Phoenix, Arizona was one of the hardest hit cities when the housing market crashed. Every aspect of the housing market took a major hit. Home values have plummeted to national lows. Arizona has had some of the highest foreclosure rates since 2008. It is no wonder that it has taken so long for the Valley of the Sun to begin to see positive sparks.
For the 1st quarter of 2010 Phoenix has seen a significant drop in pre-foreclosures. Since November 2008 there has been an average of 7000 homeowners or more fall behind on their mortgages, or enter into foreclosure. The 1st quarter showed that the average was finally dipped below 7000. This is just the spark that many valley market watchers have been waiting for. Estimates show that the drop in pre-foreclosures was down as much as 14%. The positive trend continued with a drop in valley homes that were sold at trustee sales. There has typically been between 3,800 and 5,300 homes per month sold through trustee sales. The numbers for these types of sales are hard to draw a baseline figure due to the erratic effect that federal programs have had on foreclosures. Some months have shown better numbers than others, but economists agree that the reduction in foreclosures is a direct effect of one of the many federal programs that currently available, and not a valid sign that the market has reached rock bottom and started to rebound.
One area that has had a direct effect on foreclosures is homeowners making a calculated decision to “walk away” from their homes due to the fact that the value of their home plummeted far below what they currently owed on the home. The federal government has decided to extend The Federal Affordable Refinance Program. This program allows homeowners to refinance at a lower interest rate if they owe more than 225% more than the current value of their home. The program was scheduled to expire June 10, 2010. The programs new expiration date is June 30, 2011. This gives homeowners an additional year to refinance their upside-down mortgages and reconsider the possibility of a “walk away”.
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