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Study: Worst of Ariz. housing crisis may be over


A study released by an ASU professor last week showed an increase in Valley home prices for the first time since early 2007, possibly signifying that the real-estate market has bottomed out and the housing crisis may turn around.

The study by Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business, showed Valley home prices increased by 0.8 percent from May to June 2009.

The study also showed a 31 percent decline from June 2008 to June 2009, indicating the decline in home prices on a year-to-year basis has continued to slow down.

The April decline was 35 percent, followed by a 33 percent decline in May and early estimates for July and August show 28 and 25 percent declines, respectively.

“House prices clearly are declining at a slower rate on a year-to-year basis than they were earlier this year,” Guntermann said. “On that basis you could say that the worst is over.”

It appears home prices are going up, he said, but that may not be the only direction they can move.

“It’s significant in the sense that it’s the first time there’s been an increase, but it’s a small increase,” Guntermann said. “That could turn around depending on what happens to house prices in July and August.”

However, Guntermann said the decline in year-to-year homes prices, now on a 28-month streak, will likely continue for some time.

“It’s got a long ways to go before it gets to zero,” he said.

The median price of Phoenix-area homes went up from $119,000 in May to $122,000 in June, according to the study.

Holly Eslinger, president of the Arizona Association of Realtors, said she thinks the median price will settle down around $122,000.

“Lenders have not delivered their inventory to our market yet,” she said. “When that happens, that’ll bring down the values once again a little bit.”

Eslinger said she doesn’t think the real estate market is going to turn around soon.

“I think that we’ll probably level off,” she said. “I’m not sure that we’re really beginning an increase in pricing because we haven’t seen the second wave of [foreclosed homes] come on the market yet. There are numerous foreclosures happening as we speak, and all of those properties are going to have to be sold.”

Though housing prices are down from June 2008, Eslinger said this is part of the real estate market cycle. She also said it also makes it a great period for first-time buyers.

“I have talked to every first-time homebuyer I can talk to because this is the time,” she said. “If they want home ownership this is the time to do it.”

Homeowner Bryan St. Andrews, a spring ASU graduate with a master’s degree in real estate development, said the increase is a good thing for homeowners but he’s not sure the housing market has completely turned the corner.

“At the bottom there might be a month up and a month down as [the market] tries to find its true value,” St. Andrews said. “You might have a jagged line at the bottom.”

St. Andrews, whose home value has dropped about $65,000 since he purchased it in 2006, also said he thinks the pricing increase may be due to supply shortage.

“That sounds like the product of lack of inventory where the buyer might be willing to inch up the price for the same product, and that’s a good thing for homeowners,” he said.

Reach the reporter at salvador.rodriguez@asu.edu.


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