Index: Phoenix-area home prices to hit a decade low

The Phoenix area's median home price is likely to fall to a decade low of $100,000 in November, according to a predictive indicator of future home prices based on current pending home sales.

The Arizona Regional Multiple Listing Service Pending Price Index is based on pending sales in the multiple-listing-service database, where most, but not all, Phoenix-area homes for sale are listed.

The index provides a fairly accurate forecast of pricing trends as far ahead as 90 days.

The listing service describes it as a tool for strategic decision making by real-estate brokers, agents, buyers and sellers.

The latest Pending Price Index, issued Wednesday, predicts a median home price of $110,300 in September, $105,000 in October and $100,000 in November.

Last month's index for August missed the mark by $100, predicting a median sale price of $110,000 for all homes listed for sale via the listing service.

The actual median price for listed homes sold in August was $109,900.

The Phoenix-area housing market has taken on a split personality in recent months, with homes valued at or below $100,000 selling almost as soon as they hit the market, while demand has nearly disappeared for homes priced above the Federal Housing Administration's guaranteed loan limit, currently $346,250 in Maricopa County.

One key reason is that at least half of all recent home purchases have been made by investors looking to renovate and lease out the homes they buy to generate monthly income.

Such investments have the greatest profit potential and pose the least amount of financial risk at the low end of the market, investors say.

Real-estate agents and brokers have been frustrated in recent months by the continuing slide in home prices despite improvement in other housing-market indicators, such as sales volume and the inventory of homes listed for sale.

According to the listing-service report, inventory decreased in August to slightly fewer than 27,000 homes. The inventory has been in decline since November, when it was about 45,000 homes.

August's inventory represents just 3.1 months of housing supply, the report said, adding that anything under four months is considered a seller's market - at least under normal circumstances.

Sales volume of listed homes increased in August to 8,717 transactions, up 3.9 percent from July and an increase of 18.4 percent compared with August 2010.

by J. Craig Anderson The Arizona Republic Sept. 8, 2011 12:00 AM




Index: Phoenix-area home prices to hit a decade low