Valley housing market still struggling

The Valley’s struggling housing market — which saw prices stagnate in the first three months of the year — has been both an advantage and a hindrance for Chandler homeowner Tara Bianco.

View chart of Arizona home prices

In February, Bianco and her husband snapped up a brand new, five-bedroom house near Gilbert and Ocotillo roads for $464,000 — roughly $85,000 less than the original price.

“We were able to take advantage of a soft market in that area,” she said.

While some areas are being hit harder by the market slump than others, Valley home prices overall in the first quarter of 2007 remained unchanged from the end of last year, the Office of Federal Housing Enterprise Oversight reported Thursday. Arizona experienced a statewide increase of 0.13 percent for the period, while the nation saw an appreciation rate of 0.5 percent — the slowest quarter-to-quarter gain in a decade.

For the Biancos, the stalled market means they must hold on to their old home in Gilbert or risk taking a loss.

“We’ll just have to wait and see what happens,” she said.

The Valley’s inventory of existing homes for sale is at a record-high of around 53,000, said Mike Balzotti, vice president of education and development at The Equitable Real Estate Co. in Scottsdale. Competition is even more severe when considering the market is laden with unrealistic sellers and timid buyers, Balzotti said.

“The fact that there is any appreciation at all or even that the prices have held is quite remarkable,” he said.

But, Balzotti said, sales and prices are still up in some areas, and homes that are priced right are selling.

“There is always demand for the best property,” he said.

Mesa real estate agent Bill Christie said he’s seen more buyer activity in recent weeks. He’s had two homes — one in Chandler and another in east Mesa — enter escrow in the past two weeks.

Prices are holding steady, and people have begun to see that, Christie said. Two weeks or three weeks isn’t long enough to establish a trend, but “it’s a start,” he said.

Still, sales aren’t happening as fast as new listings are hitting the market, Fountain Hills real estate agent Dan Dufek said. Many sellers are still hanging on to their unrealistic asking prices, he said.

“With sellers that are unwilling to reduce, they’re either going to just hang onto the home a while, get lucky and get an offer or be forced to reduce,” he said. Fountain Hills resident Bob Hersh hopes to at least break even on a $625,000, recently completed condominium he signed a contract for as an investment two years ago.

The 2,440-square-foot home sits on a golf course, but there are 22 for sale in the same area now, he said. Hersh bought two other investment properties last year — one of which has dropped in value since October — and he plans to rent both for four or five years. Investors who paid cash can just sit and wait, but many “are bailing just to break even,” he said.

Hersh added that he doesn’t expect the market to pick up for at least 18 months and may rent out the newly built condo too if it doesn’t sell.

“It is a very scary market out there for sellers — not good at all,” he said. “Would I invest now if I saw a bargain? No.”