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Phoenix-area foreclosures hit lowest level since spring 2009


Professor Emeritus Jay Butler
November 14, 2011

The Phoenix-area housing market is starting to see a little relief from the foreclosure crisis. A new report from the W. P. Carey School of Business at Arizona State University shows that, in October, foreclosures made up 26 percent of the existing-home transactions in the market. That’s the lowest level since April 2009. Still, the report’s author wants to be clear, the end is not in sight.

“Though the local housing market is beginning to produce some positive movement, the surrounding economic environment and anemic growth are still inhibiting consumer confidence,” says Jay Butler, professor emeritus in the W. P. Carey School of Business. “Just because we’re seeing a drop in foreclosures, that doesn’t mean we have a healthy housing market. Other types of activity and purchases are not increasing, in order to push us forward.”

The foreclosure rate has dropped all the way down from 43 percent of the area’s single-family existing-home transactions in January and February to 26 percent last month. This is a continued decline from September, when the rate was 29 percent. August was the only month this year when the foreclosure rate went up in the Phoenix area. However, Butler doesn’t expect the downward trend to continue straight through next year.

“The numbers are deceiving because they only look at recorded foreclosures,” Butler says. “Many more foreclosures may be lingering in the pipeline just because more paperwork and rules are being followed in the process now.”

This October did mark the lowest number of foreclosures in quite a while. The market had 1,900 in October, down from almost 2,300 in September. There were almost 3,400 foreclosures last October. The last time the number of foreclosures dipped below 2,000 in a single month was back in February 2008.

Overall activity in the Phoenix-area housing market is also down. The market had just more than 7,200 transactions in October, down from almost 8,000 transactions in September. That’s partly due to the season.

“Historically, it is not unusual for the local resale home market to slow down over the later months of a year,” Butler explains.

The median price for a single-family home resold (not new foreclosures) in the Phoenix market in October was $125,000, the same as in September. That’s significantly down from last October’s median of $135,000.

The townhouse/condominium market had 265 foreclosures in October, down from 325 in September and way down from 485 last October. The median price for a townhome/condo resold (not new foreclosures) in October is actually up a little bit to $79,125 from $76,700 in September. The median last October was $80,000.

Butler’s full report, including statistics, charts and a breakdown by different areas of the Valley, can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Press-Release-October-2011A-resale-homes.doc. More analysis is also available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.