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TEMPE, Ariz. — Things are really slowing down in the Phoenix-area housing market. The Valley of the Sun just experienced its lowest levels of foreclosures and overall resale activity in more than a year. A new report from the W. P. Carey School of Business at Arizona State University reveals the new numbers and questions why this is happening.
“While it is not unexpected for the resale market to slow in the waning months of a year, 2010 is in the midst of an unusual set of influences, including foreclosure moratoriums, legal challenges to the foreclosure process, weak economic and job recovery, and stricter underwriting guidelines for home loans,” says Associate Professor of Real Estate Jay Butler, who authored the new report. “Thus, it is difficult to discern whether the market is responding to its traditional slowing or other influences that could extend uncertainty well into 2011.”
In November, the market had a combined 6,845 foreclosures and resales of existing homes. That’s the lowest level of overall activity since January 2009.
Foreclosures accounted for about 2,100 of those transactions, or 30 percent, the lowest percentage of total activity since April 2009. This is way down from 42 percent in October, 46 percent in September, 45 percent in August and 43 percent in July. The market spent only three months in the 30-something percent range just prior to that.
“In confronting potential uncertainty, the level of activity and prices could even go lower than generally expected as people await the review and resolution of the problems associated with the foreclosure process,” Butler says. “The main question for 2011 is: As the issues with the economy and the foreclosure process are resolved, will the market begin a path to improvement or return to being dominated by foreclosures?”
The November number of about 2,100 foreclosures is significantly down from almost 3,400 foreclosures in October and about 3,000 last November. The combination of foreclosures and sales of previously foreclosed-on properties represented 58 percent of the overall market activity in November, again, the lowest combo level of 2010.
The median price from traditional home resales (not including new foreclosures) in November was $134,000. That’s the lowest median price since April 2009.
The townhouse/condominium market had 300 foreclosures in November. That’s a big dip from almost 500 in October and more than 400 last November. The median price for a condo/townhome in November was all the way down to $75,000 from last November’s $105,000.
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.
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 99 countries and include 60 National Merit Scholars. For more information, please visit wpcarey.asu.edu and http://knowledge.wpcarey.asu.edu.