October 14, 2010

Phoenix home foreclosures hit highest level of the year

Posted: October 14, 2010
Associate Professor Jay Butler
W. P. Carey School of Business Associate Professor Jay Butler's new report shows foreclosures accounted for 46 percent of the total transactions in the Phoenix-area existing-home market last month.

The Phoenix area just hit an unfortunate record for 2010. According to a new report from ASU's W. P. Carey School of Business, 46 percent of the total transactions in the existing-home market last month were foreclosures. That’s the highest percentage recorded in any month this year. Unfortunately, the report’s author predicts even more trouble from foreclosures.

“The biggest issue is heightening uncertainty in the housing market throughout the country, brought about by the evolving problems within the foreclosure process,” said Jay Butler, associate professor of real estate. “The potential impact could include foreclosure moratoriums, the availability of title insurance, the willingness of people to purchase foreclosed properties, and the public perception and acceptance of the entire home-financing process. In confronting potential uncertainty, the level of activity and prices could even be lower than generally expected as people await the review and resolution of the problems associated with the foreclosure process.”

The actual number of existing-home foreclosures in September was just over 4,100. It’s the highest number recorded since March and up slightly from about 4,000 in August. It’s also way up from fewer than 3,000 foreclosures last September.

Butler said the market experienced a bump up in home resales in September. That’s normal for the end of the annual selling season, when people are wrapping up summer vacations and children start to go back to school. About 4,900 homes were resold in the Phoenix area in September. That’s up from 4,800 resales in August, but it’s still way down from more than 6,100 resales in September of last year.

The median home-resale price for September was $135,000, the same as in August. It’s down from $140,000 last September.

“Another influence on the market is that, for the last year approximately 40 percent of the traditional resales were foreclosed homes sold again with a median price markdown of 14 percent from the foreclosed price,” Butler said.

In the townhouse/condominium segment of the market, more than 550 foreclosures occurred in September. That’s down from 630 in August, but still up from 410 last September. The median resale price of a townhome/condo in the Phoenix area was $75,000 in September, a step down from $80,000 in August, and a huge step down from $100,000 last September.

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 also is available from Knowledge@W. P. Carey, the business school’s online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu.

Debbie Freeman, Debbie.Freeman@asu.edu
(480) 965-9271
Communications Manager, W. P. Carey School of Business