Phoenix metro area experiences nation's biggest drop in home prices - East Valley Tribune: Business

Phoenix metro area experiences nation's biggest drop in home prices

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Posted: Thursday, February 24, 2011 12:56 pm | Updated: 2:56 pm, Fri Feb 25, 2011.

Trying to sell your home?

Odds are you're going to get only what it would have sold for in 2002.

New figures Wednesday from the Federal Housing Finance Agency show that the price of the average home dropped 4.5 percent between the third and fourth quarters of last year. That compares with a drop of just 0.8 percent nationwide.

Only Idaho fared worse, with a 6.1 percent quarter-over-quarter drop.

And in the last year, prices in Arizona have dropped nearly 13.4 percent, again second only to Idaho. The year-over-year decline nationwide averaged less than 4 percent.

Looking at the figures from a different perspective, they also show that an Arizona home which sold for $200,000 five years ago is now likely to bring less than $115,000 now.

The situation is particularly bleak for homeowners in the Phoenix metro area, which the agency considers Maricopa and Pinal counties. There, prices declined in the last year by more than 15 percent, the biggest drop of any metro area in the nation. And homes are worth only about half of what they were five years ago.

Edward DeMarco, the agency's acting director, noted that home prices remain down pretty much across the board. Only three states were able to show an increase between the last quarter of 2009 and the same period last year: North Dakota, Alaska and West Virginia.

"Lingering unemployment and elevated inventories of for-sale homes contributed to the ongoing decline of house prices," he said in a prepared statement.

The figures in the report are considered a good indicator of housing prices because it is based on a repeat-sales index. It measures the prices on about 6 million homes whose mortgages have been purchased or securitized by Fannie Mae or Freddie Mac and where there are records of the prior sale going back to 1975.

FHFA also has an index for some local areas.

In most cases, though, these numbers are not directly comparable to that 13.4 percent annual drop.

That's because this figure is computed only on sales. By contrast, for most metro areas, FHFA uses a broader base for its computations, considering not only resales but also cases where homes were refinanced with owners remaining in place.

That broader index, for example, shows a statewide year-over-year change of 8.5 percent, with an 8.9 percent drop for the Phoenix area.

For Tucson, the annual decline was 6.1 percent.

Elsewhere, the drop was nearly 7.2 percent in Coconino County, 9.1 percent in Mohave County, 9.8 percent in Yavapai County, and 8.8 percent in Yuma County.

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