Phoenix-area foreclosure rate keeps dropping
Good news for the hard-hit Phoenix-area housing market: The rate of foreclosures continues to drop. A new report from the W. P. Carey School of Business at Arizona State University shows the rate has now fallen four months in a row.
Foreclosures represented 31 percent of the existing-home transactions in the market in June. That’s way down from 43 percent in January and February, 38 percent in March, 36 percent in April, and 35 percent in May. However, the report’s author says it’s still unclear whether the downward trend will last.
“Things are showing a lot of improvement, but we still have a long way to go, and some conditions affecting the housing market remain uncertain,” says W. P. Carey School of Business professor emeritus Jay Butler. “Even though the number of foreclosure prefilings has been declining for the last year, foreclosures continue to be the dominant force in the market. Recovery is moving at a glacial pace.”
The Phoenix-area housing market had almost 3,300 single-family home foreclosures in June. That’s down from about 3,500 in May and from more than 3,800 last June.
The median price for a single-family home resold in the Phoenix-area market in June (not new foreclosures) was $126,500. That’s up from $125,000 in May, but still significantly down from $143,000 last June.
“Although mortgage interest rates and prices are attractively low, tighter underwriting standards, a struggling economy and job market continue to be obstacles for the return of homeowner/occupants as the primary force in the market,” explains Butler. “Investors like the low prices now because they know they can sell in several years for a profit, but most people buy a home because they have confidence in their future, in their jobs, in their families. Until the economy really starts to recover, that confidence is lacking.”
Butler also predicts another possible wave of resales in the future that could bring prices down again.
“If the market really starts to improve, many people who bought very cheap foreclosures may try to ‘flip’ their homes to lock in a profit, causing a surge in supply,” says Butler.
Overall, activity in the market is brisk, since we’re in the summer resale home season prior to the start of school and the holidays. About 10,500 single-family homes changed hands in June, similar to the 10,720 transactions last June.
In the townhouse/condominium market, more than 400 foreclosures happened in June. That’s way down from 585 foreclosures last June. The median resale price for a townhome/condo in June was $75,950, significantly down from $94,600 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 newsletter, at http://knowledge.wpcarey.asu.edu.