Downturn hits hard in West Valley Phoenix Home market - Prices Down 25% in some areas

Theresa and Tom Love are in a spot.

They've been separated six months, as he relocated to Washington for a job while she and their two children remain in El Mirage to sell their three-bedroom home.

They are just a few of the everyday people caught up in an ongoing story of housing woes, as foreclosures rise and markets tumble. Most recently, the county assessor reported that for the first time in years, 94 percent of home valuations in Maricopa County dropped. The county assessor's valuations, sent out last week, show the West Valley being hit the hardest.

Three communities in the southwest Valley top the devaluation list: Buckeye valuations plummeted nearly 25 percent, Avondale dropped nearly 22 percent and Goodyear fell 20 percent.

In the northwest Valley, valuations in El Mirage dropped 17.9 percent. Surprise's valuations dropped 17.5 percent, while Sun City and Sun City West were in the 15 percent range.

"We didn't think the whole housing thing would be as complicated as it's been," Tom Love said via telephone from Vancouver, Wash.

He started a new job there. A jazz musician, 32, he hopes to launch a music ministry.

It's been two months since he last saw his family. He recently missed his daughter's fourth birthday.

"The only thing keeping my family away from me is my house," he said.

The Loves bought the home for $110,000 in 2002. Their equity grew in the once-hot market, so they refinanced and upgraded.

Their Redfield Road home went on the market six months ago for $199,000. Their asking price now is $179,000.

Love said that would pay off the mortgage and leave $2,000 for his family to rent a U-Haul and head north.

Real-estate agents say a major reason the West Valley has felt the sharpest sting from tumbling housing valuations is that its affordable housing was driven up in price during the buying frenzy a couple of years ago.

The region's success became its downfall.

"At first, buyers were lured because of the affordability, but as the months went by, there was very little difference in price between homes in the outskirts and those in Phoenix," said Margie O'Campo de Castillo with Arizona Dream Realty.

Many of those home buyers now are faced with long commutes and rising monthly payments from adjustable-rate mortgages, she said.

As home values adjust, more prospective home buyers can afford to purchase homes closer to workplaces.

"If the East Valley is employing more people, then they're going to have more sales," Re/MAX Realtor Bridgette Gavagan said.

Buckeye, on the outskirts of the West Valley, largely sprang from the desert during the housing market's run-up.

"There really wasn't anything established in Buckeye prior to the boom, and they are still lacking in infrastructure," Gavagan said.

"It's got to re-adjust."

Buckeye resident and home builder Michael Marler, 35, knows that all too well. Not long ago, the small builder couldn't knock out homes fast enough.

He said he recently sold a home, after nine months on the market, on a one-acre lot between Goodyear and Buckeye, for $290,000. The exact model in the same area sold for $385,000, or $95,000 more, a year ago.

"It's horrendous," he said.

He added, "It was definitely a bubble."

The high number of foreclosed homes, which usually sell below market value, are lowering home values further.

In El Mirage, nearly 21 percent of home listings are foreclosures, Gavagan said.

In Surprise, nearly 14 percent are foreclosures, she said.

Gavagan said those who put their homes on the market should realize latitude to "pad" the price no longer exists.

For homeowners who aren't selling, sit tight and the market will re-adjust, she said. She just can't predict when.

The drawback is if they were looking to refinance. They will find they no longer have the equity they once had.

On the brighter side, the assessor's valuations, which lag about 15 percent below the market, are used to calculate tax assessments.

Lower valuations could mean homeowners eventually pay less property tax.

Of course, the recently mailed assessments won't come due as a tax bill until 2009.

Meanwhile, any such tax breaks could get eaten up if Valley municipalities raise their tax rates to offset their own deficits stemming from the economic slowdown.