Phoenix valley residents and soon to be residents, we at West Valley Pros would like to discuss the current condition of the Phoenix Real Estate market.

As we look at the future, a mountain of challenges await us. Short sales and foreclosures have rocked our market to its foundation. With the continuing demise of a worldwide economy, these challenges are casting a dark light over the future values of the Phoenix area real estate market. Buyers and sellers alike are looking at these challenges debating the continual impact that these issues will be. Many of these difficulties have yet to come to their full bear on the market.

Currently the Government assistance programs are beginning to have an effect in the phoenix marketplace. Some efforts on the credit crisis has shown a little progress in the lending of money to first time buyers, also with the Neighborhood Stabilization Program, Avondale, Glendale, and even Phoenix are beginning to offer assistance in the form of moneis for downpayment and mortgage fees. This program, as little as it may be, should create a small benefit to these communities. However, with the uncertainty in the banking markets and the confusion surrounding the commercial and business tax structures, the gains from these modest programs are slim at best.

We here at West Valley Pros have seen some positive signs in the market. With the decrease in home values and the availability of banks to the short sale market, the volume of homes being sold has continued with a fervent pace. We have seen more homes sold today, than we had during the boom years. Buyer activity was growing strong throughout the 2008 year and has only increased into the first quarter of 2009. Because of the decrease in home values more potential buyers, from outlying states and countries such as Canada, have seen Phoenix area as an option for their primary home, vacation property, or even as an investment. Phoenix city limits continue to grow, and with this population increase there will also be an increase of property values.

Although the current situation in Phoenix is depressed, the long term growth and sustainability of that growth is hopeful.

Difficult Times Continue

It is hard to imagine that we are currently in the fourth year of this economic downturn in the Phoenix Market.

The West Valley of Phoenix was caught rapture of an extreme speculation and projection mindset. This mindset brought a lack of stability to the real estate process. A false value to a rapidly appreciating market fueled an approaching bubble that would only resolved through a just as violent burst. Some areas of the greater Phoenix metro area saw year over year growth as high as 50%.

This speculative mindset continued until the end of 2004. The first signs that the bubble was going to burst was the rapid increase of available inventory in the marketplace. By the later part of 2005 we saw a peak of home values, and the length of time for homes to sell began to increase. At some point at the end of 2005, owners trying to sell their homes began to lower prices to sell their properties. By the end of 2007 there were more than 50,000 properties available for purchase. Fannie Mae, also in 2007, declared Arizona a “Declining Market.” This declaration immediately created a buyer “freeze” on the market place. To qualify for a loan using a Fannie Mae product certain qualification were required to purchase a home in a “Declining Market” area. Because of this and other factors, short sales and foreclosures began to have a significant effect in the housing market.

Areas Hardest Hit

Some areas of the Phoenix suburbs are being hit on all fronts from this economic crises.

Buckeye, Sun City, Goodyear, Glendale, Verrado, Tartesso and others have especially been hardest hit from this speculative mindset. Investors were purchasing the majority of the homes in some of the sub-divisions and because of this, they have seen a remarkable rate of foreclosures. Some areas of Glendale have a30% foreclosure rate in their newest sub-divisions.

Home builders began a frenzied process of creating massive amounts of homes in a physical situation that economically there was no supporting structure. These new developments were miles from grocery stores, gas stations and more importantly jobs. This has created a vacuum only to be filled with vacant homes and barren streets.

In some parts of the city, home values have seen a 50-60% decrease in their value.

Looking on the Bright Side

Situations today,being as they are, have also created an interesting time for the Phoenix housing market. Markets like Queen Creek and Avondale have seen a remarkably robust buying market.

Queen Creek currently has nearly 25% of its listed homes under contract. Avondale also has nearly 20% of its homes under contract.

The question you may be asking is why such a robust market.

Because of the significant decrease in home values and the massive amount of foreclosures to hit the Phoenix MLS system, their is a unique buying opportunity in some parts of the Phoenix Metro area. Goodyear, Avondale and even Phoenix have Neighborhood Assistance Programs available to offer up to $35,000 toward a down payment and/or fees for the first time home buyer of a foreclosed home.

Foreclosed homes being purchased makes up 40% of the homes currently under contract negotiations in the Phoenix market. These properties are often priced remarkably low, as the lender or home owner is trying to liquidate their properties.

There also is a unique opportunity for the cash investor. Homes that were once valued in the $150,000 range can be found in the $30,000 range at Sherriff sales and foreclosure auctions. The key to finding such a deal is to educate yourself on the different practices and process of these sales. We at West Valley Pros have a remarkably high success rate in Short Sale contracts and foreclosed properties.

The future remains bright for the overall state of the Phoenix economy. The increase in the overall population, the steady growth of its business sector, and the continuing improvement of its transit capacity, will bring about positive change to the real estate market.

One thing that is for certain, Phoenix has proven in the past to be a resilient city. This period of economic problems will once again prove that the Phoenix people love their city, and that this city is a great place to live.