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TEMPE, Ariz. — Homeowners in the hard-hit Phoenix market will be encouraged to hear that foreclosure rates have now dropped for three months in a row. A new report from the W. P. Carey School of Business at Arizona State University reveals the positive development for those hoping for some stability in their neighborhoods.
In May, foreclosures represented about 35 percent of the existing-home transactions in the Phoenix-area housing market. That’s a big improvement from January and February, when the rate was 43 percent. It’s also a continued decline from 38 percent in March and 36 percent in April. Still, the report’s author cautions the downward trend may not continue.
“Although the number of foreclosure pre-filings has been declining for the last several months, this trend is not unusual in the early part of any year, with a typical pickup over the next few months,” explains Associate Professor of Real Estate Jay Butler. “While any decline is positive, fundamental uncertainty remains as to whether foreclosures will cease to be the dominant force in the market.”
Butler points to ongoing discussions about even stricter underwriting guidelines, inflationary concerns, changes in the secondary market and possible lowering of the Federal Housing Administration mortgage limit as factors that could strongly influence the market in the future. He also emphasizes that the job market and economy are still struggling.
More than 3,500 foreclosures happened in the market in May. Despite the recent monthly drops, that’s still up from more than 3,200 last May. When foreclosures are added together with the resales of previously foreclosed properties, they total up to 61 percent of the Valley’s recorded activity in May.
Overall, the number of transactions is relatively high in the market right now, as buyers try to lock in purchases before the start of schools and the holiday season. More than 10,000 existing homes changed hands in May. That’s up from more than 9,600 transactions last May.
The median price for existing homes resold in the market in May (not new foreclosures) was $125,000, the same as in March and April. That’s a big drop from last May’s $144,000 median price.
In the townhouse/condominium market, about 1,600 units changed hands in May, and 460 of those were foreclosures. That’s about even with 470 foreclosures last May. The median resale price for a townhome/condo in the market in May was $80,500, a fall from $83,325 in April and a big decline from $99,775 last May.
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.