by J. Craig Anderson - Feb. 18, 2009 12:00 AM
The Arizona Republic
It's official: Phoenix-area home pricing has overcorrected for the housing bubble.
Preliminary same-home resale data from Arizona State University show the Valley's median home price fell to $130,000 in January, equivalent to the median price in January 2001.
That was three years before home prices began their meteoric climb, fueled by a frenzy of building, lax lending and overreaching buyers.
While the numbers probably will not shock those who have tracked recent developments in the housing market, they underscore the severity of the Phoenix area's real-estate crisis, which prompted President Barack Obama's visit to Mesa today to outline his $50 billion plan for reducing home foreclosures.
The ASU Repeat Sales Index, measured monthly by W.P. Carey School of Business real-estate professor Karl Guntermann, shows the Phoenix-area median home price fell to $150,000 in November, the same as in October 2003, just before the price run-up began.
Rather than hitting solid ground, the median price continued to slide in December and January, early ASU housing data show.
The Repeat Sales Index tracks repeat sales of the same homes over a period of years, considered the most accurate way to measure changes in the market value of housing.
Data from November 2007 to November 2008 show a record year-over-year price decline of 32 percent. That number probably increased to 33 percent in December and 34 percent in January, Guntermann's preliminary research shows.
"It will probably be months before the index levels off, which would be the first step in ending the home-prices decline," he said.
As median home prices plummet, affordability is skyrocketing, Guntermann said.
He also measures what's known as the Affordability Index, which tracks the relationship between median home price and median income.
An index of 100 means that a household earning the median income can afford a house selling for the median price at prevailing interest rates. An index of 125 means a median-wage earner can afford a home that's 25 percent above the median home price.
The Phoenix area's Affordability Index has gone from a low of 74 in 2006 to well above 100 in most Valley cities, Guntermann said.
The most-affordable city in which to purchase a home in the fourth quarter was Phoenix, he said, which led the Valley with an index of 152.
The least-affordable city measured was Tempe, which had an index of 87.
Scottsdale and Paradise Valley were not measured.
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