Foreclosures in the Phoenix area slightly up again
After two months of positive news, the Phoenix-area housing market is backsliding a bit, with a higher level of foreclosures. The latest Realty Studies report from the W. P. Carey School of Business at Arizona State University shows foreclosures accounted for 36 percent of the existing-home market activity in June. That’s up from 33 percent in May.
“Many homeowners and potential sellers are watching their limited equity erode as prices decline to – and even below – existing debt level,” said associate professor of real estate Jay Butler, who authored the new report. “Low value can be an issue in some of the mortgage modification programs and the stimulus for strategic defaults, people deciding to walk away from their homes.”
In his previous report, Butler cautioned that defaults and late payments were still at record levels and could be a precursor to more foreclosures. In addition to the higher foreclosure rate in June, about 40 percent of the Phoenix-area homes resold during the month were sales of previously foreclosed-on properties.
Butler says housing recoveries usually happen when potential homeowners are motivated by low interest rates and good home prices to buy new homes or “move up” to a better house. However, he doesn’t see that happening now.
“Although current interest rates and home prices are very attractive, the typical owner-occupant seems to lack the motivation to satisfy any pent-up demand,” Butler said. “This lack of motivation can be attributed to several factors, including anemic economic and job recovery, low consumer confidence and stricter underwriting guidelines. Further, many households may be satisfied in their current homes and see no reason to move up.”
The Phoenix area had more than 3,800 foreclosures in June, up from more than 3,200 in May. Still, this is an improvement from last June, which saw more than 4,000 foreclosures.
Almost 6,900 homes were resold in the Phoenix area during June, up from more than 6,400, but not as strong as the summer activity last June, which had more than 7,700 resales. The median single-family home price was $143,000 in June, slightly down from $144,000 in May. Prices are significantly higher than last June, when the median was $134,000.
The townhouse/condominium market had 585 foreclosures in June. The median price of a townhome/condo was $94,600 in June, way down from $107,000 last June.
Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/realestate/Phoenix-Resale-Market-Reports.cfm. More analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu.