Foreclosures still driving region's home prices down

The median sale price of existing Phoenix-area homes declined in August for the third consecutive month, according to an Arizona State University report.

Reasons for the downward trend include a combination of the expected and the unexpected, according to the report's author, Jay Butler, an associate professor of real estate at ASU's W.P. Carey School of Business.

Butler said it's typical for median home prices to decline in the latter months of the year, as homebuying activity takes a backseat to preparations for school and holidays.

Still, he detects an unusual lack of motivation on the part of potential homebuyers, which he said is likely the result of pessimism about future economic stability and employment opportunities.

The median home-resale price in August for Maricopa County was $135,000, down from $137,500 in July and $138,000 in August 2009, according to the report, which was released Monday.

About two-thirds of all home-resale activity continued to be driven by home foreclosures, the report said.

There were 3,990 single-family, detached-home foreclosures in August, up from 3,865 foreclosures in July and 3,085 foreclosures in August 2009.

There were 4,800 existing-home sales in August, Butler said, down slightly from 5,080 sales in July, and a 25 percent drop from the August 2009 total of 5,995 sales.

It is possible that the area's three-year-long home-price downturn is being prolonged by the desire of some financially distressed homeowners to stay put and ride out the recession, he said.

"I think there's a group of people who thought they were going to hang on," Butler said. "They may have maxed out their credit cards waiting for the job market to come back, and that hasn't happened."

by J. Craig Anderson The Arizona Republic Sept. 21, 2010 12:00 AM


Foreclosures still driving region's home prices down