The Long Road Ahead For The Valley's Housing Market

In February 2008, the headline on the cover of Arizona Business Magazine stated: “The Subprime Storm: Can the state’s economy weather this financial monsoon?” We all knew the housing market would be hard hit, but few of us imagined the near-total collapse that took place. Even by the end of 2008, we still hadn’t seen the extent of the damage. That would come in the late and unlamented year of 2009.

So how bad did it get? According to a recent Realty Studies report from the W. P. Carey School of Business at Arizona State University, the Valley real estate market tallied a record number of foreclosures last year. About 41,000 single-family homes were foreclosed on in 2009.

This February, our cover story looks at the long road to recovery the housing market faces. Freelance writer Steve Bergsman spoke with a number of housing experts, and while they disagree on the severity of the situation, they all agree that foreclosures will remain a problem for the Valley. The three main issues keeping the housing market mired in foreclosures during this recovery period are subprime resets, persistent unemployment and low population in-migration.

Jay Butler, an associate professor of real estate at ASU, puts the dilemma this way: “Recovery is a perception issue. Some people believe they will see recovery when their home values are back where they were, and that’s going to take a long time. As for the economic recovery, Phoenix-area layoffs are still coming, and there’s an expectation interest rates may get higher, so the housing market will probably bounce around for a while longer.”

Let’s hope it’s not too long.