The hard-hit Arizona housing market may be looking up. A new report from Arizona State University shows positive trends in single-family home prices, foreclosures and underpriced homes.

Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business at ASU, said the median home price for January rose 6.5% to $120,500 from a year earlier, while the average price per-square-foot for single-family homes increased 3%.

Orr expects a declining trend in foreclosures, something that started this January with big drops for Maricopa and Pinal counties, where foreclosures were cut almost in half. The number of foreclosures starts decreased 49% from last January.

There is no longer a surplus of homes for sale below $300,000 because investors have eliminated the excess inventory, according to Orr. The supply of homes for sale in January declined 42% from a year earlier. However, ample supply remains in the upper price ranges, which were less affected by foreclosures. 

Orr adds that fewer homes are reverting to the banks at auctions because investors are quickly picking up bargains. He said international buyers, especially those from Canada, New Zealand and Australia, are taking advantage of exchange rates to purchase vacation and investment homes. 

“Many people think there’s a glut of homes the banks are hiding somewhere, and that may be the case in other markets, but not here in the Phoenix area,” Orr said. “We’ve gone through so many foreclosures that the system has been working itself out for about five years. Everything is cyclical in housing. The market doesn’t go down forever, and it doesn’t stay up forever.”