Phoenix-area foreclosure rate falls below 30 percent

Professor Emeritus Jay Butler
August 11, 2011

For the first time since the spring of 2009, the Phoenix-area foreclosure rate has dropped below 30 percent of the existing-home transactions in the market. A new report from the W. P. Carey School of Business at Arizona State University confirms five months in a row of foreclosure-rate declines.

The Phoenix area has been hit especially hard by the impact of foreclosures. In January and February, foreclosures represented 43 percent of the existing-home transactions in the market. Then, the rate fell to 38 percent in March, 36 percent in April, 35 percent in May, 31 percent in June, and finally, to 29 percent in July. Still, the report’s author says not to celebrate yet.

“While the local housing market is beginning to produce some positive movement, the main concern is the economic environment that surrounds the market,” said Jay Butler, professor emeritus at the W. P. Carey School of Business. “Currently, there are mounting concerns about the anemic job and economic growth that are limiting consumer confidence.”

The market had a little more than 2,500 single-family home foreclosures in July. That’s an improvement from almost 3,300 foreclosures in June and more than 3,800 foreclosures last July.

The median price for a single-family home resold in the market in July (not new foreclosures) was $124,900. That’s down from $126,500 in June and $137,500 last July.

Butler said, “Until there is a more favorable economic and financing environment, investors will continue to be the leading buyers of local housing, instead of more permanent and stable homeowner/occupants.”

In the townhouse/condominium market, fewer than 350 foreclosures happened in July. That’s down from more than 400 in June and almost 600 last July. The median price of a townhome/condo resold (not new foreclosures) in July was $76,900. That’s slightly up from $75,950 in June, but still significantly below $84,500 last July.

Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Press-Release-July2011-resale-homes.pdf. More analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and newsletter, at http://knowledge.wpcarey.asu.edu.