Valley foreclosure rate under 30%, a 1st since 2009

The metro Phoenix foreclosure rate has not only fallen for the past five months but in July it dipped below 30 percent for the first time since the spring of 2009, Arizona State University reported Thursday.

The steady decline could mean that after a moratorium on foreclosures imposed last fall, lenders have just slowed the process down to make sure everything is being done correctly, said Jay Butler, professor emeritus at ASU's W.P. Carey School of Business. Or it could represent better news.

"And I think to some degree, hopefully, we are running out of people to foreclose on. I mean, we have foreclosed on over 12 percent of the single-family market here in Maricopa County," he added.

There were about 2,500 single-family foreclosures in July, compared with 3,300 in June and more than 3,800 in July 2010. The rate, which shows the percentage of single-family home transactions that include a foreclosure, dipped to 29 percent in July. It peaked at 46 percent last September before the moratorium.

Of course, the housing market is a long ways off from being normal, Butler said. The recent volatility in the stock markets and congressional debate over the country's debt won't help, he added.

"I'm not a big fan of the stock market as an economic indicator. But the volatility, the lack of confidence just permeates down to the individual. I mean (people would ask), 'Why should I make a 30-year commitment to buy a home when I'm not certain what's going to happen tomorrow?' "

Homebuyers, especially those 45 to 65, are worried about retirement and Social Security, he said.

Butler said investors are still snatching up a large portion of all the homes on the market and many are spending money to improve them. Foreclosure-related activity represented 58 percent of transactions in July.

"Lots of investors are buying these and then turning around and selling them to families. We're seeing this in Chandler and Gilbert, more of the family communities," he said.

Unfortunately for homesellers and owners, median prices for single-family homes continued to fall in July, according to ASU's research.

For example, the median price for a traditional sale (not a foreclosure) in metro Phoenix fell to $124,900 in July from $126,500 in June. It was $137,500 in July 2010.

Traditional buyers, those who plan to buy a home to live in it, are not stepping up because of the weak economy, Butler said. Many are just remodeling their homes and staying put.

Regardless of what is causing foreclosures to decline, prices in those transactions have been rising. The median price for foreclosure homes grew to $138,700 in July from $132,195 in June. But it remained well below the July 2010 price of $154,970.

Butler said that indicates investors are having to pay more. And in some areas such as El Mirage, which was once a leader in foreclosures, the number of foreclosures has dropped so much that investors are negotiating up prices and beginning to move to other areas, he said.

The median price for foreclosure sales in El Mirage grew to $81,460 in July compared with $73,000 in June. And the number of foreclosures dropped to 30 from 60.

by Betty Beard The Arizona Republic Aug. 12, 2011 12:00 AM




Valley foreclosure rate under 30%, a 1st since 2009