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Study: Valley home price skid near the end of the line

Study: Valley home price skid near the end of the line

Wednesday, August 19, 2009,
Phoenix Business Journal
by Jan Buchholz

A new housing study released by Arizona State University concludes that the worst of the housing price declines in the Phoenix market are over for now.

The Arizona State University-Repeat Sales Index still notes that price declines are taking place, but at a much less drastic rate than earlier in the year.

“It is now clear that the worst has passed in terms of the rate of decline in house prices and that prices were falling most rapidly back in February and March,” said Karl Guntermann, the Fred E. Taylor professor of real estate at the W.P. Carey School of Business, who conducted the study.

Guntermann has been doing the Repeat Sales Index since October of 2007. The survey is different from many other housing reports in that it tracks sales activity of a particular property over the course of time. Though that rules out a lot of data, Guntermann said the sampling is still significant.

“We had 3,750 sales pairs in May, so it’s big,” Guntermann said.

Within that May sampling, Guntermann determined that housing prices for May 2009, as compared with May 2008, declined by 33 percent, a significant drop, but less of a drop than what was experienced in February, March and April.
Housing prices in February and March 2009 were down 37 percent from those months last year. In April 2009, housing prices were down 35 percent from the previous year, a slight improvement.

Now with another month of improvement, Guntermann believes a positive trend is being established.

Median home prices, for example, were at their lowest in April at $117,500, but increased to $119,000 in May. Guntermann expects the median price to jump modestly in May to $120,000 when more data is tabulated.

Still the housing picture is sobering.

“The current slide in home prices is the longest in Valley history at 27 months,” the report noted.
Some interesting details emerged in the report, including the observation that the worst price slides from May 2008 to May 2009 occurred in the Glendale submarket with a 39 percent drop in prices. But not far away, in Sun City and Sun City West, housing prices dropped the least during the same time frame: 16.5 percent.

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