Improving home sales triggered by lower prices, near record low interest rates and the federal governments first time home buyers tax credit are slowly setting the stage for a recovery in Arizona housing markets.
However, Arizona will have to work through the over-supply of homes on the market and another tsunami of foreclosures that will hit in the early part of 2010. The new round of foreclosures is already in bankers' pipelines as more homeowners walk away from mortgages. Lenders will slash the prices on foreclosures to get rid of the excessive inventory, sending housing values lower before a recovery can get underway.
In Phoenix home sales have seen a healthy improvement, but prices have fallen at an unprecedented rate, nearly half from the market's peak. The pro-longed downturn has sustained for more than two and a half years, but should begin to see improvement in the latter half of the year. Government tax incentives and further enhancements in government backed lending are projected to aid in the markets recovery.
In neighboring Scottsdale, home sales are also improving as foreclosures account for more than a quarter of the volume due to lower prices. Scottsdale is projected to trail Phoenix in recovering from the downturn mainly because of its higher priced inventory of homes.
| City |
Forecast |
| Phoenix |
− 11.3% |
| Scottsdale |
− 12.4% |
| Sedona |
1.7% |
| Tucson |
− 8.3% |
| Yuma |
− 7.3% |
Home prices in Scottsdale have fallen to their pre-bubble levels. As re-sales rise in Scottsdale, new home builders anxious to get back to work will begin buying up parcels of land. Scottsdale is forecast to experience average housing deflation of 12.4% in 2010.
In northern Arizona, Sedona is already experiencing a slight turn around of sorts. But as chiefly a second home market any recovery could sputter along before fully developing. Homes, especially foreclosed properties, are selling at prices lower than they were in 2002. The market is forecast to appreciate a slight 1.7% in 2010.
In Tucson the inventory of homes has been cut by eager first time buyers taking advantage of the government's tax incentive. But more homeowners who are losing their jobs and others who have lost any incentive to hold on to their homes are being foreclosed as the values of their homes plummet.
Tucson is a market that is making strides towards recovering from the downturn, but with more foreclosures prices are forecast to fall in the New Year. Tucson is forecast to sustain average housing deflation of 8.3% in 2010.
Government financing has given the Yuma market a boost with two major military bases in the area. First time home buyers have taken advantage of low government mortgage rates to get the tax credit. Hopes are high that the expanded tax incentive will prompt move-up home buyers to take advantage of the program, which could help boost the Yuma market's recovery over time. Yuma is forecast to sustain average housing deflation of 7.3% in 2010.
