Valley home prices fall again

The bad news is, Valley home prices fell in July for the 17th consecutive month, tying a record for prolonged declines set more than a decade ago.

The good news, however, is that rate of decline has slowed slightly and should eventually level off in the coming months as the market gradually hits bottom and begins its long trek toward improvement.

That's according to the latest Arizona State University-Repeat Sales Index, which is based on repeat sales of the same houses as they sell over time. From July 2007 to July 2008, Valley home prices dropped 24 percent. July was the fifth month in a row that home prices dropped by double digits.

The last time the Valley saw consecutive monthly declines for this long was during the last serious real estate recession in Arizona in the early 1990s, the study said.

"What's becoming more apparent is that this annual rate of decline appears to be leveling off or bottoming out," said Karl Guntermann, a real estate professor in the W.P. Carey School of Business at ASU. "We've now started doing a preliminary estimate for the next two years, and for August it's (a drop of) 26 percent and for September it's 27 percent. I would suspect that the rate of decline will level off somewhere probably close to 30 percent ... and then in all probability it will turn around and start becoming less negative."

The biggest year-over-year drop, 36 percent, was in the southwest Valley, while the smallest decline, 14 percent, was recorded in the north East Valley.

The Valley's median price was $191,000 for July, down from $263,000 for July 2007, Guntermann said.

"It will probably take six months, eight months or longer before we get back to where prices themselves have leveled off," he said. "You might say that's an important step in the recovery. When you have prices bottoming out, then you can start to think of prices eventually going back up."

Gilbert real estate agent Tra Bell said the inventory of homes on the market will have to shrink considerably before home prices begin climbing again.

"I've been in the business for over 12 years and ... having looked at it hundreds of times through the years, we typically have about 22,000 to 25,000 homes on the market, and right now we have over 50,000 homes on the market," he said.

A high percentage of the houses selling are owned by banks, which is creating even more downward pressure on pricing, Bell said.

"(Banks are) a little more motivated than the actual seller, so they're willing to go a little bit lower on price if they have to get it sold," he said. "Of course, when they do that, (other sellers are) going to have to continue bringing their prices down, too, just to compete," he said.

Agent Don Matheson with RE/MAX Fine Properties in Scottsdale said the market is "pretty darn decent for properties that reflect their true market value in today's market."

"In Scottsdale ... your really good-quality properties that are in good locations, are really in good shape, have good curb appeal and are well-marketed are still seeming to me to get a really decent dollar," he said. "But, as a home seller right now, you've got to be very objective and look at your property with a microscope, and make sure that you're looking at all the things that can improve the value."

For sellers, the key is to be realistic and not panic, Matheson said.

"You're not going to see 2005 prices, that's history," he said.