Driven by a job market that has been plagued by workers being cut from large companies, and lower home prices Arizona may be in the beginning stages of its long awaited housing recovery as more employees go back to work. The suffering economy has seen unemployment improve even in the face of the worst real estate crash in U.S. history.
The hard hit economy in Phoenix, already with home values down more than half from their peak highs, is raking up low home sale figures. As re-sales remain sluggish without the addition of more federal aid and new home builders hold-off pulling building permits to construct houses, the housing market will have difficulty making strides towards recovery.
Declining home prices will hurt any real chance for a recovery for most of the year as homeowners remain glum about their situation and put off decisions about moving up to a larger or more expensive home.
But assisted by low mortgage rates and lower home prices, the market is projected to see improving conditions towards the middle of 2011. Home and condo sales should pick-up then but prices are still expected to decline for the year. Average home values in Phoenix are forecast to fall another 8.3% by year’s end.
The federal tax credit pushed more buyers to get off the fence, but its’ expiration has slowed home sales in Scottsdale , a posh community near Phoenix. The slower sales come at a time when the nation is just beginning to become accustom to the new economy when banks lend less and take less risk. Foreclosures are hurting the local market as homeowners who owe too much on their mortgages increasingly walk away from homes. Scottsdale is projected to experience average home price deflation of 7.9% in 2011.
Across the state in Tucson, a large and growing inventory of foreclosures and homes left vacant by owners are part of the shadow inventory of homes that trouble the nation. Lenders have slowed the foreclosure process in efforts to stabilize home prices. There work is having a telling impact on the community, which saw better home sales as a result of the tax credit. A weak economy, however, troubled by higher expected job lay-offs in the area will hinder the market from recovering in 2011 and pressure home values. Average housing prices in Tucson are forecast to deflate an additional 8.2% for the year.
In Yuma lower overall home prices and two military bases helped soften the blow from the fallout of the real estate collapse. But doubts about the economy have driven the market to lower home prices as the community faces the challenges of the financial crisis. Weaker demand to buy homes has led many military personnel to select to rent instead of buy, slowing a recovery. But an onslaught of foreclosures expected to hit the market in 2011 should offer enough incentive for many would-be buyers to return to the market. Home prices, however, in Yuma are still forecast to decline in 2011 by 6.2%.
In the tourist and vacation home market of Flagstaff housing sales hit a ten year low as prices declined after the tax credit for buyers expired. The fallout gives buyers a lack of confidence in the market that is hard to counter with an over supply of homes and other properties. As a second home rental market for vacationers, many may buy property in the future but for now are holding off over growing economic uncertainty. Flagstaff is predicted to see average home prices decline 7.5% in 2011.