The Valley's struggling real estate market may be on the eve of finally bottoming out, according to a new forecast by real estate brokerage Grubb & Ellis/BRE Land Group.
Foreclosures and notices of foreclosure dropped significantly last month across Maricopa County, while the prices of new homes have begun showing signs of stabilizing, according to the report.
"Some argue that (the drop in foreclosures) is an artificial drop because the banks are not being as aggressive in pursuing foreclosures as they have been traditionally," said Ross Smith, senior vice president of Grubb & Ellis/BRE Land Group. "But nevertheless, it helps reduce the oversupply of homes, which is kind of the root of the problem here. We have to get housing supply back in balance with demand."
Also, asking prices for existing homes versus actual sale prices have begun returning to normal.
Another surge in foreclosures is expected in 2009, but federal intervention hopefully can stabilize the market, Smith said.
Mortgage rates and home prices are at record lows, which should prompt more sales and therefore a reduction in the foreclosure inventory on the market, he said.
"There's great bargains out there," Smith said. "I think bank-owned properties are selling below cost in some locations, including peripheral locations."
East Valley real estate agent Jay Thompson has noticed an increase in people looking to buy homes in the past three to four weeks. The surge is unexpected for this time of year, he said.
"Things typically slow down between Thanksgiving and Christmas," he said. "The fear seems to be subsiding a little bit. There is no question my Web site traffic and phone traffic and e-mail traffic have all picked up with buyer inquiries. Friends of mine who are agents outside my brokerage also seem to be a little busier than they have been lately. Busy's good."
After steady increases since the first of the year, sales of existing homes dropped in November, according to the report. Many potential buyers still are waiting to see how low the market will go, Smith said.
"There's definitely a danger of values falling further, but I think we're fairly close to the bottom," he said.
The areas of the market most distressed are those located farthest out from the central Valley, Smith said.
"There's more demand for homes at higher prices closer in," he said.
Thompson expects the market to be "relatively flat" next year.