by Lesley Wright - Mar. 30, 2012 03:35 PM
The Republic | azcentral.com
After another year of a faltering real-estate market, West Valley home values appear to have turned a corner in the last six months.
Some Realtors are waiting to see if the surge is sustainable but others say it shows promise barring a double-dip recession or another financial shock to the nation.
"I'm really optimistic, more so than last year," said Greg Marthaler, a Coldwell Banker broker who sells homes in the Southwest Valley and Surprise. "The real-estate market is fabulous right now, especially in the West Valley."
Marthaler said that the backed-up inventory of housing, which had held down prices, now is starting to move. That is based in part on a large number of short sales in the west.
Last year was stagnant for home values compared with 2010, according to an Arizona Republic analysis of data from informationmarket.com.
Of 29 communities in metro Phoenix, only four saw their overall median prices increase between 2010 and 2011: Litchfield Park, Wittmann, Wickenburg and Carefree.
In the Northwest Valley, 43 percent of ZIP codes saw decreases of 10 percent or more in 2011, but four ZIP codes -- in Glendale, Peoria, Wittmann and Wickenburg -- saw single-digit increases.
In the Southwest Valley, four of the 10 ZIP codes saw double-digit decreases in 2011. That drop affected homes in Tonopah, Tolleson, Laveen and Avondale.
Litchfield Park, however, had the greatest improvement in years, a 7.4 percent increase in median values.
Peoria appears to be the bright spot in the Northwest Valley market, according to the data. The 85383 ZIP code posted the highest median value of $242,000 in 2011.
That area jumped 1.3 percent between 2010 and 2011.
The lowest overall median in the Northwest Valley last year was $49,500 in the Glendale ZIP code 85301. That area, which had seen prices increase by 10.8 percent in 2010, decreased by 10.6 percent in 2011.
Homes in Glendale's affluent Arrowhead ZIP code 85308 decreased nearly 11 percent in value in 2011 and have lost 52 percent of their value since 2006.
A summer turn
Real-estate experts said that prices began to turn upward in August and have been holding steady since, due primarily to increased short sales, a lower inventory of housing and a general lift in consumer confidence.
Marthaler said that of 19 Coldwell Banker offices across the Valley, the Southwest Valley office had the most units sold and dollars generated.
Marthaler said that short sales of homes, about 50 percent of the West Valley market, are increasing.
As more short sales go through, inventory is reduced. Demand increases, in turn eventually pushing prices up. Short sales occur when the lender and the homeowner agree to sell the home for less than its original value.
"People see that as a way to do a workout with their lender and get out from underneath toxic debt," he said.
Chris Heagerty of Arizona Regional Multiple Listing Service, Inc. said she has watched home values plummet nearly 60 percent since the real-estate bubble burst in 2006. Even 2011 was promising to be another dismal year of double-digit plunges.
Suddenly, in August, all of her price indicators jumped by about 2 percentage points. And the signals have remained solid.
"All of last year, those prices were just flatlined, like a patient in ICU," Heagerty said. "It has turned. This is not a one-month flash in the pan."
Distressed properties healing
A good indicator for Heagerty was movement in foreclosures.
At the height of the Valley's housing crisis, she counted 55,000 homes a month in foreclosure. That has dropped below 18,000 a month, according to her company's data.
"That is a steady drop," she said. "That means that the total of distressed properties is going to fall. The removal of distressed properties in the marketplace, that is cutting the amount of properties that will hurt sales."
A lower inventory of homes on the market is helping the market move for short sales and, increasingly, traditional home sales, real estate agents said.
With investors buying most of the homes listed for less than $100,000, that drives up the price of the remaining stock, Marthaler said.
"We have less than a four-month supply of inventory and I think that's driving home values up," he said.
Jesse Abarca of RE/MAX Professionals in Glendale, said that he feels a "drastic" swing in the market."
"I sell a lot of houses to first-time homebuyers and it's exciting for me to contact them and tell them there's probably an appreciation in their property," he said.
"It's starting to look like this is really happening."
Words of caution
But Linda Booker, a 20-year real-estate agent in Glendale, said that she is not ready to say that home values are on the upswing for good.
She said she believes that inventory is low because banks are holding back foreclosed properties, which may be artificially inflating prices.
"What is going to happen to our market when the investors who are purchasing these properties in bulk put them back on the market?" she said. "We will be flooded again."
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