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Home prices jump for first time since 2007

Home prices jump for first time since 2007

Daily News – Daily News Surprise/Glendale/Peoria Today

Thursday, September 17, 2009

Valley home prices in June increased from one month to the next for the first time since 2007, according to the latest Arizona State University-Repeat Sales Index.

The latest numbers show a 0.8 percent uptick in Valley home prices from May to June. The index measures changes in average home prices from year to year.

The federal first-time homebuyer tax credit, low interest rates and improved access to financing have all increased demand for homes and therefore helped drive up home prices, according to some East Valley realtors.

“Another big factor is the lenders held off on filing notices of foreclosure … for about four to five months to try and work out loan modifications with homeowners,” said Gilbert real estate agent. “We weren’t getting a lot of foreclosures on the market and therefore our inventory has dropped quite a bit.”

From May to June, home prices increased 0.2 percent in Chandler; in Gilbert, prices dropped 1.7 percent; and in Mesa, prices dropped 1.2 percent.

Despite the small boost in prices from May to June, the report shows an overall 31 percent drop for the entire year from June 2008 to June 2009. However, this is an improvement from the 33 percent decline from May 2008 to May 2009, and the 35 percent drop from April 2008 to April 2009.

From June 2008 to June 2009, home prices fell 21.6 percent in Chandler, 20.6 percent in Gilbert and 30.7 percent in Mesa.

Preliminary estimates show a Valleywide 28 percent drop from July 2008 to July 2009 and a 25 percent drop from August 2008 to August 2009.

The index has now fallen for 28 consecutive months, surpassing the previous record of 17 months set in the early 1990s.

“It is now clear that the worst is past in the home-price rate of decline and that prices were falling most rapidly back in February and March,” said Karl Guntermann, a real estate professor in the W.P. Carey School of Business at ASU. “However, it must be remembered that the current housing market is still quite volatile, so this conclusion must be tentative.”

Chandler-based realtor said prices have definitely been on the rise in the outlying areas of the Valley, including Queen Creek and Maricopa.

“I just sold a house out there last month for $170,000, and that same exact house just closed … for $218,000,” he said. “That’s a pretty big price jump. What’s driving it is the tax credit and … all-cash investors. Every offer I put in for my buyers, I’m competing with 20 other offers, and half of those are cash offers. The cash offers are mostly from investors who are putting their money in real estate because it’s really cheap.”

Distressed properties continue to dominate the market, and an expected second wave of foreclosures could hurt pricing.

“What it’s going to do is slow down multiple offers on properties and homes selling in seven, eight, nine or 10 days because there won’t be 10 to 15 people bidding on the same house,” he said. “There will be plenty of inventory and more to choose from, so it will take a little longer to sell them.”

More luxury homes are becoming distressed properties and will be hitting the market as foreclosures. At the same time, few buyers are interested in those properties, he said.

“The listings under $400,000, the buyers are there, while the ones above $400,000 tend to lag a little longer,” he said. “I think those luxury homes are going to keep on plummeting (in value).”

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