Although there isn't much good news these days in the AZ real estate market, at least it appears that AZ is faring better than some other parts of the country. However, overall, the AZ real estate market is definitely challenging right now.

"It was boom; now it's bust for home sales in the West"

In much of the West, where the housing boom was most robust, the bust is deepest. The National Association of Realtors says the West saw a 16.7 percent drop in sales of existing homes in March, with median prices falling 2.9 percent to $330,600. Many cities in California are still trying to claw their way out of the slump. But prices remain high compared to other parts of the country and climbing interest rates are expected to continue dragging on sales.

Home sales decreased 20.8 percent in March in California, the San Jose Business Journal reports, compared with the same period a year ago, while the median price of an existing home increased 3.2 percent. In Los Angeles, the L.A. Times reports, sales of high-end homes continue to be healthy, while those lower on the scale are languishing on the market longer. The Times reports that sales fell in the Los Angeles region 4.6 percent in March, compared to the same period last year. Median prices, though, rose 2.6 percent to $571,110.

The Silicon Valley/San Jose Business Journal reports builders in the area that includes San Jose, Santa Clara and Sunnyvale took out permits to build 198 houses in March, down from February, but 20.7 percent more than in March 2006. In California as a whole, however, housing starts climbed almost 39 percent compared to February, but fell year-over-year. In March, permits were pulled for 7,743 single-family homes statewide, up almost 23 percent from the previous month but down 31 percent from March 2006.

And it's likely to take longer to sell a house in California. The Silicon Valley/San Jose Business Journal reports that the unsold inventory index -- which indicates the number of months needed to deplete the supply of homes on the market at the current sales rate -- was 8.7 months in March, almost double the 4.7 months for the same period a year ago.

The median price of a home in Santa Clara County was $830,000, up 9.2 percent from the year-ago period and up 5.1 percent from the preceding month. The median price of a home in Monterey County was $669,000, down 2.3 percent from March last year and up 1.8 percent from February. The median price in Santa Cruz County was $751,000, up 1.5 percent from last year and up 4.3 percent from the preceding month. Statewide, the median price of an existing, single-family detached home during March 2007 was $580,090, a 3.2 percent increase over the revised $562,130 median for March 2006. The median number of days it took to sell a single-family home was 56.2 days in March 2007, compared with 44.5 days for the same period a year ago.

"For the first time since October 2006, time on the market fell below 60 days, as we enter the prime home-selling season," said California Association of Realtors Vice President Leslie Appleton-Young. "On the other hand, the inventory of homes for sale continued to increase, a sign of price softness in the coming months, as expected."

***If there's a bright spot in the Southwest, it may be the valley of the sun. Phoenix appears to be at least holding its own.

The Phoenix Business Journal reports that prices are holding steady in that market, though housing inventory is up, and it may take longer to resell existing homes. Phoenix-area housing analysts estimate the Valley still has a six-month inventory of new homes to be sold. And there are more than 40,000 single-family resale homes on the market.

Still, according to the Phoenix Business Journal, high interest rates are likely to continue to take a toll. "Everyone expects this year to be slower and lower," said Jay Butler of Realty Studies at Arizona State University Polytechnic. Butler said those who have owned their homes for a number of years likely will see gains, but investors and others turning homes bought only a year ago may see a drop in price. ***

In the Northwest, the picture is brighter than for the rest of the region, said Celia Chen of Moody's Economy.com, and a report in the Puget Sound Business Journal backs her up. The business journal says the latest report from the Northwest Multiple Listing Service indicates that the average price for a home in King County is almost $500,000. In March, the average price of a home sold in King County was $499,470. A month earlier, the average sale price was $462,575. Brokers polled by NMLS indicated that they have 9,340 pending home sales, which is the highest number since August 2006.

"We've been fairly protected from the subprime problem in the Puget Sound region because of our healthy economy and strong housing appreciation," said Erik Hand, president of Response Mortgage Service, a subsidiary of John L. Scott Real Estate.

Cynthia Leggitt
Phoenix, AZ
NARREIA Advisor
www.NARREIA.com