Excerpt for the East Valley Tribune newspaper December 3, 2008.  By Edward Gately of the Tribune

(Home prices) Drop breaks record for consecutive months of falling prices , according to the latest Arizona State University-Repeat Sales Index.  The index compared repeat sales prices of a single house at different points in time. Comparing August 2007 to August 2008, showed a drop of 26 percent in the Valley.  Declines varied from a low of 16.4 percent to a high of 37.2 percent.  Karl Guntermann,  ASU W.P. Carey real estate professor, stated, “If you go back to the Great Depression, you might find something like this.”  John Stih , CEO of the South East Valley Regional Association of Realtors, calls this the worst down cycle that he has seen in the 40 years he’s been in the real estate business.  They’re scared.  Stih says, “Let’s say a house last year was worth $250000 to $300,000, and today they’re selling for $150,000.  He went on to say, “Interest rates are still affordable, but people aren’t buying because of the economy.  They’re scared.”

So what can we expect going forward.  Stih feels that many sellers still have unrealistic expectations on who much their homes are worth, while banks have continued to restrict credit, making it difficult for potential buyer to obtain credit to buy these homes.  Added to that Stih see a lot of potential buyers sitting on the sidelines, betting that prices will drop further.  Guntermann takes a more optimistic view, saying there is evidence that sales have rebounded to where they were a year ago, and year-over-year rate of declines in sales prices is expected to bottom out in early 2009, and then make an upward move toward zero.  Guntermann did hedge a bit by saying prices moving up may not occur until late 2009 or even into 2010.

Jeff Polhill

Tags: buyers, credit, home prices, homes, real estate, repeat sales index