Phoenix Arizona Waterfront Homes

Headlines quick to report foreclosure activity rises in 21 states

News of this activity seemed to cast doubt on a housing recovery, and gives hope to buyers  who have been watching the market for great deals that have seemed to evaporate in the last 12 months. One article even said it was the 2012 tidal wave of foreclosures.  The trap that many fall into is not understanding the underlying cause as why this is happening in these specific states.   Some states have been impacted harder than others; Florida, California, Arizona, Georgia, and Nevada, to name a few.  However, the increase in foreclosure activity in this case can be better traced to the foreclosure process employed by a state.  The above graph shows the pending foreclosures for Maricopa county.  No tsunami or tidal wave on the horizon for Arizona.  Read on to find out why.

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Is the real estate market changing?

For 6 years the Phoenix market has been a declining market with some property values declining by more than 50 – 60% from their peak.  At last, many of the fundamentals strongly indicate that home prices bottomed out in 2011, and 2012 will reward homeowners with long awaited appreciation, a word that hasn’t been spoken since 2005. The graph to the right shows sales price/square foot for homes sold in Gilbert.  Instead of the typical year end slump, 2011 finished with a positive upward trend that has continued in 2012.  In fact, the average price per square foot for Gilbert homes for 2012 is higher than in 2011.  The following fundamentals show that 2012 will be a transition year with significant changes compared to previous years.

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Just because they print it does it make it true?

Congratulations Miami, the 2011 NBA champions! – NOT.  Here it is in print from a Florida newspaper.  I guess they never got the memo or checked the score board.  Just because it gets printed or makes its way onto the internet, does that make it true?  That’s the same way I feel about Phoenix area shadow inventory.  Some of the confusion lies in the definition of shadow inventory.  Obviously,  shadow inventory includes properties that have gone back to the lender but are not on the market.  Some also consider homes that have received a Notice of Trustee Sale with a scheduled auction date.  Some add to those numbers loans that are seriously delinquent which is 90+ days behind.  As you can see, the definition will affect the level of shadow inventory cited by the various experts. There’s also the issue that real estate is local and national commentaries cannot be relevant to individual markets?  Many have stated that shadow inventory is out of control and will contribute to a foreclosure Tsunami.  Now let’s get the facts for the Phoenix area.

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Short sales are a major part of the Phoenix real estate landscape

Short sales continue to be a significant portion of real estate sales in the Phoenix Az valley.  And they affect each city to varying degrees.  For example, short sales in Sun Lakes were  12% of the total sales in June 2011, while in El Mirage they accounted for 41% of the sales.  Other cities were somewhere  in the middle; Gilbert – 35%, Chandler – 35%, and Scottsdale – 23%.  During the month of June 2011, there were 91 waterfront properties that were sold as a short sale transaction.  Short sales provide a method for homeowners experiencing a financial  hardship to sell their home. And lenders see short sales as a way to prevent costly foreclosures. Freddie Mac CEO, Ed Haladman, summed it best when he said, “Freddie Mac is doing everything it can to prevent more foreclosures, and short sales are becoming an ever-popular tool in situations where foreclosure is imminent and modifications have failed.”   Properly  negotiated short sales also offer homeowners a way to sell their homes without a deficiency judgement and in many cases the opportunity to purchase a home within 2 – 3 years. The above chart provided by The Cromford Report shows the percentage of 2011 June sales with the blue bars.

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Will Your Short Sale Last?

Contract acceptance is the honeymoon… everyone anticipates a happy ending, then real life sets in. As in real life not all marriages survive, neither do all accepted short sale offers!   Its like dating a beauty queen or the all-star quarterback. It’s love at first sight and WOW that list price is amazing.  It may be the nicest Scottsdale, Chandler or Gilbert waterfront property you’ve seen.  But with time you find out that this short sale process uncovers some severe flaws that were unforeseen.  Here’s real life situations where “flaws” have surfaced and that promising short sale deal falls apart before happily ever after comes!

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Bank Owned Foreclosure – A Play on Words?  

It is very common to associate a foreclosure with a bank, and this idea is reinforced when we see advertisements for “bank owned” properties.  Mistakenly, we also believe banks are taking the biggest financial hit when a house is sold as a foreclosure.  However, the fact is that in many cases a foreclosure is not owned by a bank.  If not the bank, then who owns these distressed properties and takes the financial  loss? Read the rest of this entry

2010 Phoenix Water Ski Community Sales

In any given month, distressed sales (foreclosures,short sales, or trustee sales) account for over 50%  of the total sales in most all of the Phoenix valley cities.   Ski lake properties have been somewhat insulated from this type of transaction,  but during 2010 distressed sales have increased in these unique waterfront communities.  Three of the Phoenix ski communities had no recorded sales of any kind in 2010.  All sales during the year ocurred in Gilbert ski lake communities; Crystal Point, Santan Lakeside and Playa del Rey Estates.  33% of those were distressed sales.

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Questions Remain As Short Sales Become a Bigger Share of Home Sales in Phoenix

Short sales, once almost unknown, have become a significant part of the real estate jargon in Phoenix Az.  Short sales remain one of the most misunderstood real estate transactions inspite of their increasing numbers.  There are many aspects and implications a seller must understand reinforcing the need to seek competent legal and tax advice.  First of all, let’s define an Arizona short sale.  A short sale is when the lender/investor is willing to authorize the sale when the proceeds do not cover the outstanding loan amount. What are the issues to be considered by Phoenix valley homeowners regarding a short sale?

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Phoenix area cities have different recovery patterns

The graph to the left shows the the monthly price per square foot of sales for the last 10 years for Gilbert and Chandler.  A good opportunity to see where we are compared to pre-bubble sales activity.   The twin cities of Gibert and Chandler have similar trends for the last 10 years.   Current price per square foot is similar to 1993 levels.  Do other Phoenix area cities have similar patterns?

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Phoenix Arizona Short Sales and “upside down” homes.

Short sales in Phoenix, Gilbert, Chandler,Queen Creek,  Scottsdale and all across the valley are taking center stage as they have become the topic of any Az real estate discussion. Many a buyer or seller that has been through a short sale transaction will undoubtedly compare it to high drama movie because of the highs and lows, a soap opera because it never ends  or a nightmare due to  all of the above.  These discussions will continue with home prices at current levels.  According to an article in the Phoenix Business Journal, First American CoreLogic Inc., estimates that 51% of the mortgaged properties in Arizona are “upside down”, also described as having negative equity, because the balance on the mortgage is more than the market value of the home.  This is confirmed by the fact that in most Phoenix area towns and communities, distressed sales account for 50 – 75% of the monthly home sales.  Therefore, many homeowners will need to become well informed of the various aspects of a short sale  when a situation arises and they need to sell.  The following are important points  that must be considered:

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