Phoenix Home Prices Down 21% Year-Over-Year

Edward Gately, the new real estate reporter for the East Valley Tribune, called me yesterday to discuss the latest Arizona State University – Repeat Sales Index (ASU-RSI) report that was released Tuesday.

Not having read the report, but always willing to chat Phoenix real estate, Edward and I had a nice discussion.

Gately wrote, Sellers struggle as Valley home prices down 21%, published yesterday in the Tribune where he rehashed the ASU-RSI report, with some added thoughts by yours truly.

In a nutshell, the report states that home prices in the Phoenix metro area declined 21% from May 2007 to May 2008 — the 15^th straight month of price declines.

ASU reports Phoenix home prices decline 21% YOY

This is, of course, news not many want to hear.

The report author, ASU Real Estate Professor Karl Guntermann, indicates that foreclosure properties are a significant driver of real estate price declines. While this may fall under the “no brainer” category, it is a point many seem to either fail to realize, or want to believe.

The bright side (if you want to call it that) is that the rate of price decline seems to be slowing, though as Guntermann correctly points out, there isn’t enough data out there to say if this is an aberration, or a true trend.

Another point that is often lost (particularly on the mainstream media) is that despite 15 consecutive months of YOY price declines, home prices have not fallen as much as they increased in the boom (and insane) days of 2005 – 2006. To both Guntermann’s and Gately’s credit, this factoid is mentioned in the Tribune article.

As an aside, I was sad to hear from Edward that East Valley Tribune real estate reporter Misty Williams had moved on. I tracked Misty down to Atlanta, where she is now the Industry Focus Editor at the Atlanta Business Chronicle. I’ve always enjoyed talking to Misty as she seemed “fair and balanced” and didn’t mangle quotes like some other MSM reporters I’ve worked with. Edward seems like a really nice guy though, and I look forward to talking to him as well (and for the record, he didn’t mangle a single quote either).

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Scottsdale News

Jay -
I will share with you blog readers what someone who is tied to the real estate market in the Phoenix metro area mentioned to me. This person told me a few weeks ago: "people don't know how bad the real estate market is".

Before your readers go out and pour money into short sale property and foreclosures take note on some info. Did you also know that foreclosure homes that people have bought the past few years are now being foreclosed on or sold at short sales.

One top local broker who once answered the phone on the second ring - now the phone goes to a answering machine.

On a positive note: One Scottsdale Realtor has told me he has just had his best year ever. This guy is a specialist in his area. His hard word has payed off in this tough housing market.

Have a good one,

Pete Kosednar

Jay - The Phoenix Real Estate

Pete -

No question it's rough out there. Many agents and brokerages are closing up shop. We on the other hand opened our brokerage in February. Some very experienced brokers thought I was nuts for opening a brokerage in this market.

It's not easy. But we're making it work.

Jayson

Not good news; nothing I want to hear.

It is what it is though, and as you pointed out, it looks like prices may be declining by less! We can only hope this continues and keep faith in the cycle...it might be worth mentioning that there are several AZ zip codes that have done quite well - which is why it's important to have an agent help with the purchase.

Mortgage Samson

As painful as it was, the market needed a correction. Now that that's out of the way it is a great time to buy again - of course, full doc this time around, which is fine by me.

Jayson

"Now that that’s out of the way"

Mortgage Samson - is there something you know that you're not sharing with the rest of us?

James Wheelock

@Jay - How much further does Phoenix have to go before an FHA purchase with a 30 year mortgage payment is within 15% of the normal rents for the area?

Hidden Valley Resort

I got lucky. My ex-wife got relocated to Pennsylvania. I followed her to be with the kids. I know the market is still tough in Phoenix but there are good spots. I found one at a ski resort.