The Housing Chronicles Blog: Phoenix re-rises

Tuesday, May 19, 2009

Phoenix re-rises

In an ode to its namesake as the bird which rose from the ashes of destruction, the housing market in Phoenix, due to tremendous price declines, has suddenly turned from bust to boom. So is this a temporary blip or something to watch for other hard-hit areas? From an L.A. Times story:

Phoenix's housing bust has turned into a quasi-boom, a sign that its market may have hit bottom and a sneak preview of what a national housing recovery could look like.

More homes are selling than at any time since 2006. Prices are slowly stabilizing. Buyers are once again finding themselves in frantic bidding wars -- only this time over foreclosed houses selling at deep discounts rather than ranch homes listing for vast sums...

Home prices continue to plummet or tread water in much of the nation, but there have been tentative signs of life. Pending home sales rose 3.2% nationally in April, the second month of increases after a record low in January...

Phoenix experienced one of the most dramatic real estate crashes in the nation. Median home prices for resold homes peaked at $268,000 in June 2006. Now the median price is $120,000. It is the biggest decline in the top 20 metropolitan areas tracked by the Standard & Poor's/Case-Shiller home price index.

The collapse was devastating in a city that has long depended on housing to power its economy. In the last year, Phoenix lost 41,000 construction jobs and 136,000 overall, accounting for 7% of its workforce.

Home building came to a halt. Many illegal immigrants, discouraged by the sudden lack of jobs, returned to Mexico. Realtors cut staff. Home prices dropped faster and faster each month for two years.

Until March. For the first time in two years, the decline in home prices slowed -- from 37% in February, compared to the previous year, to a still-painful 36%...

Skeptics of the turnaround note that the competition for foreclosed homes may be artificial. They argue that the number of bank-owned properties has shrunk because some lenders held off on foreclosures early in the year as they waited for President Obama to unveil his plan to aid distressed homeowners.

Some warn that a potential flood of new bank-owned properties could drive down prices further...

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