Valley home resale prices sink 18%

Valley home prices plummeted 18 percent from April 2007 to April 2008, thanks mostly to the onslaught of foreclosures banks are dumping on the market, according to the latest Arizona State University-Repeat Sales Index.

The drop was much steeper than the 13 percent between March 2007 and the same month this year, when the index fell double digits for the first time. The index is based on repeat sales of the same homes as they sell over time.

"You not only have people who are trying to sell in a weak market, you now have lenders who are taking properties that they've gotten back ... and eventually they put them back on the market," said Karl Guntermann, a professor of real estate at the W.P. Carey School of Business. "Lenders want to get rid of them, so typically they discount the prices."

Malcolm MacEwen, president and chief operating officer of Coldwell Banker Residential Brokerage in Arizona, describes the situation as a "sloppy bottom recovery," meaning the market is bouncing around in terms of price.

"However, there seems to be some price leveling," he said.

By region, the West Valley has been hit hardest, followed by the central Valley and south East Valley, Guntermann said.

Among East Valley cities, home prices in Chandler dropped 15 percent, while prices in Mesa fell 18.5 percent and those in Tempe declined 14.2 percent.

"In the big picture the economy is soft and weakening, gas prices (are high), there's just a whole set of factors that are contributing to prices continuing to go down," Guntermann said. "There are buyers out there, there are people who could qualify for a loan, who could buy a house, who maybe are just waiting and watching what's going on. On the supply side, you have houses and lenders adding foreclosures to that and builders are still building."

Foreclosures now total about 20 to 30 percent of sales, and that's knocking prices down considerably, he said.

There is good news in that the inventory of homes for sale in Maricopa County has dropped from about 49,000 in January to about 47,000 last month, MacEwen said.

Falling inventory will help push home prices back up again, MacEwen said. In the meantime, homes are selling faster, he said.

Declining home values

By region, the decrease in home prices from April 2007 to April 2008:

18.4 percent in the south East Valley.

30.6 percent in the southwest Valley.

10.2 percent in the north East Valley.

23.5 percent in the northwest Valley.

19.2 percent in the central Valley.

Arizona State University-Repeat Sales Index