The Chicago Tribune recently featured an article titled "8 Real Estate Trends for 2009". We did a news segment today with ABC15, part of our ongoing "Home Smart" series, outlining how that article's "Trends" related to our own market here in Phoenix.

  It struck me mid-production that the Real Estate insights from a Chicago paper have about as much to do with Phoenix Real Estate as a Chicago weather report has in common with....(hold on, I need to crank up the air conditioning)....with a warm 70 degree Phoenix in January afternoon. I'm guessing the Tribune picked the number "8" because it resembles the snowman in their driveway, or perhaps their knuckles froze solid at the keyboard on their way to a Top Ten List. Regardless, I decided to issue my own trendy list:

 "8 Real Estate Trends for 2009...the Phoenix Metropolitan Edition!"

  8. Income Producing Properties will Overshadow Owner Occupied Purchases

  The Great Price Plunge of 2008 has scarred the psyche of the average Valley home buyer. For the average consumer, awash in a daily sponge bath of negative Real Estate news, buying a house right now is like going on a tandem parachute jump with Helen Keller manning the rip cord. "When will we stop droppppiiinnnggggg?!?"

 Meanwhile, those nasty investor types that GOT RICH selling their wares back in the 2005-2006 Bubble Popping Contest, are clamoring back into the market. Why? Because we have thousands...not tens, not hundreds...yes, THOUSANDS of homes available for purchase today that will "CASH FLOW" immediately. Prices have burrowed into the $20 per foot range in some areas, with more to follow. Seeing as how a large chunk of Valley residents are now "former homeowners", thanks to foreclosure, the pool of future renters has more members than Richard Simmon's hot tub at Spring Break.

 If it makes money, it makes sense. Investors will mark 2009 as the year they struck gold.

  7. Fees Will Create Unease

  Recession 101: When the lump in your throat is bigger than the lump in your wallet, price tags become essential reading material. HOA Fees, Land Lease Fees, and Property Taxes will become deal killers in 2009. A penny shaved is a penny earned. Consumers will finally be asking the oft ignored question, "What DOES the HOA do for me?". Uh oh.

 Valley cities would be wise to begin comparing their own property tax rates to those of their neighboring municipalities. The bad news is that property taxes will likely rise regardless of common sense. Tis the way of government after all! The good news is that you can now list your town as a "dependant".

6. East Valley Will Stabilize. West Side Needs a Defibrillator

 The dirty little secret in Valley Real Estate is that Newton's Law doesn't apply to Real Estate. All things do not fall at equal speed. While certain communities are declining, many pockets of stabilization have already taken place. There are communities in South Scottsdale for instance that stabilized mid-2008, and are now poised for modest value gains.

 Meanwhile back at the paved over ranch...the west Valley continues to dominate the new to market listings, the under $100k club, and the bank owned list of deeds. Were West Valley loan officers issued invisible ink? You mean signatures made in spray paint aren't valid? For every foreclosed home, you have one more opportunity to rent out an investment property. We see 2009 as being the year of the investor in the West Valley.

5. Outlying Communities will Face "Shrinkage"

  "I was in the pool!"...won't be a good enough excuse for the condemned outlying areas to explain their cooling off, and their population growth shrinkage. Buckeye, Maricopa, Queen Creek, Surprise grew with the motto of "If you build it they will come." Well, they will come until gas hits $4 per gallon, construction jobs disappear, and 20,000 homes become available for sale between your town and the job corridor.

  The banks are swinging a wrecking ball at home values in these towns as they struggle to escape their own house of cards. As the banks diminish the property values, the few homeowners left in town are going to take a hard look around and think to themselves, " Why am I paying these banks MY $250k mortgage payment...when the banks are selling the identical house for $90K?". When I get to the bottom I go back to the top of the slide.

4. New Home Builders Go the Way of the Doh!-Doh!

  With costs between $60-$80 per foot to build a basic Xerox-Attack-of-the-Clones type home on a blank stretch of once pristine desert, new home builders simply can't compete with the bank repos. Show me a new home community near Phoenix and I will point out the hundreds of foreclosed homes surrounding it, all priced at less than half the cost to build new homes.

  I suspect new home builders can only survive if they post a profit. Even Bernie Madoff couldn't make the current books look good on paper. The valley is overbuilt. Having more homes than people only works if your last name is McCain. We don't need a wave of job growth. We need a tsunami. The question is not "How many builders will go under?", but rather, "How many will go under without completing the communities they are now building?". Buying a new home right now is like pogo sticking through a minefield. When the sales trailer is hooked to a running vehicle, buyer beware.

3. Proximity, Thy Name Conquers All

  Theoretically, gasoline never should have approached the $4 per gallon heights that it achieved. It was an artificial commodity price increase...but that doesn't really matter. American consumers haven't been this emotionally scarred since "The Crying Game". Not everyone is converting to a horse drawn Prius, but virtually everyone checks the gas gauge before the rear view mirror these days. The fear of a return to $4 gas is here, it is real, it will have a dramatic effect on the 2009 consumer.

Where there are jobs, there will be real estate purchases.

2. New Home Starts...Will Stop

   In a perfect world we could hit a magic button on the new home builder and covert him into a repo-home remodeler. It's a strange paradox that builders are going under faster than Oprah in an undertow, yet we have thousands of repossessed homes that could use a guy with hammerin, nailin, and sawin skills. Did I mention we are overbuilt?

   Many builders will continue to build, holding onto their employees, hoping to wait out the storm. They remind me of Yul Brenner, taking a long drag off a Marlboro through the hole in his trachea, gurgling "I'm gonna beat this"....thulump.

1. Price is King.

Your co-worker tells you he just bought a new home this past weekend. Your first question is:

 a. "Does it have granite countertops?"

b. "Did it come with a landscaping allowance?"

c. "How MUCH did you pay?"

   If you answered "c.", congratulations...you greedy money worshipper! Gordon Gecko would be so proud. As frightened as the masses are of real estate, they are equally as interested. Unlike stocks, bonds, or derivatives, Real Estate is a tangible asset. People ‘see' it everyday as they drive to work, look out their window, stand on a floor. The Valley news story of 2009 will be the crash landing of the Real Estate market. It won't be pretty, there will be casualties, but the descent will be over with! Disembark.

  The drumbeat of recession should place "price" as the favorite focus group for consumers. If they are paying attention to the price of milk, you can bet your food stamps they'll be line iteming the cost of their next home. "Honey, do we really need faceplates on the outlets?". We track the market daily in my office. We are seeing feeding frenzies in certain areas where the prices have finally hit their sweet spot. These are but flickers of light in a sea of darkness, but after twenty years of watching this market go up, down, sideways...those flickers appear to be the end of the tunnel. Or, more like the reflection off the bottom of the well. How the Valley climbs out of the well is a story for a different year. In 2009 we just need to find the bottom.