The Arizona investment property & real estate market underwent the fastest home building rate in recent years. Loans were easily granted to borrowers who were unaware then of the repercussions with their risky mortgages. Among those who defaulted with their loans are homeowners who acquired adjustable rate mortgages and traditional loans in the market. It wasn’t long until foreclosures hampered home values last year and will surely continue dipping this 2009.

Among the state’s cities, Phoenix remains the hardest hit by the crisis. Borrowers were granted with subprime mortgages that remained popular because of its immediate approval even though they are riskier. With the onset of defaults, foreclosures steadily rose and have carried on for four years already. RealtyOutlook.com forecasts a 19.5 percent drop in home values this year. That would be enough to depress prices in more than a third of the city’s homes.

Today, the glut of homes waiting for buyers continues to rise and many homebuilders have gone bankrupt because of higher competition for fewer projects. On a better note though, homebuyers are snapping up bargain prices in Phoenix. That should keep home values from moving on an extreme freefall amidst deflation. Also, the Phoenix metropolitan area is attracting more homebuyers this time. Most houses are priced way too low that buyers find good deals even in the counties of Maricopa, Pinal and Yavapai.

Flagstaff’s economy is grounded on tourism, transportation and manufacturing. However, not enough buyers nipped low-priced deals in the home market causing the supply to grow larger month after month. With this, Flagstaff home values are forecasted to plummet by 9 percent.

Tucson may be supported by the optics industry as well as education and technology sectors but the effects of the crisis cannot be put on hold. Although prices are seen to fall by 10 percent this year, the tourism industry can help the property market to recover by dispensing current housing supply to winter vacationers who are in search of bargain homes.

In Yuma, the high rate of foreclosures from massive subprime mortgage buying a few years back has affected home values tremendously. In fact, not even the federal guarantee for borrowers can salvage the plunge in prices. This is likely to swell further in 2009 where prices are to fall by 10 percent.

Scottsdale is inhabited by growing communities but when homeowners have felt the financial crunch, even luxury homes were as not as attractive as before. One reason behind this is the bearishness in the stock market that sent investors fearing for more losses. As the market would have it, home sales tumbled and would persist in 2009. Home values are expected to drop by 14.5 percent.