Phoenix Home Sales Fastest in 2 Years

It's unclear whether this spring's halting of steep month-to-month drops in the median sale price in Phoenix and other Western markets foretells a price plateau. Depending on their severity, ongoing job losses and foreclosures could undermine any trend toward near-term price stability.

Over the past year, and especially over the winter, stronger home sales across much of the West have been driven mainly by bargain hunters. Most are first-time buyers and investors choosing either foreclosure resales or other lower-cost homes in neighborhoods hardest hit by foreclosures. Last month about 45.3% of all Phoenix-area buyers used government-insured FHA loans, a popular choice among first-time buyers. Absentee buyers made up 39.4% of all purchases - a relatively high%age in the West. Absentee buyers include investors, mainly, as well as other buyers whom public records show will have their property tax bills go to an address other than the one for the home they just purchased.

Across the West, year-over-year declines in the median sale price - the point where half of the homes sold for more and half for less - have sometimes overstated the extent to which the value of the typical home has fallen. It's because the median is being tugged lower not just by price depreciation but by shifts in the types of homes selling. For example, more of today's sales involve foreclosures, which tend to sell at a discount and be concentrated in more affordable areas. Also, the August 2007 credit crunch made larger "jumbo" mortgages more expensive and harder to obtain, which has led to sluggish sales - in some cases the lowest in many years - in higher-priced neighborhoods. (A dropoff in high-end sales can pull down the median.)