After a three-month plateau over the summer, Phoenix area home values have again begun to plummet in what appears to be a "double-dip," says Arizona State University professor Karl Guntermann.
Local real estate professionals said the federal first-time homebuyers' tax credit - which returned several thousand dollars to those who bought while the program was in effect - artificially boosted prices earlier this year, and the renewed decline in prices coincides with the tax credit's expiration.
"We had three or four months when prices were stable or went up a little," Guntermann said Monday. "We're headed back down for the second time."
Guntermann, who teaches courses in real estate at ASU's W. P. Carey School of Business, released a survey this week called the Repeat Sales Index. The report, which measures annual changes in average Phoenix-area home prices, estimated a 6 percent drop in average house prices from October 2009 to October 2010. That's up front a 4 percent decline noted in September and a 2 percent decline in August.
"It is accelerating," Guntermann said. "It's certainly not a good trend."
In January 2010, local home values were in significant decline, with a 9 percent drop reported in January versus the previous year, he said. Beginning in March, however, the decline halted, and values began to hold steady and even grow slightly, he said.
Guntermann attributed the leveling off to a homebuyers' tax credit offered by the federal government, which has since expired. The tax credit temporarily brought additional buyers into the market, he said, but now that it's gone, the demand has dissipated, Guntermann said.
"It could be a factor that buoyed prices," he said.
Bob Beamis, chief executive officer of the Arizona Regional Multiple Listing Service, which collects data on real estate transactions, agreed.
"There was an artificial spike when the first time homebuyer tax credit was put into place," Beamis said.
Pam Eagan, an associate broker with Realty Executives, at 45th Street and Chandler Boulevard, said prices for entry-level homes in Ahwatukee have dropped by a few thousand dollars, paralleling the lost return homebuyers realized from the tax credit program. Sales in the luxury market, meaning homes over $500,000, have been at a crawl for some time, she said.
"There really hasn't been much of a market for luxury homes," Eagan noted.
Beamis said high unemployment, combined with a large number of people with poor credit, means fewer buyers in the market.
"Your buyer pool has shrunk considerably, and that means lower demand," he said.
Guntermann said many of the bad mortgages from the housing market collapse have been cleared off the books, but foreclosures continue because of job losses resulting from the weak economy.
"I think it comes down to job creation," he said.
Terri Kimble, president of the Ahwatukee Foothills Chamber of Commerce, said that despite the downturn, new businesses continue to open here, including six restaurants expected by early next year. Those restaurants include the Hub Deli and Los Dos Molinos at Chandler Boulevard and 40th Street, Sushi Eye and the Public House Garage at Warner Road and 48th Street, Spinato's Pizza at Chandler Boulevard and Interstate 10, and Naked Pizza at Elliot Road and 48th Street, she said.
"Growth is happening. There are jobs to be found," Kimble said. "People here in Ahwatukee Foothills really need to take a look and shop local. We want to keep the businesses we have here in business, and not just at holiday time."
Guntermann said the downward trend is likely to continue for at least the next several months. Avondale, Goodyear and Surprise are the only Valley cities seeing year-over-year average home price increases right now, he said.
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