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TEMPE, Ariz. — Two-thirds of the Phoenix-area homes that changed owners last month were either new foreclosures or resales of properties that had recently been foreclosures. The latest Realty Studies report from the W. P. Carey School of Business at Arizona State University explains a recovery can’t really be established until foreclosure-related activity is not the dominant force in the Valley housing market.
“Although the level of activity appears strong, the market is being driven by either homes being foreclosed or being sold back into the market by the lender,” says Associate Professor of Real Estate Jay Butler, author of the new report.
Butler says the current market is similar to the mindset that created a “hyper-market” from 2003 to 2006, when investors were buying up properties, looking for a great deal followed by a big appreciation in values. He maintains a real recovery can’t happen until owner-occupants take control again.
Butler says, “The impact of foreclosures on the market has been the primary concern of the last year and will continue to be in the coming months, especially with the end of many hiatus (loan modification) programs and the weak job market.”
In September, more than 6,100 Valley home resales were recorded, along with more than 2,900 foreclosures. That’s similar to August’s numbers of about 6,000 resales and about 3,100 foreclosures. Activity is significantly up from September of last year, when the market recorded only about 4,600 home resales. Though still a problem, the number of foreclosures has gone down somewhat from last September’s rate of just over 3,650.
Butler says declining prices, especially in the lower end of the market, have piqued investor and homeowner interest. The median single-family home price in September 2009 was $140,000. That’s up from $138,000 in August, but still way below the median price of $180,000 in September of last year.
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.
W. P. CAREY SCHOOL OF BUSINESS
The W. P. Carey School of Business at Arizona State University is one of the top-ranked and largest business schools in the United States. The school is internationally regarded for its research productivity and its distinguished faculty members, including a Nobel Prize winner. Students come from 75 countries and include more than 60 National Merit Scholars. For more information, please visit wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu/.