This was written about the California real estate market. The Arizona real estate market is similar.

“We don’t have a lot further to go (down in price),” said Delores Conway, director of the Casden Real Estate Economic Forecast at USC. “Unless there’s a major shock in the economy or the capital markets seize up even further, we would expect these (housing) markets to return. … In the next 12 to 18 to 24 months, prices should level off, and move at more normal rates.”

One promising indicator, she said: Housing prices have already fallen to the point where monthly ownership costs are getting closer to the cost of renting. During the big real estate run-up, monthly house payments (which include taxes) spiked sharply above average rents. It’s extremely rare for homeownership costs to fall below rental costs, she said. [emphasis mine]