Home sales and prices were down and foreclosures up throughout northeast Phoenix as the nationwide housing slump continued through 2008.
Research from a variety of sources showed that in five ZIP codes in northeast Phoenix, 350 fewer homes changed hands in 2008 compared to a year earlier, a decline of more than 15 percent from year to year.
In all of Phoenix, home values dropped 33 percent from October 2007 to October 2008, according to ASU Professor Karl Guntermann’s Repeat Sales Index Report for January. For the northeast section, including Scottsdale and Fountain Hills, the decline was 21.5 percent, perhaps a closer indicator of what has been happening in northeast Phoenix.
“It appears that the rapid, double-digit rates of decline that began in March 2008 are slowing and that the annual rate will bottom out at declines of 30 to 35 percent,” the report says. “It will be much later in 2009 before the decline in the index reaches zero, which would mean that actual house prices have stopped falling.”
The report says median prices Valley-wide in October dropped to levels last seen in March 2004, and preliminary medians for November and December have declined to levels of October 2003 and April 2002, “essentially eliminating all appreciation in house prices from the current cycle.”
The run-up in prices began in 2004, peaked in 2006 and started dropping substantially at the start of 2008, the report indicates.
Northeast Phoenix dodged the bullet for a while, said Jim Belfiore of Belfiore Real Estate Consulting. But it is catching up now.
He said condos especially are in trouble, with costs of land and construction far outpacing the prices developers can hope to get for their units. He said he expects several projects to fail in 2009.
What few buyers are out there are looking for bargains, he said, and when single-family homes’ mortgage payments are equal to or less than apartment rents, apartment occupancy suffers as well.
He said he expects prices of both new and resale homes to reach a bottom sometime in 2009.
“Once they stabilize, interest and lending are likely to come back,” he said.
Until then, lenders remain skeptical, with high down payments and, in some cases, high interest rates required.
Foreclosures, which have driven prices down, rose in northeast Phoenix from 287 in the year that ended in October 2007 to 807 a year later.
Most of the sales and most of the foreclosures were in ZIP code 85032, bordered by Cactus and Cave Creek roads, Union Hills Drive and Tatum Boulevard. That area, which generally has lower priced homes, saw 665 sales in 2008, and 428 foreclosures.
By constrast, ZIP code 85254, east of Tatum, had 537 sales but only 177 foreclosures.
Echo Farrell of Farrell Fine Homes in Paradise Valley recently began a service for homeowners in danger of foreclosure. She is helping them refinance loans or otherwise dodge the prospect of losing their homes.
She said people losing and buying foreclosed homes are a distinguishing feature of the current downturn. Otherwise, she said, the business in the northeast part of the Valley has not changed much.
Another Realtor said the market is shaky.
“It’s crazy right now,” said Andrew Holm, a Scottsdale Realtor who works in Desert Ridge and Kierland. “I’ve been in this business eight years and it is extremely different from what I have seen.”
Buyers are offering 20 to 30 percent below asking prices, Holm said, even if sellers would never accept their bids.
“We now get appraisals up front, before listing,” he said. “Appraiser and lenders are being so conservative. What matters is not what the seller wants or needs, it is what the lender will lend.”
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