Greater-Phoenix Housing Bottom: 3rd Time a Charm?
Is it possible that banks are finally running out of homeowners to foreclose on in the greater-Phoenix market? The numbers suggest this may be the case.
Take a look at this graph from Michael Orr’s Cromford Report. Note the three bottoms in April 2010 ($89.37), September 2010 ($82.37) and again in August 2011 ($79.14). Since last fall we’ve seen a steady increase here of almost 12%.
This next chart shows that new notices of trustee’s sales, while up slightly the past two months, are down significantly from this time last year.
Now take a look at this last graph. It shows how many homes were foreclosed on since the crash began in the 2nd quarter of 2007 through last month.
Almost 200,000 properties have gone through the foreclosure process since Q2 2007. According to the Arizona Regional Multiple Listing Service, approximately 232,000 homes sold during the bubble-era (2005-2007). Thus, it’s logical to conclude that nearly all of those unfortunate souls that bought a house during the boom have already been foreclosed on.
Of course, there’s no way to know how many homeowners that bought pre-boom and refinanced during the bubble are included in the total foreclosure numbers. And CoreLogic estimates at least 40% of Arizona homeowners are still underwater. Who knows if these borrowers will elect to pay or walk away?
It’s difficult to know how many more foreclosures are on the horizon. However, the data suggests the worst is behind us.
I don’t believe another “wave” in Phoenix is eminent, unless of course California drops into the ocean. And if that happens we’ll all be underwater. Literally.
Great post, and I agree with you when you say the worst is behind us. It would be great to see how many homeowners refinanced during the boom. I see your theory behind the amount of properties purchased then compared to the amount of foreclosures since then, but those that refinanced should be grouped with those that bought during the boom in my opinion.
What are your thoughts on the effect the “robo signing” scandal will have on 2012’s foreclosures? Media leads one to believe that the delayed progress in 2011 is expected to catch up this year. Is it possible that the recent spike in “trustee notifications” is the start of that trend, or more than likely just a quick spike?
I think I’m going to have to get access to the Cromford report, it seems very informative.
I have no idea how the “robo signing” scandal will affect other real estate markets. Because Arizona is a trust deed state the foreclosure process is governed by statute. There is no need for wet bank signatures to initiate the foreclosure. I believe that’s part of the reason why the recovery here is happening more quickly than in other states.