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Prescott Housing market to level off in ’09

By Jason Soifer
The Daily Courier

Thursday, January 01, 2009

It was a tough year for the tri-city's housing market in 2008.

Home values fell and short sales and foreclosures rose dramatically as the effects of the nation's slumping economy took its toll locally.

"2008 was a year in real estate unlike Prescott has ever seen," said Ed Pattermann, chairman of the Multiple Listing Service committee of the Prescott Area Association of Realtors. "Not only in the market, but also just in the way the business has changed."

The National Association of Realtors reported this past week that existing home sales fell 8.6 percent to an annual rate of 4.49 million units in November, down from a revised level of 4.91 million in October and nearly 11 percent below the 5.02 million-unit pace in November 2007.

The local numbers show the median price for homes in the entire MLS is down 12.5 percent this year versus 2007, according to Pattermann, who says that compares with the national average of 13.2 percent or the western U.S. average of 25.5 percent.

"We have held our value much better than other western cities by better than a 2-to-1 margin," he said.

Through this past November, Pattermann said the median home price in Prescott is down across the board in the tri-city area.

Pattermann said the median home price is down 1.3 percent in Prescott, 10 percent in Prescott Valley and 13.3 percent in Chino Valley in comparison with the first 11 months of 2007.

Realtor/consultant Lee Amble, with HomeSmart Fine Homes and Land, is one of many working in the local market that is dealing with the fallout.

Amble says the one of the next hurdles is getting through the housing glut, including the foreclosure and short sale properties.

"2008 compares similarly to the early '80s and the mid-90s," he said. "This has been the worst downturn and recession I've scene since I've been in the business in 35 years," he said.

Pattermann said the shrinking market means realtors must improve their game or change careers.

"It has forced realtors to learn new skills, gain new knowledge in order to work in today's market," he said. "When you have change like that, you have some that adapt and others that leave. In a way it kind of evens itself out - fewer properties selling and fewer realtors to sell them."

And that means a transitional period for buyers, sellers, lenders and every other player in the local real estate market.

Through the tough times, Amble says that buyers have great opportunities with falling values and interest rates.

But it is a double-edged sword, according to Amble.

Today, Amble says buyers need good credit, solid income and 10 to 20 percent downpayments to complete a successful transaction.

First-time buyers without a job and strong credit score are likely stuck sitting on the sidelines - at least for now.

"You can't afford a payment, you cannot afford a home," he said.

Amble said sellers in 2009 will have to recognize that the 2004-05 period was an anomaly and set their asking prices along today's market conditions.

Amble believes that sellers with good asking prices will sell faster and the average days on the market could dip.

Pattermann said getting good financing is important to getting through the housing glut.

And Pattermann believes prices will remain steady.

"I think the number of units (sold) will start going up just because credit will become more available to people, and I think consumer confidence will increase with the new administration and incentives the new administration is expected to provide the economy," he said.

Pattermann thinks the market is at the bottom and will stay there while the glut works itself out.

"When the market changes it will change fast," he said. "Certainly the data suggests that we're there both in terms of units sold and dollar value.

"I believe that people will look back and say that the end of 2008 was the bottom."