Number of foreclosures in Valley rose in January

Foreclosures continue to be the most important indicator for tracking metro Phoenix's housing market.

Foreclosures signal how many borrowers are losing homes to lenders or giving up and walking away because they owe so much more than their house is worth. Also, the ups and downs in foreclosure filings signal lenders' decisions that will affect the number of inexpensive homes for sale in the future and ultimately where home prices are heading in the region.

Phoenix-area foreclosures climbed again in January, which wasn't unexpected due to Bank of America's lender moratorium expiring in December. So far, the number of foreclosure homes, or REOs, listed for resale by lenders hasn't climbed. Lender-owned homes currently account for 18.8 percent of all Valley homes listed for sale, according to the Cromford Report. That's down from 20 percent a month ago. The number of all homes listed for sale in metro Phoenix also has dropped to 42,000 this week, compared with 43,134 on Jan. 14. The number of pending sales for REOs has fallen about the same rate in the past month.


Partially due to the drop in the supply of less-expensive foreclosure homes, metro Phoenix's median home price is hovering around $109,500, up $1,000 from a month ago.

The Arizona Regional Multiple Listing Service's pending-sales index shows the region's median price could drop to $100,000 in a few months. However, the Realtor group also readily acknowledges its index is less accurate for months farther out.

Pre-foreclosures are the best leading indicator for tracking metro Phoenix's housing market. Known as notice of trustee sales, pre-foreclosures include all new filings by lenders against borrowers who have missed at least three mortgage payments.

In January, pre-foreclosures climbed by 1,000 to almost 6,500, the highest level since October, according to the Information Market.

The increase is likely a signal of more foreclosures to come in the next few months.

If lenders continue to foreclose and list REOs for bargain prices to resell them quickly, there's a great chance Phoenix's median home-sales price will fall to $100,000 in the next few months.

Unfortunately, the federal government's loan-modification plan isn't helping nearly as many homeowners as expected. Lenders' decisions also play an important role in those foreclosure-prevention efforts.

HAMP update

The federal Housing Affordable Modification Program is nearly 2 years old, and so far it has helped fewer than 27,000 metro Phoenix homeowners lower their mortgage payments to avoid foreclosure.

At the end of 2010, about 5,000 homeowners were in trial modifications. The federal government defends the program but is frustrated with lenders. The $75 billion HAMP program was supposed to help 3 million to 4 million eligible homeowners facing foreclosure.

It hasn't failed to meet expectations only in metro Phoenix. The number of U.S. homeowners who have avoided losing their homes through HAMP is less than 1 million.

Can something be done to overhaul the program and spend the money to help homeowners and struggling housing markets?

by Catherine Reagor The Arizona Republic Feb. 16, 2011 12:00 AM





Number of foreclosures in Valley rose in January