Home values in Tucson and across Arizona tumbled again in the
third quarter, continuing an unprecedented fall that many say will
stretch well into the next year if not longer.
New figures Tuesday from the Federal Housing Finance Agency show
the value of the average home in the state plummeted more than 6
percent in the three months ending Sept. 30. And year-over-year, values
are down by 13.5 percent.
In Tucson, values fell about 3.9 percent last quarter and 8.3 percent year-over-year, which ranked Tucson 234th among the 280 largest
metro areas. The Phoenix metro area was hardest hit, showing a
quarterly decline of 7.5 percent and year-over-year plummet of 16.6
percent, which ranked Phoenix 261st.
The statewide year-over-year decline is the sharpest the agency
has recorded for Arizona since it began tracking these numbers in 1985.
Only Nevada, California and Florida home values posted larger annual
losses. Nationally, the value of the average home dropped 2.6 percent
in the most recent quarter and 4 percent year-over-year.
The figures are a key indicator of actual home values because FHFA
tracks both the sale and government-backed refinancing of the same
houses. By contrast, median sales figures for a market simply measure
the prices of the homes that change hands in that particular month or
quarter.
"The price declines that we have seen both here and nationwide
really are unprecedented in the post-World War II era," said Marshall
Vest, an economist with the University of Arizona. "I think what we can
get from this is housing prices are still declining. They have not
begun to stabilize yet."
Agency director James Lockhart attributed much of the sharp drop
in values nationwide to the spike in foreclosures as well as tightening
credit. He said recently approved federal legislation could help
alleviate both. Patrick Lawler, chief economist for FHFA, said a
turnaround will require a reduction in unsold homes on the market as
well as greater confidence in the real estate market by buyers.
Vest offered a similar assessment, but he also cautioned against
drawing too many conclusions from the figures, saying prices are much
different for foreclosures than they are for "normal" homes. To lump
them together, he said, is misleading.
"You really do have two housing markets at this point," Vest said.
"I think it's important at this point to distinguish between the prices
of normal sales and the prices of bank-owned properties, and I am not
sure that they are doing this yet."
Real estate professionals were also critical of the figures,
saying factors such as price ranges and neighborhoods can create wide
swings in values and pricing.
"The reality for us, the way real estate works is it is very
localized," said Kevin Kaplan, vice president for marketing and
technology for Long Realty. "There are submarkets in Tucson."
To that end, Kaplan said, a $900,000 home is going to be affected
by the declining market in a different way than a $150,000 home, and no
one should view changes in prices and values as across the board.
The federal figures, he said, should be looked at to get a sense of larger regional trends.
"The big question is what is happening now and going forward," he said.
Vest, the UA economist, said he expects prices to continue to fall.
So does Nancy Campbell, of Sunset Canyon Realty.
"My personal opinion is 2010 is when our market should start picking back up," she said.
Campbell also said variables like neighborhoods and construction
materials need to be taken into account when looking at a home's price
and how far values have fallen. But she said she has advised many
clients to hold off listing their properties — if they can — until
inventory moves off the market and prices stabilize.
"The first thing I do is I ask them what is the reason for selling
the home," she said. "If they are trying to move up, you make them
aware that their home is going for less."
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