the Good from the Bad & Ugly of Phoenix Area Real Estate

June 6, 2008

cowboyWith home prices dropping across the country including 23% here in Phoenix (S&P|Case-Schiller) and its towns of Peoria, Glendale and Tempe, it may seem that the real estate market is ugly. However, like Doug Willis says, there may be A silver lining in this Dark Cloud.

The Good from Bad & Ugly is that Pheonix area home prices have back towards more affordable levels. A quick story:

A family member moved to Phoenix in early 2003 and bought a wonderful home for $220K. In less than 3 years, the same homes sold were comparable at $440K; nearly twice the value. He told me that if he moved here (at that time, that he (with wife and baby) would not have been able to afford to purchase.

This little anecdote goes towards the root of the problem that led to this debacle. Too many people, who just needed to fill out an application, were given loans to buy houses, at almost any price. Thus, inflating home prices to a virtually unaffordable levels. Think musical chairs; and then the music stops.

Affordability, or lack of affordability, was one of the main contributors of the housing market decline.

The good from this bad and ugly is that homes in Scottsdale, Tempe, Fountain Hills, Peoria and even Paradise Valley have retraced to much more affordable pricing.

The National Association of Realtors (NAR) released their Housing affordability Index on May 29th which ( very simply put) compares family income versus mortgage amount. Which shows percentage increase of more than 12% from year ago. In some cases, like California and Arizona , the numbers are even higher.

It is sad to see prices drop and home equity evaporate. However, we need to get back to affordable levels to 1) stimulate buying and 2) banks will feel comfortable lending again.

Then, and only, then will we see the stability and then eventual recovery of our Phoenix area real estate market for which we are eagerly awaiting.

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Copyright © 2008 By James Wexler, All Rights Reserved. *the Good from the Bad & Ugly of Phoenix Area Real Estate*

Contact James Wexler (480) 221-8080 for all your Phoenix Scottsdale area Real Estate needs

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Written by James Wexler · Filed Under Articles, Buyers 

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