Housing prices still in decline
Nov. 25, 2007 12:00 AM
Home prices in metropolitan Phoenix took a healthy drop in October.
No one who owns a home wants to hear that, including me. But real-estate analysts say home prices in many parts of the Valley need to come down after climbing too high during the frenzy of 2004-05. The decline will help the market stabilize, they say. More buyers will get off the fence, and many sellers will still make a profit.
The median price of an existing Valley house fell to $242,000 last month, reports the Realty Studies department at Arizona State University’s Polytechnic campus. That’s the lowest median price the market has posted since spring 2005. It’s an almost 10 percent drop from the median resale high of $267,000 the housing market hit in early 2006.
Market analysts have been saying for the past several months that Valley home prices were due for a correction as big as 20 percent. Most big builders in the Valley cut prices at least that much a few months ago to keep selling homes. Some say home prices still have some sliding to do, so October’s price drop is a move in the right direction, even if it’s painful.
Remember, before the 50 percent price run-up in 2004-05, metro Phoenix was long considered a hot housing market for having steady annual home price gains from 6 to 10 percent.
Arizona isn’t alone in its housing price declines. It’s keeping company with the other three states speculators invaded, prompting price inflation a few years ago: California, Nevada and Florida.
A new report from LoanPerformance shows 17 states had housing price declines from September 2006 to September 2007. California led the nation with a housing value drop of more than 10 percent. Arizona, Nevada, Florida and Louisiana had home price drops of more than 5 percent. Of course, Louisiana’s decline was due to Hurricane Katrina, not the real-estate speculating disaster.
Real-estate advice
ASU’s newest real-estate expert was recently asked by Forbes magazine for his best suggestions for fixing a troubled housing market.
Anthony Sanders, professor of real-estate finance at ASU, said mortgage fraud must be tackled. “Mortgage fraud, by both borrowers and insiders, must be identified and prosecuted in order for faith to be restored in the market,” he said.
Other top tips: expand Fannie Mae, Freddie Mac and Federal Housing Administration loans, slow construction and cut prices; and for buyers and sellers to get realistic on prices.
CEO with Arizona ties
Former Arizona home-building executive Sheryl Palmer has been named chief executive officer of the merged operations of Taylor Woodrow Homes and Morrison Homes.
Palmer, who was once Pulte’s Phoenix division president, has been picked to run the Florida-based home builder now called Taylor Morrison. The company is among the 20 largest home builders in the country.