Low interest rates, bargains are helping
The Arizona Republic - March 2008
Existing-home sales climbed unexpectedly in February, as home buyers took advantage of low interest rates, falling home prices and foreclosure bargains.
The uptick in resales ended multiple-month losing streaks both nationally and in metro Phoenix and is prompting speculation that the housing market is close to hitting bottom.
National figures for February show U.S. resales climbed 2.9 percent from January, according to the National Association of Realtors. Valley existing-home sales climbed 10 percent in February, according to figures released earlier this month from realty studies in the Morrison School at Arizona State University.
With the spring buying season under way, March resales in the Valley are on track to top February's pace, according to an early count from Phoenix real-estate data firm Information Market.
"We are still bumping along the bottom, but the Valley's housing market is starting to gain some traction," said Jim Sexton, president of Phoenix-based real-estate firm John Hall & Associates. "Sellers are getting more motivated. Prices are coming down, and there's a lot of activity from first-time home buyers again."
He said foreclosure bargains are also beginning to attract real buyers instead of just speculators.
In metro Phoenix, the median price of a used single-family home fell to $220,000 in February from $230,000 the month before. Nationally, the median home price was $195,900 in February, down from $201,100 in January.
Jay Luber, vice president of the Phoenix office of First Horizon Home Loans, said many potential buyers are still "making the mistake" of trying to gauge when the market will hit bottom.
"But nobody can predict the bottom, and I have several clients that didn't have homes to sell who are thrilled with the deals they made when they bought," he said.
Home sales and prices, locally and nationally, are both down substantially from the pace set in February 2007.
During a boom or downturn, month-to-month figures are a better indicator of where the market is headed.
Lawrence Yun, chief economist at the Realtors Association, called February's gain over January encouraging.
"We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," he said.
New-home sales in metro Phoenix were down less than 2 percent in February. National figures will be released later this week.
A drop in the number of homes for sale will be another sign that the housing market is poised to stop slowing. Home listings in the Valley climbed by a few hundred in February, to top 53,000. But that figure is down from last fall, when there were more than 54,000 homes for sale across metro Phoenix. Nationally, listings fell by 3 percent in February.
Across the country, tougher credit standards are knocking some potential buyers out of the market, and lenders are expected to get even tougher as mortgage losses mount.
Foreclosures continue to be the wild card for the housing market. As long as the number of people losing their homes continues to climb, inventories of homes for sale will rise and home prices will likely keeping falling.
Tom Ruff, real-estate data analyst with the Information Market, said foreclosures aren't likely to peak in the Valley until late summer.
"But I am optimistic," he said. "I feel like we are finally approaching the housing market's bottom."
