Catherine Reagor of the Arizona Republic has a well researched article today, How low will it go?, but it is unjustifiably pessimistic.

If prices fall 10 percent this year, as analysts predict, the median price of an existing Valley home would dip to around $238,000.

She mentions a lot of experts in her article but not which one gave her this gem of a quote.

Right now, the median home price in the Valley is higher than it was in January, see the chart I posted on June 16th. The median home price may fall a bit by the end of 2006… but by 10%?!… that’s just silly.

The money quote for me was from Elliot Pollack, an economist I respect.

“There was never the demand for more than 45,000 to 50,000 new homes in Phoenix last year,” Pollack said. “It could take six to 18 months before the market absorbs the extra homes and gets back to normal.”

If the home builders only need 6 to 18 months to get their inventory into line, the entire Arizona residential real estate market is golden.

It looks like the economy will be great for the next year or more. If a recession hits after that, the Arizona real estate market should be well positioned to handle it.