/ Modified jun 8, 2011 11:46 a.m.

Housing Rebound Will Come Slowly in Arizona

Glut of foreclosed homes, short sales keep prices low; recovery 5 or more years away - click to watch Episode 21

Arizona has suffered more than nearly every other state from the housing bubble burst and mortgage financing meltdown of the last three years, and as a result, recovery will take a while, an economist says.

"I wouldn't say that there's a housing recovery under way. I would say that we're not falling any further," economist Jim Rounds said in an interview for Arizona Week's Friday program. "We're probably going to see somewhat dampened prices for another couple of years ... My best estimate is that we get back to normal by 2015, unfortunately."

Rounds is senior vice president with Elliott Pollack & Co. in Scottsdale and studies the state's economy, serving as a consultant to businesses and other organizations.

His projections were less optimistic than those of Arizona Real Estate Commissioner Judy Lowe, who also as interviewed for Arizona Week.

"I feel that by the end of 2011, we will begin to see some good improvement," Lowe said. "Right now, it fees like we're just stabilized."

Lowe acknowledged that foreclosures are still high and that most housing sales in the dominant Phoenix market are "distressed sales," from foreclosures and short sales. She said investors are buying looking for good returns when prices rise again.

Rounds said home sale prices are moving up now somewhat artificially because of demand brought on by investor interest. He said prices will come down again a bit when those investors start turning over their properties.

Lowe said what really is needed is for some of the pent up financing to break loose so would-be home buyers can get mortgages and start moving the market again.

What is really needed, Rounds said, is a continuation of the effort to shift the state's economy away from being so dependent on population growth and housing.

Quality jobs in the solar industry, in high-tech and other fields will be needed to do that, and he said that while the new Arizona Commerce Authority should have the tools it needs, it will take an all-out effort by political, civic and business leaders at all levels to make a difference.

Reporter Michael Chihak further explores Arizona's housing and economic issues on the June 3 episode of Arizona Week. Watch here:

Arizona has suffered more than nearly every other state from the housing bubble burst and mortgage financing meltdown of the last three years, and as a result, recovery will take a while, an economist says.

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