Median home prices in Phoenix consistently climbing, but what does that mean?

Median home prices in Phoenix consistently climbing, but what does that mean?

According to Karl Guntermann, who publishes ASU's monthly Repeat Sales Index, valley median home prices have been slowly climbing since April of 2009. This report tracks the difference in home prices that have sold multiple times in recent years, and although that difference has been negative for quite some time, that difference is getting closer to zero. As you can see from the chart below, in March of 2009, the difference was -37%, but as of September of 2009, that difference has dropped to -23%. Early estimates show that by November, that difference could be as low as -17%. The median price of valley homes has, at the same time, gone from a low of $117,500 in April 2009, to $130,000 by September 2009.

So what does this all mean?

Guntermann feels even thought these trends are favorable, the valley still has an unstable market due to a number of variables, and may take a long time to fully recover:

1. There are way too many bank owned homes being purchased by investors in this current market.
2. There is a very high unemployment rate that won't be improving very soon.
3. There are still failures after home owners get their loans modified.
4. There is a threat of interest rates increasing as the economy as a whole continues to improve.
5. There is still a very high number of borrowers upside down on their mortgages (home value less than their loan amount).

The Phoenix-based Information Market tracks home sales and foreclosure volume by month. They have reported that foreclosures in Maricopa County have gone down from 4,826 in September to 3,808 in November. Unfortunately, pending foreclosures (homes waiting for a lender to sign off on reposession documents) reached an alarming high of 50,000 in September. Guntermann says "Even if we get to zero change in the next year, it doesn't necessarily follow that the index is going to continue going up." He said, "It's going to take longer, clearly, to get out of this mess than it took us to get into it."