July 13, 2007
With home prices dropping, sellers compromise
By Nicole Beyer
Tribune
Home sellers in Scottsdale and other Valley cities holding out for their asking price should consider following the latest trend - compromise. The East Valley resale home market is slowing, with the number of sales in Scottsdale slipping from 465 in June 2006 to 415 in June 2007, and in Mesa, from 585 to 520 sales, according to a report by the Arizona State University Realty Studies Department.
Home prices also are dropping - an indication that some sellers are willing to make a deal in the troubled market.
Vern Zeman, of Scottsdale, has had his home on the market just two weeks. For his four-bedroom, two-bathroom home, he is asking $395,000.
He is competing with other homes for sale in his neighborhood, but Zeman is optimistic.
"I think we've got a bigger and better house than most of the homes in the area," he said.
He might want to consider joining the trend, though.
In Scottsdale, the median resale home price dropped to $612,750 from last year's $640,000. Mesa reported a similar trend, with the median resale price reported at $235,000, down from last year's $247,600.
Valleywide, the slumping market has shown signs of stabilizing in recent months. However, a massive oversupply of houses for sale and more stringent lending standards are threatening to send it tumbling.
Some 14,990 existing Valley homes were sold from April through June, up from the 14,185 sales recorded in the first three months of the year, according to ASU's report. Second-quarter sales were still significantly below the same period in 2006, which had 18,310 sales.
The recent sales totals are comparable to the historical trends that occurred before the hyper market of the past couple years, Realty Studies director Jay Butler said.
Builders have more room to maneuver than regular homeowners because they have their own mortgage companies and can offer larger incentives, Butler said. But "if you're the typical middle-class home seller, there aren't a lot of options that you have."
Some communities are also being hit by a growing number of foreclosures, Butler said.
Arizona's foreclosure rate was the fifth highest in the nation last month with 5,711 properties entering some stage of foreclosure - a 168 percent spike from June 2006, according to Realty-Trac, which monitors foreclosures.
It's not just low-income individuals who are losing their homes but owners of all financial levels, Butler said.
"It's people really stretching beyond their economic means," he said.
Also in June, 17 percent of homes sold were priced from $125,000 to $199,999, while 41 percent sold for $200,000 to $299,999; and 40 percent cost more than $300,000.
The median existing home price was $263,145, compared with $267,000 in the same month last year.