Increase seen in Phoenix-area home prices
For the first time in three years, Phoenix-area housing prices are showing an overall year-over-year increase for the market. A new report from the W. P. Carey School of Business contains positive news for Valley homeowners, who have been waiting for relief from dropping home values.
“This report reflects an important milestone in the recent housing cycle, with preliminary April data showing the first year-over-year increase in house prices marketwide,” said professor Karl Guntermann, the Fred E. Taylor Professor of Real Estate, who authored the new report with research associate Adam Nowak. “Also, prices for lower-end houses and the foreclosure segment of the market, which turned positive in March, continued to increase on an annual basis.”
The Arizona State University – Repeat Sales Index (ASU-RSI) measures changes in average Phoenix-area home prices from year to year. The latest index finally reveals an estimated 1-percent increase from April 2009 to April 2010. This follows a 13-percent fall from December 2008 to December 2009, a 9-percent drop from January 2009 to January 2010, a 7-percent decline from February to February, and an estimated 3-percent drop from March to March.
“Prices may continue to increase slowly for the next few months, but price stability, rather than increases, is likely for the rest of the year,” Guntermann said. “For homeowners with higher-priced houses, achieving price stability would be an important milestone after years of price declines.”
Guntermann says higher-priced homes still didn’t show a significant slowdown in the rate of price declines until this April. They remain just out of positive territory, with an estimated 3-percent drop from April 2009 to April 2010. Also, despite positive momentum marketwide, the cities of Glendale and Peoria lag behind others with prices still down more than 50 percent from their peak in 2006.
The overall median price for Phoenix-area single-family homes in the February index was $127,000. It’s projected to be $135,000 for April, which would put the market back at the same level as December of 2008.
The townhouse/condo market remains rough. The new index shows a price drop of 26 percent from February 2009 to February 2010. Preliminary numbers for March and April anticipate 19-percent annual declines. The median townhome/condo price in February was $86,400, with forecasted drops to $83,500 in March and $81,000 in April.
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 property against itself at different points in time, instead of comparing different homes and buildings 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 new report can be found at http://wpcarey.asu.edu/realestate/housing-market-reports.cfm. Further ASU-RSI analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu.