Foreclosure Home Listings Still Driving Arizona Market- By: John Cutts
Foreclosure home listings and short sale listings are still driving the housing market in Arizona, particularly in the communities of Verde Valley, according to local real estate brokers.
Last year, out of 1,038 houses sold in the valley, 529 units or 51 percent were distressed sales. Currently, 251 units of the 1,086 houses available for sale are distressed properties.
According to Cottonwood brokers, the recovery of the housing sector will remain difficult because of the distressed inventory and its downward pressure on home prices.
In Sedona, which is the most active market during the downturn, the median home sales price has dropped from the 2006 median of $530,000 to $359,000 in the last months of 2009.
Similarly, home price levels in other Verde Valley areas declined. The median price in Cottonwood dropped from $215,000 in 2007 to $135,000 in 2009 and the median in Camp Verde also fell from $225,000 in 2007 to $140,000 in 2009. In the unincorporated community of Beaver Creek, the median declined from $190,000 in 2007 to $124,000 in 2009.
Cottonwood real estate professional Dan Mabery said that over the past several years, foreclosure home listings and short sale listings accounted for about 60 percent of total home sales in the area, cutting down significantly the equities of a lot of homeowners in the valley.
Another Cottonwood broker, Phil Terbell, affirmed the continued increase in distressed sales. He explained also that more lenders are now preferring short sales over foreclosure proceedings. Lenders have realized that the $100,000 average that they spend for every foreclosure they pursue is much higher than their losses at short sales, even though they sell the properties at prices lower than the loan balances.
Meanwhile, mortgage professional Mark Miskiel said that the number of distressed properties will continue to climb up this year. He also admitted the banking sector practice of regulating the release of foreclosure properties into the market in order to prevent sharp drops in home prices. He reiterated that the Arizona housing market will remain favorable to buyers for many years to come.
Local real estate professionals said that homeowners planning to sell their homes because they are moving to another place or they are moving up will have to sacrifice their equity.
According to Terbell, foreclosure home listings and short sale listings are taking the non-distressed housing market down with them, so owners who can afford not to sell their homes should not sell yet.
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John Cutts has been educated in the finer points of the foreclosure market over 5 years.