In the Phoenix real estate market, the traditional resale season begins in March, and as expected, the number of transactions last month rose to more than 11,000, up from about 8500 in February.

Read or listen: A report on real estate market conditions in Phoenix shows that foreclosures represented 43 percent of total transactions in February.

"Arizona is stuck in a vicious cycle right now," says Lee McPheters, research professor at the W. P. Carey School of Business and director of the JPMorgan Chase Economic Outlook Center. "Homes come onto the market from foreclosure and that weakens prices.

January brought an uptick in foreclosures in the still-troubled Phoenix real estate market — discouraging words after the drop in foreclosure-related activity in the waning months of 2010. But is it a new trend?

Phoenix Metro home prices continued their decline in December, and are expected to keep dropping for the foreseeable future.

Since 2008, 11 percent of the single-family homes in Maricopa County, Arizona, have been through foreclosure — 4 percent in the last year alone. And with moratoriums on foreclosures ending, the new year is expected to start with an uptick in the number of property owners losing their homes.

Once the envy of most of the nation, Arizona's real estate industry has become a cautionary tale, and the new story of recovery is one of fits and starts.

Housing prices in the Phoenix-metro area are likely to continue dropping for the next several months, says Karl Guntermann, professor of finance and real estate who compiles the Arizona State University-Repeat Sales Index (ASU-RSI).

It's not unusual for the real estate market to slide into the doldrums in the fall and winter, but the Phoenix market was all but becalmed in November.

At first glance, the drop in year-over-year Phoenix housing prices recorded in the October Arizona State University-Repeat Sales Index (ASU-RSI) could appear to be unmitigated bad news: this means prices compared to a year ago dropped for the third consecutive month.