Phoenix Leads the Way Down in Home Prices - Southern California is Thawing
Phoenix has achieved the unwelcome distinction of becoming the first major American city where home prices have fallen in half since the market peaked in the middle of the decade, according to data released Tuesday.
Home prices in the Sun Belt city, the 12th-largest metropolitan area in the United States, dropped 4.5 percent in February, according to the Standard & Poor’s Case-Shiller Home Price Index. Prices in Phoenix are now down 50.8 percent since the market peaked in June 2006.
For the country as a whole, the Case-Shiller numbers offered the thinnest of silver linings: things are still getting worse, but more slowly.
Home sales in Southern California and the San Francisco Bay area, where foreclosures dominate many markets, have snapped back this spring as prices dropped. But sales have slowed to a crawl in other markets like New York City, where prices declined 10 percent from a year ago.
“We’re seeing very strong sales in a few states and weak sales across 40 states,” said Patrick Newport, United States economist at IHS Global Insight. “The key factor driving them right now is just the excess inventory. Even though prices are undervalued, they’re still going to drop because of the excess. Even if we were at full employment we’d still see prices dropping.”
As prices have dropped, frozen housing markets in hard-hit areas like Southern California, Phoenix, Las Vegas and South Florida have begun to thaw. Record-low mortgage rates and huge inventories of foreclosed homes and other fire-sale properties have enticed first-time buyers to the market and lured others who had been sitting on the sidelines.
Inventories of unsold homes are edging down slightly, but there was still a glut of 3.7 million unsold homes in March, the Realtors’ group reported, representing a supply of nearly 10 months.
In February, the price of single-family homes in 20 major metropolitan areas fell 18.6 percent from the year earlier, compared with a record drop of 19 percent in January.
“Finally, we’re seeing a touch of moderation,” said David Blitzer, chairman of S.& P.’s index committee. “This is the kind of thing one might see if we’re beginning to see a bottom. I would not run out and celebrate, but I would not dig the bunker any deeper.”
Mr. Swan, the realty agent, said inventories of lower-priced homes were already dwindling in Phoenix as investors snapped up bank-owned properties at bargain prices.
“I’ve got Canadians coming here who are putting together investment pools of millions of dollars to buy houses by the hundreds,” he said. “They’re going to rent them out to all the people who were foreclosed and need a place to live. This is going to be a good year for us.”
