We all know that Phoenix real estate has taken one of the hardest beatings in the nation. Now new data is emerging that may indicate the dreaded double dip.
The Arizona Regional Multiple Listing Service index, based on pending purchase agreements, shows Phoenix home prices hit a new record low of $115,000 for December 2010.
That's lower than they were in April.
During the boom of 2004 to 2006, Phoenix home prices rose to an average of $250,000. But since the bust, they have been on a steady decline. Phoenix median home prices
Find Local Homes for Sale Browse through photos of millions of home listings on AOL Real Estate See Homes for Sale Search Foreclosures for Sale bottomed to about $119,000 last April, as the first-time home buyer's credit started taking shape. The tax credit goosed sales, and hence median home values, up to about $130,000 by summer. But then, kerplop: The credit ended, and prices fell.
Real estate experts say this could constitute the nation's first double dip, since home prices went up then fell back down again. Which is not good news for Phoenix.
And they do not expect the news to get any better in 2011. Bank of America has files of foreclosures to process in the Phoenix area, but all of those were placed on a moratorium due to the "robo-signing" problems. That moratorium ended last week. When the B of A foreclosures hit, or more accurately, flood the market, real estate experts say prices could be diluted downward even more. Phoenix foreclosures could rise by 1,000 per month as B of A clears its books. This will put even more downward pressure on Phoenix homes since those foreclosures will be cleared out at bargain pricing.
That's really not great news because 66 to 67 percent of Phoenix homes are already underwater. In fact, almost every Phoenix resident who bought a home after 2004 may be underwater on their mortgage.
Then there's housing analyst Mike Orr, publisher of the Cromford Report (sub. req). He tracks Phoenix-area home sales by the method most buyers like: price per square foot. Orr says the median per-square-foot price for a Phoenix area home sold in the region fell to $82.10 in October, which is what it was back in April. And 44 percent of all Phoenix home sales are REOs.
But before you run for the Prozac, Orr says this dip won't be as bad as the last one.
"The sharp relapse (of home prices) fueled by the end of the tax credit is now over," Orr says. "I expect a long, slow recovery in 2011."
And December is always a lackluster month for real estate sales. Multiple Listing Service data for contracted sales in January is looking better than December --- median sale values are up to $118,000 from December.
Other positive signs: Investors are scooping up many of the region's foreclosure bargains, diluting the supply of lower-priced housing. Among those investors: Sarah Palin's daughter, Bristol, who recently bought a home in Maricopa, Ariz., for $172,000.
Of course, some experts say investors do not create great communities. The best news is that the Phoenix job market is slowly improving, and job growth in industries other than real estate will help the market. Though mortgage rates have been heading upwards from historic lows, they remain lower than they were a year ago. If more homeowners can qualify for mortgages, the market could improve even more. All of which leads experts to tell us that even if it's a double dip, this one is not going to be quite as deep a crevasse.
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