Prices of Phoenix Foreclosure Homes May Have Bottomed Out

by Peter Vernon on cities

The prices of foreclosure homes in metro Phoenix may have bottomed out, according to a report written by Karl Guntermann, real estate professor at the Arizona State University W.P. Carey School of Business, and his associate Adam Nowak.

Guntermann said that the median sales price for foreclosed homes dropped by 15 percent between October 2008 and October 2009 while the drops in the median sales price on a year-over-year basis in November and in December were 8 percent and 2 percent, respectively, showing a slowdown in the rates of price declines over the last months of 2009.

Based on the report, the prices of foreclosure homes started falling sharply in the early part of 2007 and then slowed down in the latter part of 2009.

The drops in the price decline rates of bank owned homes for sale also made a positive impact on the prices of non-foreclosures.

Using year-over-year comparison, the prices of single-family homes dropped in October 2009 by 21 percent, lower than the September drop of 23 percent and the August drop of 25 percent.

The slowdown in price declines was also shown by the year-over-year declines in November, which was 17 percent, and in December, which was 12 percent.

According to Guntermann, if the preliminary figures gathered for the months of November and December hold up, it can be said that the prices foreclosure homes in metro Phoenix have reached its bottom level.
He explained that the expected stabilization of the repeat sales index for foreclosures reflects both the sharp home price declines since 2008 and the increased demand for homes sold at distressed sales or auctions.

In October, the median sales price for detached single family houses in metro Phoenix was $131,000, a slight increase from the September median of $130,000. Preliminary reports of sales showed that the median sales price in November was $135,000 and the price median in December was $132,500.

The median price for condo units dropped in October to $89,200 from the September median of $99,500 while preliminary reports showed that the December median for townhomes dropped to $84,600 from the November median of $89,000.

The repeat sales index compares the prices of the same single home at various points in time, a method considered by the analysts as more reliable as it avoids comparing the prices of different houses with different characteristics and features. This is shown in the sharp differences between the decline rates for foreclosure homes and non-foreclosed homes.