Smaller home-price spread suggests rebound

It's all in how you look at the numbers.

Home listings across metropolitan Phoenix remain at record levels, hovering above 55,000, not good news for homeowners trying to sell.

Resales fell to their lowest monthly level in several years in September. Foreclosures continue to climb, also not great news for sellers.

On the flip side, interest rates slipped this week, and with all the listings, there are many deals to be found in the Valley's housing market, real-estate agents say. Translation: That's good news for buyers because it's a great time to purchase if you have decent credit and plan on holding onto a home until prices rebound.

But one current indicator bodes well for sellers, buyers and the entire real-estate market. The spread between the price at which Valley homes are listed and at what they are selling is much lower than it was six months ago.

It means buyers' and sellers' expectations are more in sync, and that eventually should translate to more sales.
According to data from real-estate firm John Hall & Associates, the median price of metro Phoenix homes listed in September was $265,906, and the median price of houses sold was $234,900.

There's a spread of a little more than $31,000 between the two. In February, the spread between listing and sales prices was $43,000. In February 2006, as the market was starting to slow, the spread was $50,000. The shrinking spread between buyers' and sellers' expectations is a sign the housing market is correcting, and a rebound almost always follows a correction, particularly in the Valley.

Metro Phoenix's home prices are catching the attention of big lenders.

In the past few weeks, parts of Maricopa and Pinal counties have been put on housing "watch lists," or lists of "declining markets."

That usually means they will fund less of a loan on a property in case prices fall more.

For example, if a borrower was able to get a loan for 90 percent of the purchase price of a home last year, now a growing number of lenders only will fund 85 percent of the price.

But the Valley isn't alone on these lists. Lenders also are watching carefully the other markets across the country that saw big run-ups during the boom of 2004-05.