A combination of large inventories, low interest rates and reduced prices gives several real estate agents an optimistic perspective of the local market.

In their eyes, now is an advantageous opportunity to purchase real estate in Fountain Hills.

“It’s a great time to buy a house if you have a lot of cash lying around. There are some great deals out there,” said Richard (Rick) Merritt, president of Elliott D. Pollack & Company, a Scottsdale-based economic and real estate consulting firm.

Merritt participated in a housing forum this fall at Radisson Fort McDowell Resort. Merritt and other mortgage specialists concurred that a full recovery could take three to four years.

The National Association of Realtors predicts a 98.6 percent drop in home sales from last year. This year’s projected 5.9 million sales would be the lowest since 2002, when sales slumped to 5.6 million.

Arizona has weathered the industry downturn in many respects better than other areas of the country because of migration into the state, and because housing is relatively affordable, said Merritt.

“It’s not all doom and gloom,” believes Jay Butler, director of Realty Studies in the Morrison School of Management and Agribusiness at Arizona State University’s Polytechnic campus.

“The doldrums should begin to let-up in earl y 2008,” said Butler. The fall months in the housing market are traditionally slow due primarily to the holidays and the desire not to move children during a school year, said Butler.

People who have long wanted to buy their vacation or retirement dream homes only to watch prices climb every year finally now face a buyer’s market, said Butler.

Foreclosures and new homes provide a competitive alternative to resale homes in many areas, he said.

The increasing inventory of single-family houses and condominiums and length of time on the market could be negotiating tools for buyers. The advice to sellers is to price their homes correctly at the beginning of the listing.

“Sellers who need to sell are realistic,” said Realtor Rich Madden, The Madden Group, with John Hall & Associates.

The peak real estate sales period occurred in 2004, said Madden, when 1,005 houses sold between January 1 and Aug. 31. In a comparable timeframe this year, half as many homes ---516 --- sold.

Madden said the Fountain Hills real estate market is unlike any other in the Greater Phoenix area.

“For all the reasons we live here, our homes will continue to sell,” said Madden. “Out-of-state buyers are discovering Fountain Hills. We’re still seeing people in the bedroom communities of Mesa, Chandler and Ahwatukee wanting to move here.”

Active listings as of Oct. 24 totaled 826 of which 475 were single-family homes and 351 were condominiums or town houses. A year ago, the single-family inventory tallied 406, according to MLS data. Pending were 76 home sales that week.

Data not reflective of market

Realtors say the figures do not accurately reflect the current housing situation.

“Even though the inventory of residential properties for sale in Fountain Hills is not currently at its highest level, this is not an indication of an improving marketplace,” said Micky Parker, managing broker at Sonoran Properties GMAC Real Estate.

“Rather, we’re finding that sellers are waiting for better times to put their properties on the market or are pulling them off the market as their listings expire when they realize that the prices they’re asking are, in many cases, not reflective of current conditions but reminiscent of the boom days of 2004 and 2005,” said Parker.

“For those who purchased their properties prior to 2004, reasonable profits are still possible. Pricing and condition of the property are paramount as buyers’ seek value above all else,” said Parker.

Million dollar babies

Thyra Edwards, a Realtor with STS Marketing Group at Keller Williams Southwest Realty, agrees with Madden about the town’s status as an ideal place to live.

A major change has been in the number of $1 million or more homes on the market, and the length of time to sell them.

Multiple Listing Service (MLS) reported 135 homes for sale from $1 million to $7.75 million at the end of September.

The locations break down to: North Heights, 3, $1.1 million to $1.39 million; Stoneridge, $1.16 million to $2.7 million; Sunridge, 9, $1.09 million to $2.2 million; Eagle Mountain, 9, $1.3 million to $2.6 million; Crestview, 11, $1.3 million to $7.5 million, and FireRock, 51, $1.16 million to $7.75 million. 

In 2005, 45 homes in the $1 million-or-more category were sold. It took an average of 151 days to sell a house. Days on the market increased to 266 in 2006. So far this year, the average length of time on the market is 183 days for the luxury properties, reported Edwards.

Of the current inventory, seventy-five percent of the homes have been on the market more than 90 days. Sixty percent of the resale homes have been listed for more than 90 days.

Town revenues decline

The town experienced a dramatic downturn in building permit activity, particularly in multi-family units in fiscal year 2007-08.

In fiscal year 2006, described by the town in its quarterly budget report for the fiscal year ending June 30, 2007, 2006 was described as “the year of the condos.”

In 2006, 325 applications were filed for multi-family permits, compared to 14 in 2007.

The result was a drop in the General Fund revenue by nearly $800,000 from the previous year, the majority from building permit fees.

The town has noted that repercussions from the decline in condominium and other multi-family permits will begin to be felt in fiscal year 2007-08 when the actual construction of the units tapers off.

Local sales tax collections from construction activity were $922,600 less than the prior fiscal year. Applications for building permits dropped 81 percent, 85 applications compared to 455 in 2006.

The number of single-family permit applications during 2007 was 71 compared to 130 the previous year. Multi-family permit applications totaled 14 in contrast to 325 in 2005-06.

“These reductions in permit activity will mean less construction-related sales tax during 2007-08. This trend is likely to continue as the Arizona building and real estate economy recedes -- new permits from the state trust land are not anticipated until fiscal year 2009,” the town reports.