North Scottsdale and PV are the most expensive markets in the state. There are deals to be found, you just have to search a bit, and be willing to look at other areas. You're buying the zipcode in these two locations more than you are the house.

I find it ironic that a $3million house has that much mortgage on it. Bet that person owns a Hummer and a BMW. You might want to wait another 6 months and wait for the next round of foreclosures and short-sales to kick in. You won't see prices drop by 40%, but a 10 - 15% drop is certainly possible in the next 12 - 24 months.

They keep saying it's a buyer's market in Phoenix, but some people have mortgaged themselves so deep, they can't afford to come down on the price and pay off the debt on the house. They'll probably end up walking, or at least doing a short-sale in the coming months.