National home prices seeing sharpest decline in two decades

The latest data from Standard & Poor's/Case-Shiller shows that national home prices have fallen at the sharpest rate in two decades. S&P reported a 14.1% decline in the first quarter of 2008 compared with a year earlier.

According to S&P the areas reporting the biggest declines are those that grew the most in the recent real estate boom. Las Vegas leads the pack with 25.9% annual decline. Phoenix came in third with a decline of 23%.

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Fallin hard, but not too hard

Yikes! Arizona homes prices are dropping faster then ever according to figures from the Office of Federal Housing Enterprise Oversight. The value of an average home in Arizona slid 5.5% in the first quarter of this year compared with the same period last year.

At least Arizona didn't rank number one in the list. Florida homes lost 8.1% of their value, while Nevada saw a 10.3% decline and California saw a 10.6% decline.

Tucson home values didn't see quite the decline that Arizona saw overall. Year over year values in Tucson are down 2.9%, with a single quarter drop of 2%. Phoenix saw a big drop of 6.7%. Still puts Arizona home values up more then 72% over the same period five years ago, so homeowners that bought around 2002-2004 should have quite a bit of equity.

OFHEA has a great little graph that shows the trends in Tucson property appreciation

Read about Arizona home prices falling at record rate

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Latest new construction stats misleading

Just this morning several media outlets reported that new home construction was up in April, but the headline is a little misleading.


USA Today reported that construction of new homes posted a 8.2% increase for April, the biggest increase in two years. However when you read the full article you'll find that the strength in April housing starts came entirely from a huge increase in apartment construction, up 40% in April after being down 35% in March. Construction of single family homes was down 1.7% for April. Not good news for the housing market but good news if you're in the market to buy. Though home builders might not be lowering their prices, many are increasing their incentives or including free upgrades like granite counter tops or appliances. Some builders will negotiate more then others, so if you're looking for a great deal you might need to make a sacrifice like location.

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Depression on rise along with foreclosures rates

There was an interesting but sad article on the front page of USA Today that discusses the emotional toll that foreclosures are taking on homeowners. It reported that homeowners all over the country are frantic about losing their homes, and unfortunately many are becoming depressed, suicidal or are suffering other health conditions as a result of the stress. Crisis hot lines are being bombarded with calls from frantic homeowners with no where to turn. It's a tragedy when so many people are so deep in debt and feel the have no alternatives.

Nationwide foreclosure filings surged 65% in April compared with the same month last year, according to a report Wednesday by RealtyTrac. Some very scary statistics...

On a local level, Arizona foreclosure activity in April increased 26 percent from the previous month and 181 percent from April 2007.

Sixty-one percent of homeowners in the Western part of the nation reported housing costs as a very or somewhat significant source of stress.

One in seven homeowners nationwide worry that they won't be able to make their mortgage payments on time over the next six months and more than one-quarter fear their home will decline in value during the next two years.

Unfortunately the stress that comes with foreclosure could also be resulting in increased divorce rates. The inability to make mortgage payments is creating a division between couples; one wants to blame the other for the problems at hand and they just can't overcome the obstacles.

Just leaves you a little speechless.....

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Gas prices dictate where buyers buy

It's not surprising that gas prices are affecting where home buyers are looking at homes. Back in the day when Tucson saw it's real estate boom (2003-2006) buyers were venturing out to the farthest corners of our city in their property searches. Homes in the outlying areas were cheaper then those closer to the city, so they were being snatched up while the gettin was good. Now many of these same outlying areas are saturated with home inventory because 1. Nobody wants to drive that far when gas is so expensive, and 2. There's just too much inventory closer to Tucson and all it's amenities.


Areas struggling with this issue include Vail and Sahaurita. During the height of Tucson's real estate market, both areas attracted buyers who either wanted to or had to spend less then what current prices in town were (drive til you qualify). Each area offered new construction homes at relatively dirt cheap prices, so buyers flocked to these sites because of their affordability. Unfortunately these communities were and still are considered isolated by some due to the lack of amenities close by.

Increased gas prices are going to continue to have some impact on where buyers are choosing to live, but areas like Rancho Sahaurita will most likley remain steady due to affordability. Tucson home prices have continued to drop over the last few months, but Sahaurita still offers new homes at prices that can't be matched closer to town.

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Median home prices drop nation wide

Looks like the nation's median home prices fell hard during the first quarter of 2008. According to a report in USA Today, median home prices across the nation dropped 7.7% from Q1 2007 to Q1 2008. Sixty-seven percent of the 149 metro areas reviewed saw price declines, the highest declines since NAR began recording data in 1979.

The Western states seem to be struggling the most, suffering an average 12.3% drop in median home prices where overbuilding, sub prime lending and speculation were most prevalent.

According to the data, Tucson's median home price in Q1 2008 fell 8.8% from Q1 2007.

Median home prices in reviewed metro areas

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Low appraisal affects builders home price

Some clients of mine closed on a new construction spec home last week in Oro Valley and they ended getting quite a deal. Just 24 hours prior to close the builder had to adjust the sales price due to a lower then expected appraisal. The builder was really scrambling at the last minute, trying to get a new, higher appraisal for the sales price, but it just wasn't going to happen.


I haven't encountered this before, a builder's sales price coming in below appraisal. The reason it did, in our case, was that there are two short sales in the community. These "pre foreclosures" have dropped their prices so low that they're impacting property values around them. Great for new buyers, but bad for those already living in the community and trying to sell at the much higher price they paid two years ago. We're seeing foreclosures in every corner of Tucson, at every price range. The neighborhood my clients bought in isn't even three years old and it's not yet built out. It's going to be interesting to see how the financial struggles will impact the sales prices of the rest of the homes that are yet to be built.

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