Signs of a record fall

Valley's home values recorded an average 24 percent one-year decline in July. Although the skid shows signs of slowing, real-e

by J. Craig Anderson - Oct. 21, 2008 12:00 AM
The Arizona Republic

The Valley's housing market plummeted past another milestone in July, tying a record 17 consecutive months of declining home values.

The mark was set in the early 1990s after the savings-and-loan industry implosion.

The latest Arizona State University Repeat Sales Index, released Monday, reported an average one-year decline in home values of 24 percent from July 2007 to July 2008.

Preliminary data for August and September shows the trend continuing, according to the report, which would make it the region's longest downturn ever recorded.

The Repeat Sales Index compares sale prices of homes that have sold more than once, measuring the rate at which they increase or decrease from a year earlier.

The latest report shows the ongoing decline in home values continued to accelerate in July, though the rate of acceleration has slowed over the past few months.

ASU real-estate Professor Karl Guntermann said the Valley has not seen such a prolonged period of home price decreases since its last major real-estate recession more than 15 years ago.

During the previous downturn, he added, prices fell at a far slower rate.

Southwest Valley homes fared the worst during the 12-month period ending in June, with a 35.8 percent drop in value. Same-home sale prices in the northeast Valley diminished the least, at 14 percent.

Homes values declined by 25.6 percent in Phoenix, 28.4 percent in the northwest Valley and 23.7 percent in the southeast Valley.

The overall, year-over-year rate of decline was 1 percent more in July than in June, which means home prices fell just a bit more than they did the previous month. By comparison, June prices fell 3 percent faster than in May.

The rate of decline appears close to leveling off, Guntermann said, but prices are likely to remain on a downward slope for some time.

"It probably will take months for the index to move up to zero, which would mean that house prices have stopped declining from one year ago," he said.

Guntermann said he expects to see year-over-year declines of 26 percent in August and 27 percent in September.

"The decline may not level off until the RSI (the Repeat Sales Index) is down close to 30 percent from the prior year," he said.