At the peak of the housing boom in 2006, the affordability index in Phoenix was 75, which means that a household earning the median income had only 75 percent of the income needed to buy a median-priced house.
In the third quarter of this year, the affordability index in Phoenix had climbed to 126, which means that a family with a median income now has 126 percent of the income needed to buy a median priced home.
While affordability is obviously positive for buyers, it also is good news for the market generally because it can lead to more sales and stronger prices.
I will post more very soon.

Where is The Bottom ?

The question hanging on everyone's lips is how much longer will Phoenix area homeowners have to wait before home prices stop falling?

The following is an excerpt from a professor at Arizona State University School of Real Estate who has been a favorite muse of mine.

I expect the median home price and actual Phoenix house price to intersect late in 2008 or early 2009, which, is approximately where house prices would have been without the big run-up in 2004 and 2005.
The drop in actual home prices won't necessarily stop when it hits the median home price trend line, but could overshoot it. Even if that happens, home prices would eventually get back close to the long-term trend.
If the economy is weak and if financing remains a problem that could cause actual home prices to fall below the median home price trend line, at least temporarily.
At that point, the difference between actual home prices and the median trend line is not so much a market imbalance as it is a problem caused by the broader economy and financial markets.
At some point, when home prices continue to go down, the fundamentals of supply and demand get into balance and the market is at bottom.

My company acquires Russ Lyon

The real estate company I am affiliated with has acquired 60 year old valley luxury realty firm, Russ Lyon. We have now renamed ourselves - Russ Lyon Sotheby's International. As a result we have become the luxury home powerhouse in the Valley with an estimated 78% market share of luxury home sales and listing activity.

Continued price pressures

Interesting excerpt from an article :

Arizona's most severe real estate downturn began in the late 1980s and stretched deeply into the next decade. At the abyss, home prices in the state had declined (on a repeat-sale basis) for a record 17 straight months.
The -RSI report, which compares February 2008 home sales against the same month the year before, showed home prices fell by 9.3 percent.
"The Arizona housing market was deteriorating gradually last year," says Guntermann, "and then shifted to a higher plateau in December, and we have stayed at that higher rate of decline since then. About the only good news is that the rate of acceleration has eased, although the market is still going in the wrong direction and will continue to do so into the near future."

HAVE WE HIT THE BOTTOM OF PRICE DECLINES?

I observe a lot of people and they are often asking where is the bottom for declining home values in Phoenix/ Scottsdale area. Well i don't know and to say otherwise is merely a guess. However sometimes guessing can be fun so here goes.
I think there will be more downward trending in some areas through the next months until December 2008. Downward from what is the key question? To me that means downward from current list prices as their is still too much inventory and still it is often times overpriced. More foreclosures are also adding to the downward pressures in sales and leasing.

This is the time to buy, you just need to know what a good price is and the methodologies to determine such. I remember an old saying, pigs get fat, hogs get slaughtered!
If you buy now or over the next 6 months and hold the home for at least 5 years you will most likely be very happy you bought when you did. After all that has historically been the case for the 30 prior years in Arizona.

Various Markets Within Scottsdale

There are various markets in Scottsdale that have their own dynamics and perform based on their dynamics and less the general economic drivers. Across the board there are communities in Scottsdale that have increased value 5% , some that held their own and some that have seen median price decreases of from 5 - 10%. However statistics are often misleading and to more accurately assess a homes or communities value I like to look at price points and trends within the data base to give me a better feel for the subject. Additionally looking at outside macro trends and environmental issues can be a wise thing to do especially if you are concerned with hold periods of 5 years or more. I would welcome others comments on this matter also. Have to run, will readdress this issue soon. www.premierAZhomes.comHave made several updates to my site.

The following is an excerpt from the Arizona State University School of Real Estate for an insight into market conditions in the Phoenix metro area I thought you might find interesting.

The latest data through October 2007 reveal a continuation of earlier trends of house price declines compared to October 2006 for the overall Phoenix metro area. On a moving twelve month basis, price changes became negative in March 2007.

However, there are considerable variations in both the rates of decline and the total decline in house prices across regions and cities.

House prices in the Northeast region have held up well relative to other parts of the metro area although the annual change from October 2006 to October 2007 has again turned slightly negative. The total decline in prices in the Northeast since
the October 2006 peak is slightly over 1.0 percent. In contrast to the Central and Northeast regions, which have low rates of decline and small total declines from their peaks, the rates of price decline in the Southeast, Northwest and Southwest regions continued to accelerate slightly in October 2007.

The decline in the Southwest reached -11.1 percent while the Southeast and Northwest regions declined at approximately 8.0 and 9.0 percent annual rates respectively.

CITIES INCLUDED IN REGIONS

NORTHEAST
CAREFREE
CAVE CREEK
FOUNTAIN HILLS
PARADISE
VALLEY
SCOTTSDALE

NORTHWEST
EL MIRAGE
GLENDALE
PEORIA
SUN CITY
SUN CITY WEST
SURPRISE
YOUNGTOWN

CENTRAL
PHOENIX

SOUTHEAST
BUCKEYE
GOODYEAR
LITCHFIELD PARK


SOUTHWEST
APACHE JUNCTION
CHANDLER
GILBERT
HIGLEY
MESA
QUEEN CREEK
TEMPE
www.premierAZhomes.com