money to fill holes.

The cycles of the market are a lot like the cycles of nature, it follows the same pattern of growth and consolidation then more growth.

Generally things grow but not constantly and not without pullbacks, as painful as right now is it's just one of those historic pullbacks that sets the stage for the next boom.