Home values in several established Valley neighborhoods have held steady this year despite the housing market's slowdown. But many areas, particularly far-flung communities, have seen prices tumble.
Median home prices have dropped in more than half of all metropolitan Phoenix's ZIP codes, according to a
Republic analysis of new- and used-home sales from the data-research firm Information Market. Hardest hit were newer Valley fringe communities from Pinal County to Peoria and even some closer in, where home builders reduced prices.
Several of the newer suburbs farther out such as Queen Creek, Surprise and Avondale posted double-digit drops in median home prices. Central Valley ZIP codes in west Phoenix and Glendale with more-affordable homes and established neighborhoods fared better, largely a result of little room for new building and shorter commutes.
The drop in prices is painful for sellers and homeowners banking on equity, but real-estate analysts say the Valley's housing market is due for a correction because prices were artificially inflated by speculators during the boom of 2004-05.
Impacting the housing market significantly are foreclosures, which are expected to keep climbing as adjustable-rate mortgage payments rise, speculators walk away from properties and people who need to sell can't. For some potential buyers, mortgages have become tougher to get and more expensive as the credit market tightens from the fallout from bad loans.
So far this year, Valley home sales are 20 percent behind last year's pace, and 2006's pace was 30 percent off the speculator-driven boom pace of 2005. Housing experts expect prices to keep falling in many Valley areas for at least the next several months and potentially much longer for areas struggling the most.
"If the numbers continue to decrease month after month, it puts the rebound farther and farther away," said Jim Sexton, president of brokerage John Hall & Associates.
The median price of a new home has fallen from $285,000 at the tail end of the boom to $255,000, according to the Phoenix Housing Market Letter. A few Valley areas such as north Scottsdale and far east Mesa posted increases in new home prices due to luxury subdivisions that continued to sell this year, albeit at a much slower pace than the previous few years.
One figure that isn't declining is listings, which need to fall for prices and sales to climb.
Based on the record 55,000-plus homes for sale across metropolitan Phoenix, Brett Barry of Realty Executives estimates there is a 12 to 14 month supply of homes on the market.
"That means homeowners have a 1-in-12 chance to sell their home in a month," Barry said. "Those odds aren't good in Vegas, and they aren't good for the housing market."
Kathy and Dennis Rowedder are trying to sell their north Phoenix home in the 85050 ZIP code. The couple recently closed on a new house in Peoria and got a $30,000 concession on it because they haven't yet sold their existing home.
So far, the couple have lowered their price $40,000 to $360,000.
"I thought when we listed it at the beginning of August it was priced really well. I buried a statue of St. Joseph in our front yard for luck," Kathy Rowedder said. "But after we lowered our price, I went out and dug it up, cleaned it off and brought it back in the house."
Overall home prices in 85050 have fallen almost 24 percent this year , the biggest drop of any Valley neighborhood. But several new, less expensive homes recently went up in the area, which pulled down the overall price. The median new-home price in 85050 dropped 60 percent this year to $298,271.
"The bad time to buy a home was two years ago; now sellers are motivated, and there are plenty of houses to choose from," said Steve Walsh, president of Scottsdale-based Scout Mortgage. "Buyers just need to be careful and not get into loans they don't understand that could cost them a lot more in a few years."
The drop in home prices is bad news for homeowners who bought at the peak and are now finding their homes are worth less than what they paid. Market watchers say those people should price to sell now if they have to because prices are likely to continue to drop.
"We are going to have to go through this pain to get back to a healthy market," Barry said. "Sellers tell me their bottom line on a sales price, and I tell them to forget it because we haven't seen the bottom of the market yet."