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ASU-RSI: Phoenix homes lost a third of their value in 2008

April 09, 2009

Homes in the Phoenix area lost about a third of their value last year, according to the latest numbers from the Arizona State University-Repeat Sales Index (ASU-RSI). From December 2007 to December 2008, average Valley home prices plunged a record 33 percent. This marks the steepest-ever one-year drop and also the longest-lasting slump in Phoenix history.

“The magnitude of the decline in house prices over the past two years is apparent,” says Karl Guntermann, the Fred E. Taylor Professor of Real Estate at the W. P. Carey School of Business at Arizona State University, who calculates the ASU-RSI with research associate Alex Horenstein. “The ASU-RSI has now dropped 22 months in a row, surpassing the previous record of 17 months from 1989 to 1991.”

Guntermann says he also expects the index to keep dropping 1 or 2 percent for the next few months. He believes “the uncertainty in the financial markets last fall and the accelerating decline in the U.S. economy are just starting to be reflected in the ASU-RSI, so it will probably be several months before the decline levels off.”

However, he notes the rapid rate of decline is finally slowing down. Average Phoenix-area home prices hit a peak after increasing by 76 percent from January 2004 to 2006. Since then, the ASU-RSI has declined almost 40 percent.

The median Phoenix-area home price was down to $139,000 in December 2008, back at the level of September 2001. The southwest area of the Valley has been hit hardest, losing more than 51 percent of average home values since its peak.

The ASU-RSI is based on repeat sales, the most reliable way to estimate price changes in the housing market. Repeat sales compare the prices of a single house against itself at different points in time, instead of comparing different homes with different quality factors.

The ASU-RSI is produced through the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. The current report and archived reports are available at the Division of Real Estate – Repeat Sales Reports. Further ASU-RSI analysis is available at under the heading “Real Estate.”

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