Arizona Hopeful by Phoenix’s Small Ray of Hope
Prices of houses in Phoenix have fallen more than 20 when compared with 2007 according to the Arizona State University–Repeat Sales Index. Karl Guntermann, Professor of Real Estate Fred E. Taylor, and Alex Horenstein, a research associate, put together this report. Guntermann said that with prices of houses waning for 15 months now, the housing sector now is getting to the stage where it would resemble the duration that was experienced in the beginning of the 1990’s. This, for Phoenix foreclosure homes, will not be good.
Even though costs of houses have been declining for more than a year, figures for the last two months are especially alarming. March-2008 has displayed a rate decline of -13, the first double digit drop for this cycle.
A greater part of the well recognized indices computed median home-prices. The basis ASU-RSI index is repeating sales, said Horenstein. Making use of data of repeat sales for same houses is considered to be the most precise way to gauge the transformation of costs in the housing industry, because the house is a constant.
What this means is that with repeat sales, the cost of a house is evaluated against itself, without having to worry about ‘quality’ factors of dissimilar houses.The method employed to compute indices by the ASU-RSI is the same as the one used by the S&P/Case-Schiller Index to compute indices for houses. The one dissimilarity is that with the data used by ASU-RSI, transactions where values of houses have risen more than 60 annually and where sale prices are less than 5,000 are given a miss.
Guntermann said that one positive thing that the ASU-RSI May figures displayed, was that this declining rate has reduced in paces in comparison to a month back. Costs of houses in metropolitan Phoenix, if April and May figures are to be compared, have seen a -3 fall. Costs of houses reduced from March to April at a -6 dip.
For foreclosure homes in Phoenix, this could be the start of better news to come.