Arizona's home values tumble

Home values in Arizona continue to plummet at faster and faster rates.

New figures from the Office of Federal Housing Oversight show the average value of an Arizona house dropped 4.4 percent in just three months. That compares with a 2.8 percent drop in the prior three months, a 1.2 percent drop the quarter before that and a decline of less than 1 percent the prior quarter.

Overall, home values in Arizona are now 9.2 percent lower than the same period a year earlier. That means a home worth $200,000 on June 30 last year now is worth less than $181,700.

That 9.2 percent drop compares with a nationwide decline of just 1.7 percent. Only California, Nevada and Florida had sharper year-over-year declines.

The figures are a key indicator of actual home values because the housing oversight office actually tracks the sale and government-backed refinancing of the same houses. By contrast, median sales figures for a market simply measure the prices of the homes that are sold in that particular month.

Agency Director James Lockhart said there's a reason for the sharp decline in Arizona and the other three states, calling them "the most overbuilt areas of the country." He said the high level of homes for sale just made worse the problems caused by tighter credit conditions.

Arizona's housing bust continues to erode the gains in home values that property owners saw during the boom period when investors were snapping up houses as fast as they could be built and driving up prices.

At the end of June, though, the average Arizona home was still worth 66 percent more than five years earlier - and 418 percent more than in 1980. That compares with national figures of a 34.8 percent value increase in five years and more than 280 percent since 1980.

The picture around Arizona in communities where home sales are monitored by the federal agency mirrors the state, with values declining at a sharper rate than before. But the size of that drop varies.

In Flagstaff, for example, the single-quarter drop was just 1.5 percent, with home values down in the last 12 months by 3.1 percent.

At the other extreme, homes in the Kingman and Lake Havasu area lost nearly 6.6 percent of their value in just three months and are now down by nearly 13.1 percent.

But the Phoenix metropolitan area, which includes all of Maricopa and Pinal counties, is not far behind. Home values slid almost 5.2 percent between the first and second quarters of the year, compared with less than 3.3 percent between the last quarter of 2007 and the first quarter of this year.