The Arizona real estate market seems to be on the mend, according to recent data released by Fidelity National Title, a title insurance and escrow service company in Arizona, in partnership with The Cromford Report, an online statistical resource on the metropolitan Phoenix residential resale market.

According to the data, the top of the Arizona real estate market was in June 2006, and the market hit bottom in April 2009. In addition, maximum inventory of homes on the market was in April 2008, the companies said.

Michael Orr, analyst and author of The Cromford Report, said pending sales in the Arizona Regional Multiple Listing Service are at a record level for January, signifying an increase in demand. This positive sign of market activity is a critical indication of recovery for Arizona’s real estate market. However, market recovery is expected to be shallow and slow. To prove Arizona is past the bottom and inspire market confidence in a recovery, Orr said steady price stabilization is important.

“Like a supertanker, once the real estate market gathers momentum, it is very slow to turn around,” Orr explained. “2010 won’t see a dramatic shift, but we can expect to see a shallow, upward trend across the market.”

With the number of homes under contract more than double what it was last January, Orr believes sale price increases are likely to follow suit. He said, the buying frenzy has cooled at the bottom of the market, but activity is warming for homes in the $250,000 to $400,000 range.

Many markets in Arizona are showing an upward trend, but Fidelity National Title and The Cromford Report said it is important to note that some areas and neighborhoods are flat or continue to decline. In addition, short sales are expected to dominate the market in 2010, and this may cause another dip is sales prices. However, the companies said the recent trend of sales price increases are a positive indication of continued recovery.

“The last three months of 2009 saw a 60 percent increase in short sale closings,” said Steve de Laveaga, SVP of Fidelity National Title. “In 2010, you will see a number of lenders move to aggressive short sale programs and cash for keys for sellers.”

As banks and lenders are discovering that less money is lost on a short sale transaction, REOs are declining in importance. December and January data showed a 25 percent drop in REOs compared to a year ago, short sales surged 16 percent, and normal sales jumped 9 percent, according to data by Fidelity National Title and The Cromford Report.

“Banks are now implementing a better short sale process, so we are seeing more agents dealing directly with sellers before the banks get involved,” said Mark Parris, a partner of Fidelity National Title with RE/MAX Renaissance Realty. “This is a good step in the right direction for everyone.”