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The Housing Market in The Valley of the Sun Phoenix, Arizona
The Phoenix housing market is in recession, as price growth for existing single-family homes has plunged from a peak of 55.4% year-over-year in Q305 to -15.4% in Q108, the seventh straight quarterly drop. Building permits have dropped for nine quarters straight, with single-family permits falling 64.8% in Q108 from a year ago and multi-family permits falling 55.1%. Similarly, housing starts have fallen for nine consecutive quarters, with single-family starts dropping 54.7% and multi-family starts dropping 8.3% in Q108.
Amid the drop in prices, housing affordability has improved. The index has risen from a recent trough 88.48 in Q106 to 101.48 as of Q407. However, this has not helped to fuel home sales, which fell 35.1% in Q108 from a year ago, the tenth straight quarterly decline.
Home prices continue to fall, but are falling much faster in neighborhoods further away from the city than in neighborhoods closer to the city. There is a lot less home remodeling nowadays, and some housing-related businesses such as flooring, windows, furniture and electricians are going out of business. Roofing, doors and drywall are also seeing s slowdown in activity. Foreclosures have had a dramatic impact on the housing markets. Phoenix saw rampant speculation during the boom, and many of these homes are now in foreclosure.
In May and June of 2008 with the increase in gas prices there has been an increase in interest in Urban Living. This is not expected to increase values in downtown and urban areas but it will help turnover of many properties and may help to maintain the current values.
               
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