Arizona housing prices were rising as a result of federal tax credits, lower asking prices and near record low mortgage rates. But then like the winds blowing across the desert before a storm, the values of homes were swept lower as a result of the home buyers tax credit expiring. In Arizona a major secondary development is already showing evidence of hurting its housing markets.
The new state immigration reform law has scared-off many residents and is projected to forcefully send home prices down in most communities across the state. Despite a federal court ruling halting parts of the new state immigration reform law, illegal aliens are fleeing the state.
It means apartments and rental homes will go without tenants for extended periods of time, damaging housing values. The loss will also result in higher foreclosures, as landlords unable to make mortgage payments due to lost rents, give up paying mortgages all together.
The recovery for the Arizona housing market will be delayed for a longer period as a result, and prices for homes, apartments and even commercial properties will suffer as a direct result. Barring federal action to permanently halt the law, the drop in population will have a long lasting impact on the state’s economy.
In Phoenix, the hard hit economy, already devastated by the housing bust is seeing a flood of foreclosures reach the market as a new round of discount priced homes are released by lenders to be sold at lower prices. The government tax credit pushed more buyers to get off the fence, but the expiration of the credit has slowed home sales along with harder to get mortgage financing.
Greater buying interest by investors accounted for nearly half of all homes being sold in the first half of the year. But a slow down driven by doubts about the number of renters available to rent homes and apartments is leading to a second downturn. Housing Predictor forecasts that home values will be damaged as a result at an average of 12.9% in 2010.
In Scottsdale the socio-economics lean to a higher net income resident compared to most of greater Phoenix, and as a result the market will be hurt less by fallout from the immigration reform bill. An increase in home sales coupled with a move by many Phoenix residents to move-up to Scottsdale properties should trigger a healthier Arizona housing market. Scottsdale is forecast to see lesser average home deflation of 9.8% for the year as a result.
Across the desert in Tucson, the inventory of homes was cut as a result of the tax credit, but another round of foreclosures and weaker demand are jeopardizing the market, which has suffered setbacks as a result of growing unemployment. Tucson will take a long while before reaching a healthy balance in terms of housing, and is forecast to sustain average home deflation of 10.1% in 2010.
Easier to get government financing has helped push Yuma with its military bases out of the downturn, but weaker demand coupled with higher foreclosures and the state immigration reform legislation are triggering a slowdown. Yuma will see a large increase in discounted foreclosures hit the market through the remainder of the year on forecast average housing deflation of 8.1%.
In the scenic red rock country of northern Arizona, Sedona has experienced higher foreclosures due to a weaker economy that depends greatly on tourists. Lower demand coupled with harder to get mortgage financing will weaken the market over the rest of the year on projected deflation that will average 7.0%.