Phoenix foreclosures snapshot to begin November 2009

Phoenix Foreclosures Snapshot - November 2009

Phoenix foreclosures comprise 30.8% of all real estate listings in the metropolitan area. Foreclosure listings are comprised of REO property (bank owned) and short sales. REO property used to be the majority of active listings in the foreclosure arena. However, bank owned properties have been on a decline for most of 2009. They are being replaced by short sales because more distressed homeowners are seeing short sales as a better alternative to foreclosure.

The chart indicates 12,539 foreclosure listings in the Phoenix real estate market to begin November 2009. Since there are 32,351 total listings in the Phoenix market (seen in my last post), foreclosure listings make up almost 39% of all listings in the area. Of that 39%, 35.2% (4,417) are REO listings and 64.8% (8,122) are short sales. There are several reasons for the decline in REO property listings over the last year:

• the federally mandated foreclosure moratorium
• banks for selling more properties in bulk to large-scale investors
  
• banks are taking chunks of foreclosure properties and turning them into rentals
• more properties are being sold at public-type auctions

Homeowners are increasingly seeing short sales as a viable alternative to foreclosure. Although the short sale process can take between three and five months to complete, buyers in the Phoenix area real estate market are paying much more attention to short sales. The percentage of completed short sale transactions continues to grow each month in the Phoenix area.

Days on Market for Phoenix Foreclosures

Foreclosure listings have been on the market for an average of 80 days less than their counterparts -- "normal" listings -- during 2009. The second chart indicates that current foreclosure-type listings have been on the market for 105 days, while normal listings have been on the market for 182 days. The obvious reason is the difference in price between two categories of listings. REO property and short sales are always priced much lower than normal sales making them much more attractive to home buyers.

It can also be seen by the chart that overall days on the market has been steadily trending downwards for Phoenix area foreclosures. However, if we were to isolate REO properties we would find that the average sold home would be on the market for less than 60 days. The longer selling cycle for short sales is what keeps the foreclosure "days on the market" higher.

Short sale your home

September 2009 Phoenix home sales keep pace with August 2009 - foreclosures still dominate

September 2009 Phoenix home sales keep pace with August 2009 - foreclosures still dominate

Of the almost 31,000 Phoenix homes for sale, 7,942 homes were sold in the metropolitan Phoenix area in September 2009. That's 97 homes less than the total sold in August. A majority were Phoenix foreclosure type properties. 2009 has been a very good year for homes sales in the Valley of the Sun. At current sales levels, I expect to see approximately 90,000 homes sold in the Phoenix area for 2009, making it the third best sales year for housing in the last decade. As of this writing, 72,451 homes have been sold in and around Phoenix. The only two years with more home sales were the “boom” years of 2004 in 2005 -- with 98,100 and 104,000 sales respectively. The next closest year was 2003 with 79,500 sales.

It seems clear that the Phoenix foreclosure market, the $8,000 tax credit, low interest rates, and the overall affordability of Phoenix area homes has done much to stimulate sales. This post is not about whether or not the $8,000 tax credit is spoiling the Americans into a feeling of entitlement. It is simply reporting on the sales trends in the Phoenix area and confirming that local residents have cast a vote of confidence in returning to the home market. Having said that, it must also be noted that some figures indicate that approximately 30% of all Phoenix home sales in 2009 were from investors.

Foreclosures continue to dominate Phoenix area sales

67% of all home sales in the Phoenix area during September 2009 were foreclosures, foreclosures being either REO property (bank owned homes) or real estate short sales. This has been a trend in the Phoenix area for the last year.

October 2008 was recorded as the first month that foreclosure sales exceeded 50% of total sales. Foreclosure sales increased from 51.4% in October to a high of 75.9% in March 2009. The decrease in REO property (bank owned homes) has been a significant factor in the gradual reduction of foreclosure sales beginning in April 2009. My post in the next few days will show that Phoenix foreclosures are increasingly being affected by real estate short sales, a trend barely noticeable 12-18 months ago. Short sales deserve a look if you are considering making a purchase from the inventory of Phoenix homes for sale.

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Ron Wilczek, Broker/Owner
Metro Phoenix Homes
480-445-9480

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"Active" homes for sale in Metro Phoenix remain consistent - October 2009

The total number of "active" homes for sale in Metro Phoenix remained consistent at just over 31,000 homes for the fourth month in a row. As the chart indicates, that's 20,000 homes less then we experienced during 2008 and all the way up March 2009.


The number of active foreclosure listings has also been steady at just under 12,000 homes over the last four months -- after reaching a high of over 22,000 homes for sale in the Phoenix area in February 2009.

Metro Phoenix foreclosures have accounted for the majority of home sales over the last 12 months, reaching as high as 75.9% of all Metro Phoenix homes for sale in March 2009. Those figures will be updated in the next few days on this blog. The foreclosure market has severely impacted the Phoenix area and the prices of all homes for sale.

