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Valley home prices in double-digit decline
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The Valley's swelling number of foreclosures spurred a first-ever double-digit drop in average home prices in the past year - signifying the worst housing market on record for many cities.
Prices fell an average of 13 percent from March 2007 to the same period this year, according to an Arizona State University study. That's up from a 9.3 percent year-over-year decline registered in February.
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ASU tracks repeat sales of homes, comparing prices of the same homes at different periods of time. "What's going on now is unprecedented," real estate professor Karl Guntermann said. In the last major housing downturn during the early 1990s, the most severe year-over-year decline on record was a 5 percent drop recorded in February 1990, the ASU report shows.
But today's prices are collapsing at a far faster pace, in large part because of the credit crisis and surging number of foreclosure properties.
Easy money doled out through risky loans amplified the dramatic upswing in prices during the latest boom, Guntermann said.
Prices shot up 76 percent from January 2004 to July 2006, with the annual rate of appreciation peaking in September 2005 at 44 percent.
"The faster and higher they went up, the faster and farther they'll fall," he said.
Every region of the Valley has been hit. The southeast Valley plummeted 13.8 percent from March 2007 to the same month this year, according to ASU's research.
Meanwhile, the Scottsdale and Paradise Valley area - where prices have tended to be more stable - experienced a 4.3 percent decline.
The southwest Valley experienced the harshest drop, at 22.9 percent. "In outlying areas, homes are getting crushed in terms of pricing," said John Vatistas, co-owner of Russ Lyon Sotheby's International Realty.
Foreclosures have hit cities such as Queen Creek and Maricopa especially hard, driving down prices.
That's not the case in Scottsdale and Paradise Valley, said Vatistas, whose company works mostly in those areas. Buyers think they're going to get steals, but sellers aren't necessarily budging, he said.
Still, activity has been picking up in recent months, said East Valley agent Jay Thompson, who recently opened his own brokerage and is hiring agents.
Buyers and sellers seem to be more serious, Thompson said, and bank-owned properties are garnering multiple offers within a few days of hitting the market.
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