Anthem housing market in downward spiral
by Michael Murphy

ANTHEM – The resale housing market in Anthem is plunging – while foreclosures rise.

Existing home sales fell nearly 40 percent in the third quarter of 2006 from the same period last year, leaving sellers frustrated and scrambling to slash prices.

“It’s pretty heartbreaking,” said Lisa Covert, whose Anthem home has been on the market since May. “For the first several months, we had no one come to look. It just sat there.”

In July, Covert’s husband, Harry, started a new job in Texas, and the couple and their two children are now living with Lisa’s mother near San Antonio until their Anthem home sells. They’ve cut the asking price by $70,000, but still haven’t gotten any offers.

“It’s extremely frustrating, especially because I know it’s a nice neighborhood, a nice street,” said Covert. The family bought the four‑bedroom home in Anthem Parkside five years ago.

The Coverts want to build a new home in Texas, but “everything gets put on hold” pending the sale of their Anthem residence.

They’re not alone, according to real estate experts and records that show the Valley’s housing market slowdown is hitting Anthem particularly hard.

Between July and September, 195 existing home sales were posted in Anthem, according to Arizona State University’s Real Estate Center. Compare that to last year’s third quarter when 480 existing home sales were posted.

The stagnation in the market is leading to a rise in foreclosures.

A recent analysis by The Arizona Republic showed 114 notices of foreclosure in Anthem’s 85086 zip code, or 161.4 per 10,000 homes this year. That compares to 59 in Cave Creek, or 55.1 per 10,000 homes, and 39 or 51.6 per 10,000 homes in north Scottsdale’s tony 85262 zip code.

Doreen Drew, owner of Daisy Mountain Real Estate in Anthem, related that for many homeowners the rapid appreciation of 2005 “has just been wiped out–they are back in many cases to ’04 levels.” She said that is true of her clients, the Coverts, who put their Anthem home on the market in May for $470,000 and are now asking $399,000.

Drew has watched the Anthem market “slowly erode” for more than a year “Are you kidding me–do I see it? Daily,” she said, when asked about Anthem’s real estate woes. “It’s actually been 13 months that the market’s been sliding.”

Drew and others cite two key factors: Competition with new construction by developer Pulte Homes and unrealistic expectations on the part of sellers. Other issues are Valley traffic congestion and gas prices.

“They (Pulte) can offer the buyer incentives and, more importantly in this market, they can offer higher commissions to the agents, so there’s a greater incentive to stay out of resales and go to new homes,” Drew said.

In neighboring Desert Hills, Cave Creek and Carefree, the real estate market also suffered a summer slowdown, but not as dramatic as Anthem’s slump, according to ASU’s figures.

Yet there may be signs of hope as temperatures – and prices – cool.

“Is there a light at the end of the tunnel? Yes,” Drew said. “I believe we have reached bottom and we’re going to see this market solidify–and maybe not move up, but at least stop moving down. I think that will happen by end of the first quarter.”

“Anthem resale is just now starting to experience a turnaround, an improvement,” said Doug Clark, an area real estate broker. “We have seen increased traffic, and that is obviously related to the Phoenix market improving.”

Clark added: “People now are wanting to talk about buying a house. In the summer it’s 115 degrees outside, and who wants to be in a hot car looking at a hot house?”

Jay Q. Butler, director of the Real Estate Center at ASU, says the next few months will be key to whether real estate rebounds.

People always want to buy a nicer home; the question is whether they can afford to.

“The fundamental issue is potential homeowners with stagnant incomes confronting higher home prices,” Butler said. “Basically, the housing market could be limited by the inability of potential buyers to afford or desire any changes in their current housing situations.”