Posted By; Sean Terry | December 6, 2008
Article Written By: Tom Ruff Information Market
November Foreclosures Drop
November notice of trustee sales, new notices entering the foreclosure process, fell 25% from October numbers, actual foreclosures, down 16% over the same time span. New home monthly median sales price rises for the third consecutive month. Interest rates for new mortgages drop, loan applications rise. That’s the good news. Are these honest statements, yes. Are they a true reflection of the overall market, no. I only wanted to make the point that it’s not all bad news out there, there are some positive signs. Let’s see what Michael Orr and The Cromford Report have to say.
Market Summary for Greater Phoenix
Sales volume is up 23% compared with November 2007. Another positive signal is that pending sales remain high, even slightly higher than last month and much higher than in 2007. The market is dominated by foreclosures to an even greater degree than last month. 57% of the homes sold in November were lender owned properties and another 14% were pre-foreclosures or short sales. Only 29% of sales were “normal” transactions.
Among active listings: 56% are normal, 21% are in pre-foreclosure or short sales, and 23% are already owned by a lender. We still have a large number of homes pending foreclosure – about 28,500 in Maricopa County alone, although this number has not changed much in the last 8 weeks as several lenders have canceled trustee sales while they try to re-negotiate with the borrowers.
New foreclosure notices in Maricopa County are still running at about 240 per day using the 90-day average and we have a record number of homes being sold by the trustee & over 95% of these go back to the bank. But the 90-day average daily foreclosure notice rate has stopped increasing, and recent weekly volumes have eased.
Demand right now is about 90% of normal, having dropped 5% in the last month but still a reasonable range. However, supply is at 179% of normal. So it’s still a great market for buying, as long as you have capital, good credit and don’t need to borrow more than 90% of the money. Bank owned properties typically sell for 20% to 30% below the normal market price, and so as long as you don’t mind fixing up the property and the landscape, you can find some real bargains. This is even more true in places where bank-owned properties are not too numerous and normal prices are still relatively high (e.g. Scottsdale, Fountain Hills, Paradise Valley, Cave Creek). We are seeing prices at 40% to 50% below normal in some of these places. The drop in pricing has occurred while rental rates are stable, so it is easy for a landlord to find homes that will “cash flow”.
The market is still healthier than it was this time last year, but has deteriorated since mid-October as the general financial slump has eaten into demand. On the positive side, the foreclosure volumes appear to have reached a “top” and not increased further. This may start to ease the pressure caused by the huge supply of lender owned homes.
Unless otherwise stated, all figures quoted above are for “all areas and types” in the ARMLS database.
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