After drop, home prices on the rise in Valley

After drop, home prices on the rise in Valley
by Catherine Reagor - Dec. 9, 2011 04:04 PM
The Arizona Republic

In August, as metro Phoenix home prices dipped to another new low, some real-estate analysts predicted the area's home values would keep falling. Other analysts disagreed, saying all the indicators, besides home prices, were heading in the right direction for values to climb before year's end.

The median price for an existing Phoenix-area home climbed to $119,900 in November, according to a new report from the Information Market. It's the region's highest median home price since November 2010.

In October, Phoenix's median home price was $115,000, which is where it had hovered most of the first half of this year. But when it fell to $112,000 in August, some market watchers thought it would drop all the way down to $100,000 by the end of this year. Of course, some panic ensued.

But the housing analysts who were watching foreclosures fall, sales climb ahead of last year's pace and listings plummet, stood firm in their opinion that home prices would begin to rise again.

During the past few months, not only short-sale prices but the prices for foreclosure resales known as REOs, or real-estate owned, have been steadily climbing. In some areas of metro Phoenix, REOs are now selling for more than houses sold through lender-approved short-sale deals. In 2008 and 2009, REOs were dragging down the area's home values as lenders took back houses through foreclosure and then resold them quickly for bargain prices to get the properties off their books.

Home prices are also climbing at foreclosure auctions, also known as trustee sales, held daily in front of the Maricopa County Courthouse. The auctions are Arizona's method for lenders to foreclose.

In 2008, when foreclosures started to climb, few properties sold at these trustee auctions. Back then, lenders weren't lowering prices beyond what was owed on a house, so investors weren't interested in purchasing a house for at least twice what it was actually worth. But once lenders started lowering prices to much less than what they were owed, bidding picked up quickly.

Competition is also driving up prices at the trustee auctions. Each month this year, more than 1,000 foreclosure homes have been bought at Maricopa County trustee auctions. That compares with 100 per month at the beginning of the crash.

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