Sellers struggle as Valley home prices down 21%

August 14, 2008 - 10:38AM

Edward Gately, Tribune

It’s all-out war for anyone trying to sell a home in the Valley’s turbulent housing market.

Valley home prices have set a negative record, dropping 21 percent in just one year, according to the latest Arizona State University-Repeat Sales Index, which is based on repeat sales of the same homes as they sell over time. The drop in average home price was from May 2007 to May 2008.

It was even more severe than the 18 percent drop recorded from April 2007 to April 2008, and the first-ever double-digit decline of 13 percent from March 2007 to March 2008.

“Things are going down fast,” said Karl Guntermann, a real estate professor in the W.P. Carey School of Business at ASU. “Obviously it’s a very tough market to sell in. If you aren’t selling, you’re losing equity, but it’s kind of paper equity. A lot of people are losing equity, they don’t feel as wealthy and that does affect people’s spending patterns.”

The declines, while painful to sellers, still haven’t matched the staggering increases in home values that peaked in 2006, he said.

“Basically around mid-2006, the increase varied anywhere from 73 percent to about 80 percent, depending on which city or region,” Guntermann said. “We’re still on average way above where we were at the beginning.”

Among East Valley cities, prices fell 25.1 percent in Mesa, 23.2 percent in Chandler, 16.5 percent in Tempe and 14.2 percent in Scottsdale/Paradise Valley.

“In general, if you don’t have to sell, you probably shouldn’t be selling,” Guntermann said. “You’re competing with banks that are selling foreclosed properties. You’re competing with someone who has a job transfer and has to sell, or maybe they lost their job and they want to relocate to another region, and they need to sell their house.”

If you have to sell your home, the two most important things to keep in mind are that you must price your house aggressively and it must be in “immaculate” condition, said Jay Thompson, a broker with Thompson’s Realty in Gilbert.

“Curb appeal has always worked. It worked 50 years ago, and it works today,” he said. “You want people, when they pull up to the front of the house, to go, ‘Wow, this house looks great,’ and they carry that same feeling through when they walk into the front door. It’s got to look good, it’s got to smell good.”

And if the foreclosure house next door or down the street is selling for less, you need to be able to show why a buyer should pay more for your house, Thompson said.

Buyers are also pickier, and they want to look at a lot more houses before making a decision, Thompson said.

“Buyers are not going to be looking at two or three houses, they’re going to be looking at 20 or 30, or 50 houses,” he said. “So your house better be the best-looking one at the best values.”