While Arizona real estate is seeing pockets of recovery, the climb will be a steep one for hard hit areas like Phoenix, who are facing new waves of foreclosures. Phoenix was once a booming market — subsequently also a hotbed for subprime loans — and now faces yearly deflation projections of over 20%. In contrast, carefree Sedona is living up to that reputation, earning a positive housing price projection to end the year, boosted by a strong second home market. For more on this, see the following article from Housing Predictor.
Plummeting property values in Arizona have begun to slow in many areas, and some isolated communities have begun full-fledged turn arounds. The collapse of the housing market may be signaling the early signs of hitting bottom in Arizona.
The crash has been devastating for Phoenix, which saw the highest median home price in the country during the boom with the second highest number of subprime mortgages. Business failures are still rising and unemployment is increasing. But in the outskirts of Phoenix home values are declining at slower rates than over the last two years. Since Buckeye, Surprise and Gilbert began falling first they are turning around before the Greater Phoenix area.
At least part of their turn-around may be attributed to the surge in first time buyers as a result of the federal government’s tax credit and lower home prices. But the free fall in housing prices has eased in the Phoenix area.
However, Phoenix will have to wade through a tough market for months to come, and is forecast to experience average deflation of 21.5% for the year. Another round of foreclosures will send prices lower as bankers slash prices to less than half of what they were to sell the inventory off.
In neighboring Scottsdale the market is beginning to show encouraging signs with higher home sales, despite being the most expensive area to purchase a home in the Phoenix Metropolitan area. Foreclosures are making Scottsdale a tough market, but sales are rising. Scottsdale is projected to take a while longer to improve with its higher prices and is forecast by Housing Predictor to deflate 16.3% in 2009.
Local Arizona Housing Markets at a Glance
In the scenic mountain red rock country of northern Arizona, Sedona is under-going a turn around and may be nearing a recovery as vacation home buyers return to the area to buy lower priced homes before the market fully recovers.
Single family homes hit prices that haven’t been seen since 2003 in Sedona and home sales are soaring for the community, which has a national reputation for an artsy counter-culture scene. Foreclosure sales attribute for part of the fall in home values as many out of town owners walk away from mortgages as a result of owing too much on their property to make it worthwhile to hold onto. Sedona is one of just a handful of places with forecast appreciation to end 2009, projected at 2.1% on average.
In Tucson the inventory of foreclosures has been slashed by eager first time home buyers even as home prices fall. New homes still sit vacant in Tucson as evidence of the over-building the market experienced during the boom. But the numbers are providing more evidence that Tucson is a market on the mend and is projected to improve over coming months. However, home values are forecast to deflate 12.8% in 2009 on average.
In Yuma home sales are up but prices are still declining as the market tries to find a balance and outlast the foreclosure epidemic, which has made a devastating impact on the community. Foreclosures are expected to climb as another round hits to send home prices even lower. The credit crunch will have a long lasting impact on Yuma forecast to deflate another 12.7% by year’s end.
In mountain high Flagstaff only dozens of homes sell monthly as values deflate. For homeowners the deflationary cycle can be discouraging, but the market is starting to show signs of a turn around even with tighter credit standards for mortgage lending and rising job losses.
The second home market provided a sort of safety net for Flagstaff before the housing crash and vacation home buyers are starting to come back into the market as a result of lower prices, which are projected to see average home values deflate 11.8% in 2009.
This article has been republished from Housing Predictor. You can also view this article at Housing Predictor, a real estate analysis and forecasting site.