Analysts: Valley Housing Market Will Get Worse

PHOENIX - For four years now, we've been watching housing prices fall across the nation. It was starting to look like that trend might be over -- but experts are saying it's going to get worse before it gets better.

The Phoenix metro area is expected to be harder hit than most other U.S. cities. Analysts say values will drop by at least 10 percent over the next year.

Right now short sales -- where the bank is willing to sell the home for less than it's worth and cover the difference -- make up nearly 1 out of every 3 sales. In June, 21 percent of home sold were short sales -- in July, the number rose to 28 percent.

The economy, worries about job security and challenges in getting a home loan are all contributing to the problem.

According to Moody's, sellers in Phoenix should get ready to lower their asking price by 10 percent if they expect to sell.

Valley realtor Neil Brooks says his outlook isn't as grim. "I think 10 percent is kind of steep but it depends again on market segment," he says.

Brooks says homes prices under $300,000 are probably stable -- but homes $500,000 and up will probably drop up to 5 percent.

Brooks says it could take at least 8 years before home prices reach the peak of four years ago.