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TEMPE, Ariz. — For the second month in a row, the hard-hit Phoenix-area housing market saw a drop in the foreclosure rate. A new report from the W. P. Carey School of Business at Arizona State University shows what might be the beginning of a welcome trend.
In January and February, 43 percent of the existing-home transactions in the market were foreclosures, but that declined to just under 38 percent in March and now to 36 percent for April. The numbers appear to be moving in the right direction for those hoping to see some stability in the market. However, the author of the new report says not to celebrate yet.
“The actual number of monthly foreclosures in the Phoenix area is still very high,” explains Associate Professor of Real Estate Jay Butler. “It’s like flying through a hurricane, and we may just be in the eye right now. There’s probably more of the storm to go through, and we could see another wave of foreclosures.”
In April, the Phoenix area had about 3,750 foreclosures in the existing-home market. That’s down from about 4,150 in March, but still up from about 3,500 last April. Butler doesn’t expect to see clarity in the market’s direction until October or November for several reasons.
“Some homeowners have a lot of frustration built up, having used many of their resources like 401(k)s and other savings accounts to keep their homes; it’s unclear how much longer they can hold on,” says Butler. “Also, there are ongoing discussions about even stricter mortgage guidelines, inflationary concerns, changes in the secondary market and possible lowering of the Federal Housing Administration mortgage limit, which could strongly influence the market. It will take time for all of this to play out.”
The median price for existing-home resales in the Phoenix area (not new foreclosures) in April was $125,000, the same as in March. However, that’s still way down from $144,000 in April of last year, but Butler says prices may finally start to go up some.
“Those looking for the cheapest homes in the Valley have already snapped up many of the deals,” he says. “We’re now seeing low-end buyers have to look into different, slightly more expensive neighborhoods to find opportunities.”
We’re now in the resale home season that traditionally lasts until August, so the market is seeing a lot of activity. About 10,300 existing homes changed hands in April.
In the townhouse/condominium market, 550 foreclosures happened in April, slightly down from 580 in March, but still up from 515 last April. The median price in the traditional townhome/condo market in April was $83,325, slightly up from $80,000 in March. This is still a big drop from last April’s $95,000 median price.
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.
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.