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Phoenix Foreclosed Homes for Sale Still Driving Market

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By : John Cutts    99 or more times read
Phoenix foreclosed homes for sale are still the ones driving the city's housing market, according to Jay Butler, director of real estate studies at the Arizona State University.

Butler said that for every two existing homes sold in August, one was a foreclosure home. He added that investors buying low-priced foreclosures were still the ones pushing the market forward.

However, both foreclosures and home resales decreased substantially in August. Sales of previously-owned single-family houses dropped to 5,995 units, compared to 7,300 units in July. Foreclosures dropped to 3,085 units, compared to 4,200 units in July.

Compared to data in August last year, foreclosures fell from 3,295 units while home resales climbed from 4,210 units.

The median sales price for single-family houses in August dropped sharply to $138,000, about 29-percent down from the August 2008 price of $194,000.

Butler said that the August year-over-year comparisons were positive signals, but he added that the housing market is not yet stable because Phoenix foreclosed homes for sale still comprise a significant part of the market.

He also explained that in a normal market, only about one foreclosure is sold for every 20 regular homes sold.

Meanwhile, according to a separate study conducted by Houston-based real estate consulting firm Lewis Realty Advisors, Phoenix has been overshadowed by Houston in terms of real estate recovery and conditions.

Lewis Realty said that Phoenix and Houston are similar in demographics because they are the fifth and fourth largest cities in the country, but in terms of the conditions of their property markets, they are very different.

In Houston, real estate prices have been stable despite the impact of the foreclosure crisis nationwide. Phoenix, in contrast, has fallen from a city of soaring home prices in the 2000s to a city of endless foreclosures, dropping home prices and rising unemployment rate.

According to Kim Kobriger, chief analyst at Lewis Realty Advisors, Phoenix has experienced the steepest year-over-year decline in home values among all cities in the country, with price levels falling by 35.3 percent from price levels in April last year. Home prices in Houston also dropped, but only slightly.

The median home price in Phoenix has dropped to $104,000 in the middle of 2009, compared to the $250,000 median in 2007. Compared to the city's peak prices in June 2006, current home prices in Phoenix have fallen sharply by 54 percent.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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