The Mortgage Brothers Show

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Is Another Phoenix Real Estate Crash on the Horizon?

05-19-2013About MortgagesEddie Knoell

One would think that the devastation that struck the housing market nationwide only a few short years ago would be long behind us, that you wouldn’t have to worry all that much about a repeat event. However, the reality is that if you have a Phoenix home loan or any kind of Arizona-based mortgage, you need to realize what ultimately led to the collapse and that it could repeat itself again. There are steps you can take to help protect yourself and your investment, so education is the best first step.

What Happened that First Time Around?

The housing market collapse was actually a very complicated sequence of events that built up over almost two decades. Pinpointing one aspect or event that triggered it all would be unfair, but at the core it had to do with quickly rising home prices in the 1990s, spurred by a strong ‘dot-com’ economy and stock market. Then, in the early part of the 2000s, financial institutions realized that they needed to become creative in order to sell more mortgages. After all, with home prices effectively out of reach for the average homebuyer, that means fewer buyers.

So they found those creative endeavors and began luring in homebuyers, giving credit to individuals who otherwise shouldn’t have or wouldn’t have been granted them. This directly led to the eventual collapse when all those homeowners couldn’t keep up with their mortgages. When oil prices spiked, taking away any little reserves they had in their monthly income, the dominoes began to fall.

How to Protect Your Phoenix Home Loan

At the moment, the housing market is down, but it’s showing signs of life. However, that doesn’t mean home prices are going to skyrocket like they did in the 1990s, but at the same time, there are a number of people buying up cheap homes, fixing them up, and selling them for a modest profit once again (known as ‘flipping’, which is another contributing factor in driving home prices up).

On top of that, banks have now been sitting relatively idle for over five years. They need to lend money to make money, but there aren’t enough qualified applicants to fill their quotas. This could lead to more deceptive practices.

If you are looking for a Phoenix home loan, or want to refinance your Arizona mortgage, be sure that you know your mortgage lender, their past practices, and that you will be able to (or can continue) afford your mortgage payments. What happens if oil prices spike again? What if inflation doubles? Will you still be able to afford it?

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.


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Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.