The final chapter of the Phoenix foreclosure saga is ending, according to a new report from the W.P. Carey School of Business at Arizona State University.
The report found that from the time homeowners receive notice from their lenders they may foreclose in 90 days bringing the foreclosure starts down 66.6 percent below May 2012 levels. Given population growth that means the Valley finally hit its normal historical level of foreclosures in May.
Foreclosure starts are down far below peak levels reached in March of 2009. Without those inexpensive foreclosures coming into the market experts fear the Phoenix market will continue to struggle with a shortage of homes available for sale.
“Without cheap foreclosures coming into the market — and with ordinary homeowners reluctant to sell because they’re either locked in by negative equity or waiting for prices to keep rising — the Phoenix-area housing market continues to struggle with a chronic shortage of homes available for sale that may last for years,” said a statement from ASU. “The number of active single-family listings without an existing contract was just over 11,000 as of June 1. That’s down 0.4 percent since May 1, and 83 percent of the available homes are priced above $150,000, creating a problem for those looking in the lower price range. At least the shortage has improved somewhat from last year, when supply was dropping at a rate of 6 percent per month.”
The chronic shortage applies to homes for purchase and homes for lease, said the report’s author, Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business.
That shortage is pushing up prices for median single-family homes, the report found. Prices rose again to $185,000, up 26 percent from May of last year.
Home prices hit a low in September of 2011, but this year prices have risen dramatically. “Between this January and May alone, the average price per square foot rose about 13 percent for area single-family homes,” Orr said.
New-home builders are not building quickly enough to meet the demand, the report said. Current new-home sales rates are less than a third of what would normally be needed to keep up with population growth. The combined population of Maricopa and Pinal counties grew 2.9 percent from 2010 to 2012, but the number of owned and leased dwelling units only grew 1 percent during that time.
Orr’s full report can be viewed at http://wpcarey.asu.edu/finance/real-estate/upload/Full_Report_201306.pdf.
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