Maricopa County housing market: busted, damaged, or on the mend?
Local realtor says prices in Desert Foothills have stabilized
by Barry Cohen

DESERT FOOTHILLS – The Maricopa County real estate market may be a “bust” to some, but properties in the Desert Foothills are selling–albeit at lower prices.

According to Sterling Fine Homes agent Olga Reed, home prices here and in Anthem have stabilized. Reed said she’s getting more offers, showings and calls from interested buyers.

Now is a good time to buy, she said, because selling prices are not going to decline any further. “Interest rates aren’t going up and gas prices are going down,” she stated. “People are starting to feel better about the economy.”

Reed’s comments came one week after Atlanta‑based House Buyer Network, a company that buys houses from distressed homeowners, painted a grim picture of the county’s housing market.

“You’re going to see a 20‑percent housing price differential in the county between what it was at the peak,” said Duane LeGate, president of the network.

LeGate’s gloomy prediction is based on data his firm uses which spots housing price trends six months or more in advance. He acknowledged that data covers the entire county and there may be pockets within the county where home prices are steady or even rising.               

LeGate said his company in the last 12 months has seen a 235‑percent surge in the number of Arizona homeowners–most of them in Maricopa County–who need to sell their houses fast.

The local housing market, however, appears to be bucking the overall trend.

Reed said she currently has 47 properties listed and that she’s closing escrow on three to four homes per month. “However, we’re not seeing a lot of full‑price offers,” she added. “Most properties are selling for about 10 percent below the asking price.”

LeGate said the market decline in the county has been driven by real estate speculators and by homeowners who relied heavily on low down payments and short‑term adjustable rate mortgages–which in many cases have seen monthly payments balloon due to rising interest rates over the past several months.

“We recently had one client from the area with an adjustable mortgage and her monthly payment nearly doubled,” he explained. “She couldn’t afford the increase and had to get out from under her house payment fast.”

Reed noted that some investors who gambled on rising home prices in the Desert Foothills have to sell quickly because they can’t carry the two to three mortgages on multiple properties.

 Nearly 20 percent of the homeowners who opt for a quick sale through House Buyer Network are suffering financial problems, said LeGate. The next biggest group is people who own more than one property.

“People who buy a home before selling theirs are asking for trouble in this market,” he stated.

If the market outlook is so dim, LeGate was asked, then why is his company willing to purchase the properties from distressed owners?

“Prices will eventually go up,” he explained. In the meantime, his company makes its money by reselling, renting, or rehabilitating and signing lease‑to‑purchase agreements on properties it purchases from distressed buyers.

Reach the reporter at barry@thedesertadvocate.com.