The Phoenix Area Foreclosure Experts

Foreclosure listings -- March 2009, REO property vs real estate short sale

On Tuesday I reported 21,614 foreclosure listings in the Phoenix area real estate market to begin March 2009.  In this post I will report on the number of those foreclosure listings that are REO property ( bank owned) versus the number of those foreclosure listings that are real estate short sales.

The below chart indicates 11,155 foreclosure listings are classified as REO property, or 51.6% of the total. It also indicates that 10,459 foreclosure listings are classified as a real estate short sale, or 48.4% of the total.

On Tuesday I also reported 49,433 total listings in the Phoenix area real estate market.  Foreclosure listings make up 43.7% of the total listings.

Foreclosure listings in Phoenix area decrease for the first time in two years

It had to happen sooner or later. Foreclosure listings in the Phoenix area real estate market actually decreased for the first time in over two years. March 2009 began with 21,614 foreclosure listings -- compared to 22,519 in February 2009. The percentage of foreclosure listings to total listings remained unchanged at 43.7%.

It's not that the decrease is even significant because the number of foreclosure listings dropped by only 905 from the beginning of February 2009. It's just the fact that they DECREASED from one month to the next -- for the first time since the foreclosure crisis began.

I won't go into my opinions about the decrease because there is enough information in the news media about government intervention to lower foreclosure listings. Let's see what the numbers look like to begin April 2009 in the Phoenix area real estate market.

What if your not as concerned with location when looking at foreclosure listings?

Location, location, location: the 3 most important factors when buying real estate.

What if your biggest desire is not necessarily location, but to take advantage of the high number of foreclosure listings to get the biggest house you can find for under $60,000? What if you wanted to avoid moving too far away from metro Phoenix -- but not live in a dangerous part of south Phoenix? Finally, what if you wanted a house bigger than a typical apartment? A house bigger than 1,100 sq ft? Where would you search for such a house?

How about El Mirage? That's where my client set her sights and offered on an 1,800 sq ft, 3 bed, 2 bath, 2 car garage home built in 1999. The accepted contract price? Would you believe $55,000?

$55,000 is the accepted contract price with one important detail: the kitchen had been stripped of EVERYTHING. No worries for my client who works for a major cabinet maker. She expects to spend $6,000 with her employee discounts to rebuild the kitchen. OK, so she's spending $61,000 and not $60,000.

30 years ago homes were priced like this

The glut of forclosure listings  on the Phoenix area real estate market has caused some dramatic price reductions, especially in areas where there is a high concentration of bank owned, REO properties.  Here is an example of just such a situation.

This home was originally purchased in June of 2006 for $215,000. It is currently listed as a real estate short sale for $59,000 with a trustee's sale date in March. Will the bank approve such a low price? Perhaps a better question is: how quickly can the listing agent get an approval.? There are 10 to 15 more homes priced in the same range all within a two-mile radius.

This is a standard 1500 square-foot home with three bedrooms, 2.5 bathrooms, and a two-car garage that was built in 2006.

Chandler home rivals price per-square foot of Town of Maricopa

The town of Maricopa has plenty of homes and foreclosure listings for sale at $55 per-square foot.  You can't say that about Chandler, Arizona, but there is at least one newer home at $55 per-square foot. This home was built by KB homes and  is located in the subdivision of Cooper Commons. Here are the vital stats:

• built-in 2002
• 2,195 square feet on a 4,000 square foot lot
• three bedrooms, 2 1/2 baths, and a two-car garage
• located in the Chandler Unified School District; high school: Basha

Here is the financial history on the house:

• bought as a rental on September 16, 2005 for $325,000
• listed for sale on December 5, 2007 for $250,000
• reduced frequently until November 29, 2008 when the current price became $120,000
• scheduled for the trustee's sale on March 6, 2009 with an outstanding loan balance of $260,000

This house is a real estate short sale.  After being on the market for 421 days, having six price decreases, and a total price reduction of $105,000, the bank will have a tough time arguing against that foreclosure listing price. After all, isn't a home only worth what someone is willing to pay for it.

