ASU report: Valley home resale prices on verge of stabilizing

ASU report: Valley home resale prices on verge of stabilizing

by J. Craig Anderson The Arizona Republic Mar. 26, 2010 03:06 PM

Phoenix-area home resale prices are on the verge of stabilizing despite the thousands of homeowners who continue to lose the battle against foreclosure each month, according to an Arizona State University report.

The most recent ASU Repeat Sales Index, covering same-home resales through February, shows the price drops are slowing and likely to come to an end after about three years of falling.

"The rate of decline has been slowing for several months, and if the present trend continues, prices will level off later this spring," said real-estate professor Karl Guntermann, who wrote the new report with research associate Adam Nowak.

The Repeat Sales Index measures changes in average Phoenix-area home prices from year to year.

The latest index shows prices on Valley single-family, detached-homes dropped about 13 percent from December 2008 to December 2009. That's less than the one-year decline of 17 percent in November and the 20 percent fall in October.

Preliminary estimates indicate the slowdown has continued, with annual rates of decline at 9 percent for January and 7 percent for February.

The lower end of the market has seen the most dramatic improvement. Since October, the annual drop in prices has eased from almost 30 percent to just 5 percent.

Foreclosed homes are also faring better than they have in past months.

"The prices of foreclosed homes declined at a 5 percent rate from December 2008 to December 2009, but the preliminary decline for both January and February was only 2 percent," Guntermann said. "These numbers suggest the foreclosure segment of the housing market is very close to the bottom, at least in terms of the rate of price decline."

The median price of homes in the December index was $132,500. That's down from $135,000 in November. Preliminary estimates for January and February are also lower at $125,000 and $127,000, respectively.

However, Guntermann said, that could be more the result of a recurring winter slowdown in the housing market, since the overall index trend is positive, and the median just represents the middle of the market.

The total decline of Valley home prices from the mid-2006 peak is 47 percent, Guntermann said.

In the townhouse/condominium market, the December index shows a 26 percent drop in prices, and the gap is expected to get worse, with estimated year-over-year declines of 28 percent in January and 30 percent in February.