Could buying Metro Phoenix foreclosures get easier? 15 day "First Look" program

Could buying Metro Phoenix foreclosures get easier? 15 day "First Look" program

My trusted Phoenix area loan officer, Craig Bohall, Academy Mortgage, craig@myazmp.com alerted me to this. Simple answer: HECK YES -- if we could cut out the government's addictive overdosing of regulations that have been piled on like a 7 layer bean dip. But, since that is not going to happen any time soon we can take joy in small victories like this 15 day "First Look" program.

The government-run Fannie Mae has come out recently with a plan to keep investors away from their foreclosures for 15 days and allow the average Joe/Jane a first look and opportunity to get in their offers before investors. A reporter from the AZ Republic (serving the Phoenix area) had this to say regarding this announcement...

"Arizona home buyers trying to tap federal funds to help them purchase foreclosure homes might find it a little easier now. Mortgage giant Fannie Mae recently launched a program called “First Look” that bars investors for bidding on its foreclosures for the first 15 days they go on the market. In metropolitan Phoenix, first-time buyers typically lose out to investors on the best foreclosure homes. "

To read Catherine Reagor's full story click here http://www.azcentral.com/members/Blog/CatherineReagor/63525.

Is this good or bad? Well depends whether you are Joe Average or Jane investor buying Phoenix foreclosures doesn't it? On the one hand poor Joe Average was previously getting beat out on the 60K home in Phoenix when he offered 62K. That's because a cash investor was there who could close in 48 hours while the Joe Average will need 30 days to close through his lender. On the other hand, without Jane investor helping to stop prices from falling and even create some bidding wars for Phoenix foreclosures we could be left to the pricing "mud-slide" we saw for months on end!

On the one hand, Jane investor can buy 20 Phoenix foreclosures and Joe Average can only buy one foreclosure, so who is helping the economy and helping to reduce inventory more? But we Americans sooooo love to find something that seems unfair and get the government to regulate it.

But on the other hand, if the government is going to give federal funds ONLY to Joe Averages (no investors) they should have some say in letting Joe Average "to the dance" 15 days before investors swarm in on Phoenix foreclosures and give Joe Average a first look.

Yet, on the other hand, if they let free market principles work the highest bidder gets the foreclosures. Maybe the investor wants a great deal and bids 60K while Joe Average out bids him with 65K or 69K. Would that make our housing market rebound and get normal sellers back in the market sooner? Will that allow the market to run on it's own again instead of this "propping up" that we have now.

However, on the other hand... I am out of hands. What do you think about the 15 day "First Look" program and it's effect on Phoenix foreclosures?

Understanding the short sale process

Read on Phoenix Homes for Sale

Metro Phoenix foreclosures selling 5% above asking price—August 2009

Metro Phoenix foreclosures sold 5% above asking price in August 2009. 

• 5,537 Metro Phoenix foreclosures sold in August 2009
• The asking price of those Phoenix foreclosures was an average of $139,547
• The average selling price was $146,402 – a 5% increase

The reason: the supply of Phoenix foreclosures dwindled by 50% over the last six months.  There were almost 22,000 Metro Phoenix foreclosures on the market to begin 2009.  There are currently fewer than 12,000 Phoenix foreclosures on the market.  However, the demand for Phoenix foreclosures during the same period (expressed as sales) has remained relatively constant at an average of 6,000 sales per month. Phoenix foreclosures are defined as bank owned properties  and short sales.
Metro Phoenix foreclosures have accounted for an average of 70% of total sales since the beginning of 2009. Those sales had been driving down the price of homes until April-May of 2009. The decreased supply of Phoenix foreclosures caused multiple offers and even more bidding for Metro Phoenix foreclosures.  Banks learned that they no longer had to lower asking prices because of demand.  This has led to Metro Phoenix foreclosures selling 5% above asking price in August 2009.
If you are considering Metro Phoenix foreclosures did you miss the “bottom” of the market? That’s the million-dollar question. At first glance you might say yes because prices for Phoenix foreclosures have increased over the last four months. However, many industry sources believe there will be many more Metro Phoenix foreclosures on the market to finish out 2009.
The big question is: how will the banks handle the accumulated inventory of Phoenix foreclosures?  My sources claim many banks are holding inventory and releasing them at a slower pace to keep up demand for Phoenix foreclosures.  Additionally, I know a property management company that just received a contract to rent 200 Metro Phoenix foreclosures. This particular bank has decided to turn the huge losses incurred by selling Phoenix foreclosures into cash flow. Their hope is to wait until the market rebounds.
Prices at 10 year lows make this a great time to consider Metro Phoenix foreclosures.
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Ron Wilczek
480-445-9480