It doesn't look like the Arizona real estate market is going to turn around for a long time. Housing prices are deflating at an increasingly rapid rate, accelerating faster than during the U.S. Savings and Loan crisis.
Mortgage lenders played a dangerous game of lending in the Arizona housing market only to see record levels of foreclosures. Housing prices in metropolitan Phoenix are plummeting at some of the fastest rates in the nation, and Housing Predictor analysts expect that trend to last through at least 2008. When home prices fall enough, the buyers will be back in the market.
The median price in Phoenix was the highest for any metropolitan area in the west at its peak. Housing Predictor forecasts Phoenix will deflate a worsening 15.8% on the average home in 2008.
Phoenix is one of the most over-built new housing markets in the country, and many of the nation’s largest builders are offering all sorts of incentives in the Valley of the Sun to rid themselves of their new home inventory. The slide is certain to last a while.
 |
| City |
Forecast |
| Phoenix |
− 15.8% |
| Flagstaff |
− 6.6% |
| Tucson |
− 7.4% |
| Scottsdale |
− 8.9% |
| Yuma |
− 8.2% |
In nearby Scottsdale, which has some of the nicest homes in the country, home prices are falling less than Phoenix. But that doesn’t mean Scottsdale is out of the deflation picture. Scottsdale will see average prices depreciate an average of 8.9% in 2008.
Down state in Tucson foreclosures are having a major impact on the market. The surge in foreclosures, however, is effecting every part of town in Tucson, which is taking a broad hit in the ailing housing market.
While the home market boomed everything looked great for Tucson. Now empty homes sit vacant as foreclosures increase and the market deflates. Tucson prices are taking a hit, and will fall further in 2008 at an average rate of 7.4% in the combined single family and condo market. The median price for a home in Tucson is $210,000 and by the end of the year it may well turn into a buyer’s paradise in Tucson.
Yuma is seeing its market also slow from the boom. Sales of homes are decreasing with the prices even though the community has grown to a point where newcomers barely know the outskirts from the city limits. However, Yuma housing is forecast to deflate 8.2% by year's end.
Up state in beautiful mountain high Flagstaff the market is composed of many second home and vacation home owners. The quaint town was a boom market like much of the nation, but will see depreciation of 6.6% in 2008. Second home markets are less impacted from falling home prices than many other areas of the country, perhaps because more second home owners pay cash for property.
