Bank Foreclosures Information

Although the supply of bank foreclosed homes for sale in Scottsdale, Arizona is still very high, local real property agents are optimistic that housing prices will soon flatten out. They revealed that the housing sector remains a buyer's market, but the shrinking inventory of houses and the diminishing number of foreclosures are giving them some hope that prices will soon reach bottom.

With the number of Scottsdale foreclosures for sale reaching record highs in the past three years or so, local analysts stated that they expected residential prices to tumble. However, the pace of decline is showing signs of slowing, with last year's median price pegged at $375,000 in the metro area. This figure represents a dip of 6% when compared with 2009 levels.

The decline however, followed two consecutive periods of double-digit drops in housing prices, with local areas in the metro with the highest number of Arizona foreclosures posting the biggest drops. Latest figures for the region showed that prices in the area of Pinnacle Peak have declined by only 2% in recent months, while Rio Verde's median selling rate inched up by 1%. Such local trends make a lot of analysts more optimistic when it comes to the direction that Scottsdale's housing market is taking.

According to housing experts, the huge amount of bank foreclosed homes for sale absorbed by the market is the main reason for the continuous slump in residential prices. However, the decrease in foreclosure numbers in certain local markets recently is expected to be reflected in home prices in the coming months. As an example, analysts cited a neighborhood in DC Ranch wherein 23 foreclosures were posted last year, with latest figures showing that the total has declined to one.

The bargain prices and low interest rates are benefitting a lot of buyers, though. Analysts reported that investors, particularly those who have huge amounts of cash, have been picking foreclosed houses and bank owned land off the market at heavily-discounted prices. Tough competition from cheap real estate has also encouraged a lot of sellers to improve the looks of their properties which helps get them sold that much quicker.

Meanwhile, luxury bank foreclosed homes for sale remain low in Scottsdale as most lenders are reluctant to seize or foreclose on high-end dwellings. According to analysts, lenders are aware that more expensive houses will not stand much chance of getting sold at the current condition of the industry where cheaper homes are available by the thousands.

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Several real estate experts and analysts have looked into Phoenix housing market, 5 years after the area started experiencing the fallout from the mortgage crisis which lead to the ballooning of bank owned property listings. According to these experts, it is about time to acknowledge that the future holds a new reality and it should be accepted as early now that the term “recovery” will never be appropriate.

There are actually three notable characteristics of the present day market which could explain why these experts are painting such a grim picture of the future.

For starters, there are more individuals and families renting than owning homes. This could be explained by the surge in the volume of Phoenix bank owned homes over the past couple of years. Distressed homeowners losing their homes to foreclosure usually end up renting a home, especially after their credit score took a beating.

Another factor would be the hundreds of underwater homeowners, meaning they owe more in mortgage than the current market value of their home. If these homeowners eventually decided to walk away or stop paying their mortgage, the home will more likely end one of the Phoenix bank owned homes.

Lastly, residential developments which lost money due to the risks they took in building so many homes during the housing boom will no longer be able to recover. Again, this will lead to the growing number of bank owned property listings.

With regard to home prices and home sales activity, the first sign of a problem was observed during the mid-2006 when the collapse of the Arizona market started gaining momentum. Foreclosed properties in bank owned property listings suddenly became the norm rather than the exception. In no time at all, Arizona bank owned properties for sale became the trend in the market.

To make matters worse, there were also plenty of commercial foreclosure homes for sale, mainly due to the fact that even business owners took out adjustable-rate mortgages and where unable to pay the mortgage dues when the loan reset. Many of the homes listed in bank owned property listings actually have a similar story.

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Anticipating further increase in the number of repossession houses, a local government in Arizona approved a request to adjust property values on almost 95,000 taxable lands in the area.

The Washington County Equalization Board approved a proposal by Washington County Assessor Lee Ann Kizzat to make some adjustment on property values of 95,000 taxable lands to alleviate the foreclosure crisis.

Kizzard said that she expects the initiative to trim the number of repossession houses to really take hold this year compared with the previous year. Arkansas CAMA Technology project manager Don Horton, who is involved with appraisals in the Washington County’s Assessor’s Office, said that based on his observation of county parcels, many homeowners really need the adjustment of property values.

He said that there were as many as 400 foreclosures in the parcels that he inspected since the first month of 2008. According to industry experts, the housing boom in 2007 turned into a repossession houses crisis the following year. This resulted to various property value adjustments when the county’s assessor was given permission to change the values of properties in the area.

Horton said that the board may have adjusted 7,000 or 8,000 the previous year, and he expects to see more adjustments this year.

Meanwhile, some members of the Equalization Board, including Chairman Wes Cannon, Joe Bailey, Carl Johnson, Luther Freeman and Mildred Runkle expressed their concerns over the property reappraisal in Benton County.

The board asked Kizzar for explanation about the difference in the number of parcels between Washington County and Benton County which has 150,000. Kizzar said that the two counties should not be compared, adding that every county has its own reappraisal cycle. She said that Washington County’s 2007 reappraisal was based on sales the previous year while Benton reappraised last year based on sales of 2007.

She pointed out that it was in 2007 that the foreclosure problem started and Washington County was stuck with property values appraised during the peak of the housing market while Benton is preparing to reappraise based on lowered property values.

Meanwhile, property values are expected to drop in the duplex sector where a great number of properties are reported but sales are scarce because of the abundant supply of low-priced repossession houses.

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The rise in number of foreclosure sale notices filed in Arizona in May will again add large numbers of repossessed houses to housing inventories in the state.

The expected readjustment of adjustable-rate mortgage loans to their higher rates in the coming months and in the following years will also increase already large numbers of repossessed houses, according to an analysis of foreclosure and real estate records in Arizona.

In May, the number of foreclosure sale notices filed in the state reached 12,404, representing an increase of 26 percent from filings in May 2008 and an increase of 291 percent from filings in May 2007. Notices of foreclosure sale are documents issued by lenders to formally notify borrowers that the houses named in their mortgages are already scheduled to be sold in public auctions.

In the first months of the foreclosure crisis, homeowners who took out subprime loans comprised the majority of borrowers whose home became repossessed houses. In 2007 and in 2008, these types of borrowers were mostly in areas like Maricopa County.

In the first months of 2009, counties which previously had negligible foreclosure rates have been showing increasing rates of foreclosure filings. In Coconino County, the number of foreclosure notices increased in May by 175 percent compared to May 2008 and increased by 395 percent compared to May 2007.

When compared to its neighboring state of Nevada, Arizona is slightly better in terms of foreclosures, but the rising foreclosure pace in counties such as Pima, Yavapai, Navajo and Mohave has been making state and local officials concerned.

While the rise in number of repossessed houses in Arizona is beneficial to some sectors such as renters, investors and homebuyers, the rise in foreclosures has put many families in difficult situations.

One residential real estate business in Arizona said it has more than 95,000 units of homes for sale, with about half as tax sales and the other half consisting of repossessed houses and short-sale properties.

An example of a house for sale that illustrates how steeply home prices have gone down in Arizona is a Navajo house originally priced at $165,000 which is now listed at $129,000. Another is a Scottsdale condo originally priced at $210,000 which is now also listed at $129,000.

With the expected increase in number of repossessed houses, home prices will fall further, providing more opportunities for investors and new homebuyers. Housing analyst hope though that more homeowners are able to get help from the federal foreclosure prevention program.

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