Housing data stir optimism for Valley

by Catherine Reagor - Apr. 22, 2009 12:00 AM
The Arizona Republic

In March, there were 200 more new-homes sales across the Valley than the month before. That may not sound like much, but it's significant in the current slowdown.

Last month, 912 new homes sold across metropolitan Phoenix, a 28 percent increase from February, according to RL Brown's latest "Phoenix Housing Market Letter."

Even better for the market is that many of the recently sold new homes were built last year or the year before, either speculatively or for buyers who pulled out of deals. Depleting the inventory of built-but-unsold homes will help the area market rebound.

Home building slowed nearly to a halt last fall and hasn't picked up, another trend that will help lower the Valley's inventory of new homes. There were 390 single-family permits issued Valley-wide last month, compared with 1,278 in March 2008, according to the "Housing Market Letter."

Foreclosures must continue to slow to help the market recover. Now, builders must compete against lenders reselling nearly new foreclosed-on homes for bargain prices in many subdivisions.

"The metro Phoenix new-housing market is showing the signs of stabilization and even improvement," Brown said.

Could Valley home prices have already hit bottom? Real-estate analyst Mike Orr, who publishes the "Cromford Report," thinks so.

He tracks the daily square-foot price for Valley home sales by analyzing Arizona Regional Multiple Listing Service and Information Market data. The lowest he has recorded since he began tracking the market a few years ago was $82.20 on April 6. The price per square foot has been inching up since then. It reached $83.18 this week.

"The trend is now sideways to very slightly upwards, rather than very strongly downwards, which it has been for a very long time," he said.

He said there is always the chance Valley home prices could dip again, but both pending and active listings are showing prices have climbed in the past two weeks. Pending and active listings are key indicators of future home sales and prices.

"It seems more likely to me that sentiment will improve and prices will strengthen further," Orr said.

 

Cities Where Home Prices Could Fall More

With incomes falling and loans remaining hard to get, the best bargains are probably yet to come in some of the nation’s largest housing markets, predicts Forbes magazine.

To figure out which housing markets still haven’t hit bottom, Forbes calculated the spending power, unemployment, credit availability and housing stock over the last 27 years in the country’s 50 largest metropolitan statistical areas.

The projections determined how much each area’s home prices would have to change to bring that housing market into historical balance. Analysts said the employment rate is the great unknown. The more employment falls, the more likely home prices will follow.

Here are the 10 cities where Forbes believes prices are likely to continue to fall the most:

1. Orlando
2. Miami
3. Jacksonville, Fla.
4. Tampa
5. Los Angeles
6. Phoenix
7. Las Vegas
8. Oakland, Calif.
9. San Diego
10. New York

Source: Forbes, Matt Woolsey (04/17/2009)