Phoenix Titanic

Remember the Titanic? Well, it wasn't the iceberg above water that sank the "unsinkable" ship, it was what was beneath the water and there lies Phoenix's Achillees heel! Sixty thousand permits pulled in 2005 and almost as many in 2004 and guess what, with a 9-14 month lag on completion many of those homes are now coming on the market! Think of all those homes bought in Jan-December of this year, most are still under construction and many homes bought last December are not closing. A nurse I work with is sitting on a house she closed on in October and is paying $1500 a month on a house she can't rent or sell. Many of those homes bought in May, June, July and on during the bidding frenzy will come on the market this spring, then we'll really see a blood bath! How many of those homes are second homes or investment homes? Guess what, many of those "earnest money" deposits will be forfeit and it will be the builders left holding the bag on a market frenzy they helped create. Behold the pain many home owners will feel as those markets are significantly discounted. Add to that those who bought in the last three years and have their ARMs coming due for a rate increase! Many owners are so far in debt they will be a rise in foreclosures as well. With home prices falling up to $100,000 in most major Australian cities (their bubble ended a year ago) and Britain now feeling the "pain" of over priced homes and their economy going into recession and most people in California also poised for a precipitous fall in prices (no cash to come here and pay our inflated prices) the only places that will not suffer major losses are places that homes are still under valued (like Austin and Dallas and Houston and San Antonio to name a few). Call me "Chicken Little" but hey, I sold my property and bought in Texas where I get true value for the dollar. Anything you buy over $100 a sq foot and you have a great risk of losing a lot of dough. Just look at the flat market Texas suffered these past five years (and has been spared the pain that is coming). Of course, the whole country will suffer but some will suffer more than others. Where the greed was the greatest we'll see the greatest pain!