Home prices in Phoenix are off from their 2006 peak by 54 percent. In fact you would have to go back to 2000 to find prices this low. Yet low prices do not signify a good deal.
Prices tanked in Arizona and Nevada because a large portion of the buying pool was generated from speculation. Many of these investors are looking at the properties and day dreaming about easy rental income for years to come. In fact, many of these areas will see shrinking populations because they face record unemployment and short of fuel going down, higher cost of living because of this. A large part of their booming industry was due to the actual housing bubble. So remove the housing bubble and you are left with an area that should look like 1999.
The unemployment rate is 8.5 percent which on the surface may look good but many industries in the market pay lower wages which can depress what people are able to afford. Housing prices should reflect local market incomes. As Americans tighten their belt, you have to realize that demand for many things will go down, including housing.
Here is an analysis of the market in Phoenix:
MLS listed homes 9,094
Properties in foreclosure 18,913
These are signs of a very weak market. Properties in foreclosure out number MLS listed homes on a scale of 2-to-1. Some places are renting for low prices like $250: