Valley existing home sales leap 70%

October 24, 2008 - 6:09PM

Edward Gately, Tribune

Existing home sales in the Valley jumped a staggering 70 percent last month compared with September 2007, overshadowing a 5.5 percent increase in national home resales for the same period.

Home resales in Maricopa and Pinal counties rose to 5,749 units last month, up from 3,383 in September 2007, according to the latest Phoenix Housing Market Letter by analyst RL Brown. For most of the past year, existing home sales have been in the minus ranges from the same pace last year, off by as much as 46 percent last September.

"The bottom of the (Valley) resale market was sometime about a year ago," Brown said. "It went on for about six months, and we were down into the 3,000 (resales) level. So the fact that we're up is great news, but that's why the percentage is so high."

The National Association of Realtors reported that sales of existing homes nationally rose by 5.5 percent last month, the best showing since a 5.7 percent increase in July 2003 during the five-year housing boom.

"The West was up 34.4 percent," said Walter Malony, association spokesman. "A lot of the gains were in California, but also in Arizona and Nevada, and we're also seeing some pickup in Colorado. In areas like Phoenix ... where there was a lot of subprime mortgage exposure and then consequently big price corrections, that's where the buyers are responding."

The unprecedented home price surge meant the Valley had further to fall when the real estate bubble burst, prompting a flood of foreclosures and plummeting values, Brown said. These are prompting higher sales, he said.

The national improvement demonstrates that buyers who have been sitting on the sidelines want to get into the market to make a long-term investment, Malony said.

"Our survey data is showing that 80 percent of these purchases are owner-occupants and other data indicates that as many as half of the buyers are first-time buyers," he said.

Of the 5,749 Valley resales last month, 2,859 were bank-owned properties, Brown said. The median price of resales last month was $170,000, while the median price of bank-owned properties was $143,000.

Median resale prices last month fell 6.6 percent from August, 20 percent from a year ago.

"What it really comes down to is there is a demand in the price point of the foreclosed units, and that's what we're seeing demonstrated," Brown said. "It's proof that the buyers are out there and the buyers will come out of the woodwork when they see what they perceive to be appropriate values. If the buyers weren't coming out of the woodwork for the foreclosures, we would be in a much, much deeper world of hurt."

Yalda Alawi, a short-sale negotiator with WestUSA Realty Revelation in Chandler, said a turnaround is a year or two away.

"In the specific area I specialize in, I've actually seen a slowdown in buyer activity," she said. "It's slow in our end of it, especially because it takes so long."

Still, Alawi said that progress is being made toward recovery.