As foreclosures rise in Phoenix and properties are returned to the lender, the question arises as to what percentage of the market is actually "lender owned."
L thoughtfully checked the numbers for us a couple of days ago, but reminded me that these numbers have their limitations. The MLS has a couple of boxes now in the Phoenix area that agents can check for "lender owned" and "lender approval required". "Lender owned" typically would be homes now owned by the bank, and "lender approval required" would typically be "short sales"- properties that still belong to the homeowner, but the homeowner owes more than than the house is now worth, so they need lender approval to sell the home.
It is not mandatory to check these boxes, and sometimes agents will check both. As always, the MLS is not a perfect database. However, the numbers are probably close enough to give us some indication of how the market has been impacted by these properties. Here’s the numbers:
Total number of properties found: 7034 Total Active Lender Owned. or Lender approval required
Total number of properties found: 4206 Active Lender approval required
Total number of properties found: 3909 Active Lender Owned
Total number of properties found: 55482 Active[The numbers don't add up as some agents input both.]
So we’re probably looking at around 13% of listings are "lender owned" or "lender approval required." What about the properties that actually sell though? What kind of percentages are we looking at there?
Total number of properties found: 558 SOLD Lender approval required / or Lender owned 1/1/2008 to 1/31/2008
Total number of properties found: 2912 Total reported sold 1/1/2008 to 1/31/2008
So while lender owned/approval required makes up around 13% of listings, it looks like they make up around 19% of sales. I think it is probably fair to say then that about one in five homes selling in Phoenix now is selling for less than the mortgage- which has implications for not only neighborhood comps, but for lender losses as well.
It is being reported that 38% of sales in Las Vegas are "lender-owned", so Phoenix appears to still be in better shape. However, the foreclosure rate continues to grow in the Phoenix area, so it is my expectation that lender owned/approval required property sales will continue to seriously depress home prices for the immediate future.
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Good information, Twist. I’m a Realtor and 3 out of my 4 buyers want to look at foreclosures because they are priced much better that the “typical” resale. Look at these examples. But lenders bring some of these problems on themselves, for
more than just the obvious reasons.
Twist:
A suggestion… plot the REO trend lines against the sales trends. When they intersect, bidda boom, bidda bang… you’ve got negative sales in Phoenix!
I’m going to guess that’ll happen by October of this year.
I’d bet a pie.