[I’ve asked some of the top Arizona real estate numbers geeks a few questions to see what they think 2009 might hold for the Arizona real estate market. John]

Bob Bemis, CEO of ARMLS

Bob Bemis joined ARMLS as CEO in October, 2007, and immediately began an aggressive program of expanding the product options and raising the quality of customer service and support offered to ARMLS’s 35,000 REALTORS®. He has concentrated on reinforcing infrastructure, including a new core MLS system delivered in July 2008 and a redesigned ARMLS.com website with self-service customer management due in spring ’09. He has opened dialogs with other Arizona MLSs about data sharing and system interconnectivity. Bemis is a regular participant on national panels and forums dealing with real estate issues and serves on the National Association of REALTORS® MLS Issues and Policies Committee. He began his real estate career nearly 20 years ago in Chicago as a sales associate with Coldwell Banker and prior to that was a television production executive.

Bob Bemis: Thanks for the opportunity to participate. I certainly don’t have the perspective of agents on the street, but from the lofty perch of the corner office of the MLS, I can see some trends and offer some opinions. Just remember ““ they’re worth exactly what you’re paying for them.

The economy in general, and the housing economy specifically, both hinge on three key factors:

(1) JOBS ““ the unemployment rate continues to rise, and with the threat of a more severe economic downturn the threat of higher unemployment grows daily. Without jobs, regardless of the low mortgage rates, people can’t buy houses. Companies are not creating jobs and often are not filling vacancies because of the uncertain business climate. That makes it harder for those being laid off or downsized (what a horrible word) to find new employment.

(2) TRUST ““ until we get a government in Washington that we can trust, there is no confidence that those making financial policy at the highest levels are making the right decisions, and moreover that they will stick with them. The ” crisis” came out of nowhere with Henry Paulsen screaming that the sky was falling and doom was just around the corner unless we ponied up $750 Billion practically overnight. They were going to buy bad assets to loosen the money supply. Two weeks later they changed the entire game plan and started buying bank stock instead. The banks still are not being held accountable for what they did with that capital infusion, making them not only UN-trusted but appearing aloof and seemingly unaccountable. That has to change.

(3) FEAR ““ with such uncertainty in the stock and job markets and such distrust in Washington, it’s no wonder people are scared. Scared people do not buy things. They save, not for the rainy day that may be coming, but for the thunderstorm in which they find themselves now. Fear is the first symptom to set upon us and will be the last to leave. It will not happen soon.

With that little editorial, let’s get to the questions.

“What’s the chance residential resale housing prices hit bottom in 2009?”

Bob Bemis: 50-50. At best we will see a slower decline through the summer and may bottom out in the fall, but with the glut of underpriced foreclosed properties still on the market, and more to come when the next round of bad mortgages reset in the spring and renew the flow of REOs, we have a long way to go before the foreclosed properties are flushed out and the true resales again figure into the average sale price calculation.

“The median resale SFR price in November in ARMLS was $155,000. What do you think it will be in November 2009?”

Bob Bemis: The $155 figure is over 30% lower than it was a year earlier in November 2007. It’s where median prices were in the summer and fall of 2003, five years ago. As I said earlier, I think the prices will continue to slide, albeit at a lower rate. The year before our last $150 median was 2002 when prices ranged between $135 to $145. That’s not out of reach for the coming year.

“What surprise or surprises will we be talking about a year from now?”

Bob Bemis: I truly believe the housing industry, the lending industry, and the banking industry cannot individually or collectively survive the cumulative damage done to MILLIONS of credit ratings by the foreclosures and short sales that we are experiencing now. I think the Fair Isaac credit scoring system will, at worst, implode or, at best, become so unreliable that lenders will throw it out. Having a foreclosure or short sale deficiency judgment on your record in 2007-08 may become a non-factor in rating your future credit worthiness, particularly for mortgages, as lenders see the anomaly for what it is ““ a blip in the continuum of housing as the American dream.

“What’s the overall metropolitan Phoenix resale housing outlook for 2009?”

Bob Bemis: Overall, continued bleak and dreary until the path changes. If the Obama administration can put trust and faith back in the financial markets, remove the fear that permeates the country, and add a couple million new jobs to the workforce, then we’ll start to see the light at the end of the tunnel. How fast they can do that will determine how quickly this bursting housing bubble can start inflating again.