More foreclosures predicted for 2009

by Catherine Reagor - Jan. 15, 2009 01:00 PM
The Arizona Republic

Foreclosures in metropolitan Phoenix will continue to climb in 2009, says prominent Wall Street housing analyst Ivy Zelman, a factor that will continue to hold back any recovery of the Valley's housing market and overall economy. Zelman said lenders need to find more ways to help struggling homeowners find lasting solutions.

Zelman's assessment was one of several predictions from national economists and real estate analysts at Urban Land Institute Arizona's Real Estate Trends Conference today at the Phoenix Convention Center.

This annual conference has become a must-attend event for people involved in Arizona real estate because of the expert speakers and their honest, even startling projections. Last year, there was stunned silence when analysts predicted home prices would fall 30 to 35 percent off their 2006 peak and any recovery was years away. So far home prices are more than 40 percent off the peak.

Two other national experts predict Valley home prices may not begin to rise again until 2012. They said prices will continue to drop this year and in 2010, and either level off or climb slightly in 2011. That's because metropolitan Phoenix's economy was hit harder than most cities because of its dependence on housing, construction and financial services, three industries at the center of the current economic downturn.

“Those industries are the three ground zeros for problems the American economy is having right now,” said New York-based economist Arthur Margon of Rosen Consulting.

“Foreclosures are the bugaboo for Phoenix's housing market,” said Tim Sullivan, a housing analyst with Sullivan Group Real Estate Advisors of San Diego. “Home prices are a neighborhood by neighborhood indicator. Prices can depend on how many foreclosures are in a neighborhood.”

This year's conference has drawn more than 1,000 real estate executives, analysts, government officials and consultants.

Foreclosures remain the pressing issue for metropolitan Phoenix's housing market recovery. All agree home prices won't stabilize until foreclosure rates fall for several months in a row. Lower priced foreclosure sales depress home values overall. Valley foreclosures topped 40,000 in 2008, a new record.