While recent news from the financial markets has not been good, there is an upside to the housing market in the Valley:
There really is nowhere to go but up.
"We are still at the bottom, though whether we have reached the bottom is argumentative," said Jay Butler, professor emeritus at the W.P. Carey School of Business at Arizona State University.
The numbers correspond with his assessment. According to data obtained from ASU Realty Studies, housing resale numbers in Maricopa Country dropped from more than 112,700 in 2009 to just under 107,000 in 2010.
"Single-family (housing) is still dominated by foreclosure activity," Butler said. "Owner-occupant, which are usually the big-time buyers of homes and sellers, aren't participating because current homeowners are probably underwater or would have a difficult time selling their home."
And the East Valley is seeing its share of foreclosures. According to ForeclosureRadar, a company that tracks foreclosures, Mesa had 429 last month, while Chandler had 248 and Tempe 106.
While these rates are high, experts say homeowners can take solace in the downward trend of foreclosures. This week, for the first time since the spring of 2009, the Valley's foreclosure rate dropped below 30 percent of the existing-home transactions in the market.
"People are trying to buy homes and are finding underwriting guidelines (that) make it difficult to get the financing to buy a home. Most people buying homes are investors," Bulter said.
According to Mike Menefee of Keller-Williams Realty, 48 percent of all the buyers so far this year have been all-cash buyers, and typically all-cash buyers are investors.
"It's an incredible time (to be investing)," he said. "I think universally people look at Phoenix as being if not the absolute bottom, they are awfully close."
Mark Stapp, the director of the Master of Real Estate Development program at the W.P. Carey School of Business, said there are two types of investors: opportunity investors and cash-flow investors. Opportunity investors are looking to buy properties and sell them when the market turns around. Cash-flow investors are looking to invest in things that will have a solid return.
But "you can't just buy anything," Stapp said. "You can't forget the fundamentals of this business; you still have to make informed, intelligent investment decisions or you are going to buy something because it's cheap and it's not going to perform the way you thought it would."
Some in the real estate business labeled the Valley of the Sun a place that is bad to buy. While Arizona took a large hit from the real estate crisis, some investors have a different story to tell.
Greg Thirkhill of Remax Elite saw more families buying homes, particularly people who graduated college in the years preceding the financial crisis.
"Let's say someone wanted to buy a house in 2004, just out of college, just starting their career - 2005, the market is so high they can't afford it," Thirkhill said.
It cost a pretty penny to buy a home during the boom; data obtained from ASU Realty Studies showed average resale and new prices in Maricopa County were over $240,000 and $251,000, respectively. The prices skyrocketed in 2006 to $260,600 for a resale and $306,355 for a new home.
Prices are now much more manageable for people starting their careers. In 2010, an average resale in Maricopa County sold for $142,000 and new homes cost $222,360.
"Those same people from 2005, 2006, 2007, those buyers are now looking in the market, saying, ‘You know it looks like it is safe.' " They were scared in 2007, 2008 and 2009," Thirkhill said.
More offers are being made on homes as well. If properties are well priced, it isn't uncommon right now to have multiple offers. Even homes in the $250,000-plus category are seeing this.
Despite people coming back into the market, the economics of the housing market seem amiss.
"It is very strange. Our inventory, the supply of homes, continues to decline every month," Menefee said. "In a normal economy, if supply goes down you'd think prices would be going through the roof because there is just a substantial demand for homes. Pricing doesn't seem to be moving like you'd expect."
To get the housing market on track, a healthy job market is necessary. Stapp said the real estate market is tied to larger national issues like employment, while Menefee said it was necessary to have abundant work opportunities before we start to see homes appreciate at a rate of 3 to 5 percent a year.
Investors and homeowners will also have more certainty when they can determine what types of mortgages the secondary mortgage market will buy. That will determine what banks lend and resolve questions revolving around the type and length of mortgage.
Last Monday, the giant mortgage companies Fannie Mae and Freddie Mac, which are backed by the government, received a credit downgrade from Standard and Poor's. The mortgage companies' future seems to be in doubt.
"Historically Fannie Mae bought mortgages from commercial banks. Freddie Mac historically bought loans from savings and loan mutual companies. Over 10 to 15 years this sort of ceased to be a difference," Butler said.
"That paperwork and application for mortgages were the same for both groups. That's why there is a lot of discussion as to whether we need those two - they are fundamentally the same."