Phoenix area foreclosure listings continue to rise; February 2009

Let me define the way I use the phrase "foreclosure listings" for those of you who may be newer to this blog.  A foreclosure listing is one that is listed in the Phoenix area MLS as either a "lender owned property," "short sale approval required," or "pre-foreclosure." The line between the last two categories is rather thin.  In other words, a "short sale approval required" is technically also a "pre-foreclosure." But it is a "pre-foreclosure" that specifically requires the approval of the lender because the balance of the loan is higher than the sales price. However, a "pre-foreclosure" doesn't necessarily need  a " real estate short sale approval" because the sales price could be higher than the loan payoff.

Foreclosure listings in the Phoenix area real estate MLS rose by 1,206 listings from January 1, 2009 to February 1, 2009.

The chart below is read in this manner: on February 1, 2009 there were 51,565 listings in the Phoenix area real estate MLS (a decrease of 218).  22,519 of those listings were foreclosure listings, or 43.7% of all listings.

Mesa joins ranks of cities under $100 per-square foot

It took 2 years for the city of Mesa, Arizona to fall below the sales price of $100 per-square foot.  Phoenix went under $100 per-square foot in November of 2008. Glendale hit that mark in September 2008.  These three cities are mentioned because they comprise three of the four largest cities in the state of Arizona. In case you don't know your Arizona statistics: Phoenix is the largest city, Tucson is the second-largest, Mesa is the third largest, and Glendale is the fourth largest city.

Read the chart this way: 3,519 homes were available for sale in Mesa on December 1, 2008.  415 sold ( 11.8% of the total) creating 8.5 months of inventory.  The average "sold" home was 1,801 square feet and sold for $172,749.  105 days was the market time.  The average price per-square foot was $96.

source: Arizona regional MLS; January 5, 2008

Cities with smallest gap between "normal" and "foreclosure-type" properties

Here is a fun little report I do.  This one deals with the price difference between buying a "normal" property and a " foreclosure-type" property. On the seventh of January I posted a similar article on the difference for the entire metropolitan Phoenix area. This post deals with the "top five cities" with the smallest price gap.  In other words, if you were going to buy a "normal" property, you would get a much better deal by buying in one of these five cities.

Here we go for December 2008:

1. $9 per-square foot -- Town of Maricopa ($62 for a normal property and $53 for a foreclosure-type property)
2. $14 per-square foot -- Gilbert ($111  for a normal property and $97 for a foreclosure-type property)
3. $18 per-square foot -- Queen Creek ($83 for a normal property and $65 for a foreclosure-type property)
4. $20 per-square foot -- Ahwatukee ($137 for a normal property and $117 for a foreclosure-type property)
5. $24 per-square foot -- Mesa ( $111 for a normal property and $87 for a foreclosure-type property)

NOTE: Queen Creek is normally the number one city. For the previous five months (ending in November 2008), Queen Creek had been averaging $7 per-square foot. This higher difference in December was due to the price of the normal-type properties taking a bit of a jump.

Foreclosure leak = thousands of dollars

by Kent Lamb

Restoration of water service to the house is needed in many foreclosures.  The water companies do turn the water off at the main valve if there is activity at the meter, but in some cases the water meter is not turned off completely or vandals turn the water back on.  This home had the main water valve 3/4 off but water was still flowing into the laundry room of the home.  The damage to this room and to the wood foundation in the home will cost thousands to repair.

More than a clogged sink -- always inspect it first

by Kent Lamb
This may look like clogged drains but wait there is more.  Things have not only been stoled from this forclosed home but the crooks also clogged the drainage system for this house.  In this particular case, the vandals poured concrete mix into the drain line piping and have caused thousands of dollars in damage.  This is not the first instance of this type of vandalism.  Many times the drain lines are clogged with rags or other materials.  Ensure that your home inspector is taking the extra steps to determine if the clog is limited to a single drain or a more significant issue with the drainage system of the home.  In the foreclosed homes that I inspect, we allow the water to run for an extended period of time to ensure proper drainage and flow through all drain lines.