Obama's Phoenix trip highlights housing reboundPosted: Updated:
PHOENIX (AP) -- President Barack Obama's visit to Phoenix on Tuesday shines a spotlight on one of the nation's most rapid housing recoveries, with home prices soaring and bidding wars occurring on a regular basis.
But experts say much of the rebound happened despite efforts by the federal government to prop up the market and prevent foreclosures, although federal programs are credited with slowing a free-fall and allowing more people to refinance their mortgages.
Just two years ago, the Phoenix region was in the throes of the worst housing collapse in the country, with prices down nearly 60 percent from their June 2006 peak and banks foreclosing on 70,000 homeowners a year. Investors, sensing a bargain when the median price hit $111,000, swooped in, and prices were rising by early in 2012. Regular buyers who had been sitting on the sidelines then re-entered the market, and the boom was on.
The current median price of a home in the Phoenix market is $185,000 - up more than 60 percent from the lows. It still remains well below the $260,000 that single-family Phoenix-area homes reached at the market's height.
Obama plans to arrive in Phoenix on Tuesday to give a speech on housing and the middle class at Desert Vista High School as part of a national tour highlighting his plans for the nation's economic recovery.
He'll be met by Arizona Gov. Jan Brewer, who famously wagged her finger at him during their last tarmac greeting last year. Brewer spokesman Andrew Wilder said she expects to inquire about a request for a disaster declaration for the Yarnell fire area where 19 Hotshots were killed in late June.
Obama has delivered campaign-style speeches in the past two weeks in Tennessee, Florida and Missouri on investing in infrastructure, lowering the cost of college loans and overhauling the tax code. The Democratic president also has criticized Republicans for not doing enough to help struggling families.
Real estate experts say the big turnaround in the Phoenix market has as much to do with basic economics than it does presidential policies.
"Some of it has to do with access to cheap money, but the biggest thing is just basic math," said economist Jim Rounds of Elliott D. Pollack & Co. in Scottsdale. "When the economy falls that far it doesn't take much in terms of growth to post some pretty strong numbers. So housing numbers are appreciating at close to 30 percent but we're still not back to where we were before the crisis, and we're still looking at mid-decade for a full recovery."
Obama's housing proposals will include helping more middle-class homeowners take advantage of low refinancing rates, ending the business model of Fannie Mae and Freddie Mac and helping re-build communities hardest-hit by the housing collapse. He also plans to help credit-worthy families now being denied loans get them through an easing of underwriting rules.
Mike Orr, director of the Center for Real Estate Theory at Arizona State University, wanted to hear proposals for easing lending standards.
"What I would like him to do is do anything they can to improve the speed and positive outcomes of loan applications," Orr said. "I think there are a lot of people who are still getting turned down for loans who should be approved. I don't want to do back to those horrible days of 2003 where as long as you could fog a mirror you could get a loan. But I think it's still too difficult. "
Orr also said much of the recovery in metropolitan Phoenix has occurred as a normal part of an economic rebound, although he did cite some federal efforts that have helped. He also credited the president expanding a program that helps homeowners refinance, which he adopted over congressional opposition.
"That didn't really take hold until the early part of last year, and you could definitely say they should have done that sooner," Orr said. "But it was very valuable for those people who were underwater and wanted to avoid foreclosure or short sale. They could finally refinance into the lower rates and reduce their payments."
That program, the Home Affordable Refinance Program, allows people with higher interest rates to refinance at lower rates and save on their monthly payments. Until the new, expanded program took hold, may in Phoenix were shut out.
"For Phoenix, because our prices collapsed so bad, almost everybody was disqualified from the first scheme but once they waived the appraisal issue then a lot of people could qualify," Orr said.
The Phoenix housing market is set for extended growth, Orr said, because new construction basically stopped with the beginning of the Great Recession and there is pent-up demand. Housing starts in Maricopa County are running at 12,000 to 13,000 this year - far below the 54,000 or so during the boom years. Still, the average should be about 30,000 new homes a year to handle population growth and normal homeownership levels.
© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.