Phoenix homes have depreciated 21% from their peak value in June 2006 according to my analysis of the Case-Shiller data.
Since the August 2007 mortgage meltdown, prices have fallen about 15%.
The home price depreciation in Phoenix continues to accelerate according to the latest Case-Shiller numbers. From December to January the Phoenix Home Price Index fell 4.2%… that’s in 1 month!
It’s looking more and more likely to me that home prices in metro Phoenix as a whole will “bottom out” in 2008. Clearly, we’ll start to see the decline begin to decelerate in February or March.
Put together a down payment and keep your powder dry.
As always, the Case-Shiller index obscures the large differences within metro Phoenix sub-markets.
6 responses so far ↓
1 Cbass // Mar 26, 2008 at 12:11 pm
I tend to agree with your thinking John that prices could hit bottom in late 08. At this pace of depreciation we could get down to the 160 mark in no time, but only time will tell if we are going to over shoot the mark? As for price appreciation I think that will take longer because consumer sentiment has soured on real-estate and that will take more time to turn around than anything else. This should provide a good buying opportunity well into 09 as far as inventory and price go.
That being said this is just my best guess as these numbers certainly do not suggest anything good is on the way for RE in Phoenix. I know the media has already started to tout the improving sales numbers but they are comparing MOM. Doesn’t this happen every spring? What do the numbers look like YOY at this time is a more important barometer.
2 John Wake - Real Estate // Mar 26, 2008 at 1:15 pm
YOY are ugly.
3 john dough // Mar 28, 2008 at 6:33 am
the median price index is biased due to mainly lower priced ’short sales’ and REO’s selling - in reality the drop wouldn’t be as much. and the shiller of case-shiller is an eternal bear who would like to see us all in panic, scrambling for a bomb shelter with canned food somewhere in montana.
the beauty of right now? low rates, people in a media-induced panic, and a ripe time to pick up centrally located properties for a real deal.
4 Cbass // Mar 28, 2008 at 8:46 am
There is a reason why lower priced and short sales are selling. The prices are more realistic. Also the I think the Case-Shiller is based on repeat sales so this is by far the most accurate gauge on price trends as far as I can tell.
5 Brian McMorris // Mar 28, 2008 at 5:13 pm
I strongly disagree with John D. John, have you ever read anything published by Dr. Shiller?
I am a huge admirer of Dr. Shiller. He called the internet stock crash of 2000 (in “Irrational Exuberance”) and is respected enough by academia that Chairman Greenspan copped his slogan for the crazy market, supposedly after Shiller used the expression with Greenspan at a lunch.
Shiller wrote “Irrational Exuberance 2″ in 2004 and published it in 2005. It should be a “must read” for any self-respecting real estate professional. In this book, he not only called the real estate crash at a time when he was called a fool for doing so, but he backed it up with several years of research conducted by grad students at Yale, where is a chaired professor.
His economic data regarding real estate is the most comprehensive in the world and covers several hundred years of sales. He did this by painstaking research, going through old city and county records in countries throughout America and Europe. (his sales data on Amsterdam goes back to the 1600s).
He is no raving perma-bear. He is a highly respected academic who is not afraid to share the controversial results of his research.
6 Brian McMorris // Mar 28, 2008 at 5:20 pm
John D, I almost forgot: short sales, foreclosure auctions, divorces, or any other type of distressed sale still are “Sales” for the purpose of comps. If you are in a new neighborhood with 40 homes, and 10 of them are sold at foreclosure auction, you can bet those auction prices will create the basis for future comps and the value of your own home.
For this reason, I think the price declines in the next 8-12 months may equal those that have occurred. As the ARM defaults over the past year turn into foreclosures, banks will dump those properties back on the market at whatever price they can get.
I also question the basis for a “real deal”. By what metric? Compared to 2003 home prices are still not a “deal”. Mortgage rates are not especially low, basically flat over the past 2-3 years. And qualifying standards are much more stringent, so all the marginal buyers and speculators that drove prices higher the past 3 years will not be back to create demand in excess of supply.
I agree with CBass, even once the bottom is in, it will be years before the market is anything to get excited about in terms of appreciation.
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