THE BUBBLE CONTINUES TO POP

The Arizona Republic had an interesting article in the paper on Sunday (it was picked up by the Dallas Morning News–view it here) about, what else, falling home prices.

The details after the jump.

This time the spotlight is on Phoenix, where a white-hot market caused prices to soar and builders to build. Now, as interests rates rise, sellers get nervous, buyers wait for prices to fall, and builders slash prices and profits, the Phoenix market is going stagnate. That means everyone in the industry–builders, real estate agents, mortgage brokers, etc., are losing money. The article also predicts that those that bought when the prices were highest will have to stay in their houses for years if they want to keep from losing money. Some may be hard pressed to do that if they bought ARMs, as interest rates continue to climb.

Fortunately for Phoenix, the area economy is one of the strongest in the nation and may be able to absorb the hit. Even so, the article indicates that one of every three dollars generated in the local economy can be traced back to the housing industry.

Not exactly a rosy picture.

As Candy keeps saying, Dallas seems somewhat immune to the bubble, as area prices are rising (and have been) at a very modest rate. But it never hurts to keep your eyes open.