Archive for the 'Arizona' Category

Finding foreclosure properties in Arizona is never too hard as the state has one of the highest foreclosure rates in the country. Many first-time buyers flocked to the state but they seek properties in the low-end price spectrum.

The trend leaves many sellers of luxury homes struggling to compete with cheap foreclosure houses. Some were even forced to reduce the prices of their properties in order to entice investors and first-time buyers.

Residents who are responsible borrowers were spared from foreclosures brought by the collapse of subprime lending. Or so they thought. When the number of bank-owned properties hit almost 4,000 last March, many borrowers ended up owning houses that are worth less than their mortgage.

Suddenly, finding foreclosure properties that sell at below market rate is just a walk in the park. Houses that were once sold at around $300,000 can now be had for $120,000. Similarly, houses originally valued at $200,000 are on the market for only $60,000.

Because of the below market rate, home sales in the state rose up. Many renters could not resist the unheard-of price discounts that they jumped on the bandwagon too. For the first eight months of this year, about 52,600 home sales were posted in Maricopa County, representing an increase from 35,400 for the same period a year ago.

Buying bargain-priced bank-owned houses are worth the trouble, according to industry experts. But the problem lies in finding financing to make the purchase. Financing is important especially when buying a property with a loan guaranteed by the Federal Housing Administration (FHA).

The FHA requires a down payment of 3.5 percent, lower than the 10 percent required by private lenders. Jumbo lenders require about 20 percent down payment, which buyers are finding difficult to provide.

A market study attributed the lack of sales in the high-end price spectrum to difficulties in obtaining loans valued more than $400,000. Industry experts are hoping for a federal program that will help stimulate mortgage lending and borrowing at the high-end market.

Experts said that finding foreclosure properties in the low-end price spectrum is fast becoming a thing of the past as banks are foreclosing more and more luxury houses. Furthermore, first-time homebuyers and investors are facing competition from cash-rich buyers who have the edge when it comes to getting the good deals.

Home prices in the Phoenix metro area may have reached bottom, according to real estate analysts in the area. They based their analysis on the three-month stability of home price levels after consecutive declines of 27 months.

According to Karl Guntermann, professor at the Arizona State University, the median home sales price has been steady for three months after more than two years of continuous slide. This trend may already be signaling the start of home price stability.

Nonetheless, Guntermann cautioned that the expected increase in the number of foreclosure homes in Phoenix in the coming months as predicted by auction firms in the Valley could reverse the positive trend.

Two other Phoenix-based analysts, Tom Ruff and Mike Orr of Information Market, declared in April that house prices have bottomed out and also cautioned that new foreclosures could muddle the good trend.

Particularly, Ruff and Orr are concerned about the 5,300 record foreclosures posted in July and the slight decline of home price levels.

Based on the ASU Repeat Sales Index, home price levels have been improving rather than deteriorating. Guntermann said the trend has been positive. He added though that the prices of higher-cost homes could go down further while the prices of lower-end or moderately-priced homes could experience upticks or could hold steady.

Guntermann develops the ASU index by monitoring a number of houses that have been sold for many times in the past years and comparing the repeat sales prices.

In April, Guntermann found that the median repeat price decreased by 35 percent compared to April last year and in May, the decreased rate fell to 33 percent. Every month since then, the decrease rate dropped by an additional 2 percentage points.

The median home sales price fluctuated since April, but it hovered close to a certain price level. In April, the median price was $117,500 while the median in July was $119,000, based on initial sales data.

Meanwhile, according to Information Market, the median home sales price reached its highest level in June 2006 when it hit $266,523.

Based on Guntermann’s initial data, the median sales price in June was $120,000 while the July median dropped to $119,000.

On the whole, most Phoenix-based analysts predicted slight declines in the median sales price in the coming months. They contended that the employment situation, levels of new foreclosures and access to credit would be the major factors in the price trend.

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The pace of foreclosed houses for sale slowed in Phoenix in July compared to June sales, pushing down total home sales, based on data from a real estate research company.

In July, sales of new homes and resales of existing homes and condos dropped to 10,288 units in the Maricopa-Pinal metro area, a decrease of 4.1 percent compared to June but marked an increase of 27.7 percent compared to July 2008. Compared to all other July sales, total home sales for July 2008 marked the highest.

Sales of previously owned homes and condos increased for the 13th straight month on a year-over-year comparison, covering the 45.4 percent decline in newly built homes in July. The 1,029 total sales of new homes in July this year marked the lowest July new home sales in more than ten years.

Meanwhile, foreclosure homes and condos comprised 57.8 percent of all home and condo resales in July, a decrease of the 64-percent share in June and the lowest percentage since October 2008, when foreclosure sales accounted for only 54.7 percent of all total home resales. The share of foreclosure resales hit its highest level in March this year, when it reached 66.2 percent of all home and condo resales.

The median sales price in July for all newly-built and existing homes and condos was $132,500, an increase of 1.9 percent from the June median but a drop of more than 32 percent from July 2008. The July month-over-month price increase was the third straight monthly increase. The median price has increased slightly every month since it fell to its lowest level of $125,000 in April.

Phoenix analysts said that the median price increased because of the drop in sales of lower-priced foreclosure properties, the increase in number of move-up buyers and the rise in number of families looking for homes nearer the schools of their children.

The July overall median home sales price of $132,000 marked a 49.8-percent drop from the June 2006 median of $264,100, the highest price reached in Phoenix. The median home price has been dropping year-over-year for 30 straight months.

Home sales in Phoenix have been dependent on first time homebuyers and investors. In July, 47.5 percent of all buyers used home loans guaranteed by FHA. Second-home buyers and investors comprised 42.5 percent of all home purchases.

According to Phoenix-area analysts, foreclosures will still play a significant role in the housing market in the coming months and years. In July, nearly 5,900 homes and condo units have been foreclosed in the Phoenix metro area.

A nonprofit in Phoenix called Neighborhood Housing Services of Phoenix cares so much about the Washington School District that it is working with the city and the school district to help fix and resell repossession properties in the areas covered by zip code 85304 so that the school district would not lose its funding.

Repossession property sales in Phoenix increased in May to 9,980 housing units, according to data from the Arizona State University Realty Studies. The total represented an increase from the April sales of 9,100 housing units. In May last year, a total of 7,210 repossession property and non-foreclosure existing units were sold.

Arizona’s growing forclosure list has added two more victims with a combined total market value of $70.6 million. The two land projects received notices of foreclosure and are expected to be placed on the market for sale anytime soon.