The Valley set an alarming record in September with the steepest-ever one-year decline in home prices, according to the latest Arizona State UniversityRepeat Sales Index.
From September 2007 to September 2008, average prices dropped 28 percent in the Valley, while prices are expected to drop 30 percent from October 2007 to October 2008, and 31 percent from November 2007 to November 2008. Repeat sales compare the prices of a single house at different points in time.
September marked the 19th straight month of declines in the year-to-year index, also a new record. Prices dropped 26 percent between August 2007 and August 2008, and 24 percent from July 2007 to July 2008.
The area encompassing Apache Junction, Chandler, Gilbert, Higley, Mesa, Queen Creek, Sun Lakes and Tempe was down 25.7 percent from September 2007 to September 2008, while the northern portion of the East Valley was down 18.2 percent. The southwestern portion of the East Valley registered the steepest drop, down 38.3 percent.
"Who's being hurt would be anyone who is trying to sell their house," said Karl Guntermann, a professor of real estate at the W.P. Carey School of Business. "They're selling in a weak market where prospective buyers know prices are declining."
The housing market collapse has eclipsed the downturn of the early 1990s, when prices fell for 17 straight months, Guntermann said.
The barrage of foreclosures is pushing home prices further down, said Bob Bemis, CEO of Arizona Regional Multiple Listing Service. Currently, the service has 55,787 single-family homes listed for sale in the Valley, and 11,652 or 20 percent of those are foreclosed properties owned by banks, he said.
"It's definitely the foreclosures that are being unloaded onto the marketplace and being sold for dramatically discounted prices as the banks try to move this inventory off their books," he said.
While the market has not hit bottom, it may be getting closer, Guntermann said. Although prices are falling, the rate of decline itself is declining and could be flat in a matter of months, he said.
"I don't think we're going to see any major change in the market before next summer," Bemis said. "The momentum is not there for a recovery."