This article below was featured in the Calgary Sun Friday March 25th 2011. Myke was provided an ARMLS PPI index and a few other STAT charts to work with. We had a brief conversation and he chose to focus on the value and market timing displayed in those charts.
As winter drags on in Calgary, the idea of a second home in the Valley of the Sun becomes more appealing, and with the idea comes the question, “Have prices bottomed out in the Phoenix area?” 
The answer is a floating target, says Gary Peruzzini, a broker with Realty Sense in Phoenix.
“There’s never really an answer to that,” says Peruzzini. “What I can say is if you look at sales volumes and the volume of properties on the market, it would appear we have hit the bottom, but it’s really a function of supply, which is being controlled by the banks.”
Prices are being kept low because of a flood of foreclosures and short sales in the market – as the supply diminishes prices will rise, but the banks are holding distressed houses off the market and when those are released, prices will flatten or fall.
A good barometer of where prices are heading is the Arizona Regional Multiple Listing Service Pending Price Index (ARMLSPPI), says Peruzzini.
The report is a forecasting tool that predicts the average and median sales prices three months down the road, based on pending prices of properties in the MLS system for the metro Phoenix area.
“Predictions for the next 90 days for both median and average prices show a modest positive gain in 30 days, followed by increasing declines in 60 and in 90 days,” says the report dated March 4. “The median sale price is forecasted to rise to $114,000 in March and then make an about-face to $109,000 in April and fall below $100,000 to $95,000 in May. The average sales price prediction follows a similar pattern.” (All prices in US dollars.)
The report cautions the accuracy of its index diminishes the further out to the future it forecasts, no doubt because of the uncertainty of future supply in the market.
Purchasing decisions should not be based on the metro average and median prices – there are eight cities of reasonable size in the Phoenix area and prices vary greatly.
The median price in Phoenix, year-to-date to March 10 was $100,000.
In Scottsdale, north of downtown Phoenix, the median was $375,000. In Chandler and Gilbert, to the southeast, the median prices were $179,900 and $178,000 respectively. In Glendale, to the west, the price was $110,000.
All prices showed downward pressure from February to March, as they did on a year-over-year basis, but not the significant drops of 2007 to 2010.
Is a housing recovery in sight?
“It’s much the same as trying to predict the bottom,” says Peruzzini. “I’ve been through downturns (before) and when the upturn happens, it happens rapidly…depending on how depressed it is. (These) things are relative to the ability to finance and financing is a problem right now.”
The general consensus is a second home in the Phoenix area – or anywhere in the U.S. – should be considered first as a place to escape the snow, with any return on investment many years away.
Article produced by MYKE THOMAS-Homes Editor – Calgary Sun
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