Northeast Valley home prices continue steady decline

Joan Hunsinger sold her Scottsdale Ranch home after finally knocking her asking price down to $650,000.

At one time, the home was appraised at $1.2 million, but it sat on the market month after month until she drastically dropped the price.

In turn, Hunsinger was able to purchase a bank-owned home in north Scottsdale for $250,000, about $200,000 less than the appraised value before the housing market downturn.

"I got a screaming deal," she said. "It came on the market at 10 p.m. on a Sunday night and we were locked in that Tuesday morning. I love this house, it's just perfect for me."

The Northeast Valley - Scottsdale, Paradise Valley, Fountain Hills, Carefree and Cave Creek - remains home of the priciest ZIP codes for residential real estate in the Valley. However, median prices in this region have steadily declined, according to an Arizona Republic analysis of data from informationmarket.com.

The data include sales from Jan. 1 through Aug. 31 and all of 2009.

Six of the region's ZIP codes dropped 5 percent or more in median home price during this time, according to the data.

Likewise, sales dropped in every ZIP code in the region, with 10 of them seeing decreases of 20 percent or more.

Of all sales in the region, 21 percent were foreclosure resales, contributing to the decline in home values.

The Scottsdale area hasn't been inundated with bank-owned homes, so the drop in home values hasn't been as steep as in other areas of the Valley, said Holly Eslinger, president of the Arizona Association of Realtors.

Hunsinger, owner/broker of Exclusive Homes and Land in Scottsdale, noted her new home was one of her listings.

"The popularity of Scottsdale is still strong enough that when buyers come in, if they can afford to be in Scottsdale, they will elect to," she said. "The reason why we haven't had a major recovery is we still have the (bank-owned home) market to contend with."

Sellers with loans on their homes can't compete with bank-owned properties because there are limits on how low they can go in asking price, Eslinger said. Banks can go as low as it takes to attract buyers, she said.

"It's still going to take us three, maybe even four years to have a recovery, which is slower than would be expected," Eslinger predicted.

Howard Lein, owner of Re/Max Excalibur Realty in Scottsdale, said strategic mortgage defaults and "walkaways" keep plaguing home values in the region.

"(Homeowners) determine that continuing to pay for the home isn't in their best interest, and at the same time they have absolutely no financial difficulties that are demonstrable," he said. "It's incredibly widespread. Every short-sale and foreclosure that comes into the marketplace depresses the rest of the homes that are either for sale or that might come up for sale to reach their more normal price point."

One of the big problems is agents and brokers "educating" their clients on how to do a strategic default, Lein said.

"If an agent can motivate a seller to sell their home via a short sale, then the agent can have a listing commission within that transaction," he said. "The impact is that no matter what method of sale you're using, the value is going to be compared to the last short sale and foreclosure transaction, and the more there are, the lower the price points are going to be for the normal transaction."

Jay Butler, director of realty studies at Arizona State University, said the Scottsdale area has had fewer foreclosures than the rest of the Valley because homeowners have had more options and financial resources. Still, there have been enough foreclosures to make the market more affordable for those who can obtain the higher financing, he said.

"I was at a meeting and a guy showed me a home that was $3 million to build, it foreclosed on $1 million and sold for $800,000," he said. "So if you're looking for the deal, this is the time to do it."

by Edward Gately The Arizona Republic Oct. 15, 2010 01:10 PM



Northeast Valley home prices continue steady decline