Phoenix: Record Number Of Notice Of Trustee Sales In March Indicate Market Decline Not Over

The Phoenix market continues to be in rough shape.

At the peak of the market in 2004-2005, home sales sometimes exceeded 10,000/month.  Ironically, foreclosures in March are also north of 10,000/month: [Thanks M!]

Lenders signaled their intention in March to foreclose on more than 10,000 Valley homes and other properties, the highest single-month total on record.

The 10,635 notices of trustee sale issued through March 30 represent a 25 percent increase from February and a 100 percent increase over March 2008, according to Mesa real-estate-research firm Ion Data.

Data for March 31 was not yet available. [I went to the Maricopa County Recorder's Office and counted 414 entries for 3/31, but that may not be the exact number. - t.]

Reasons for the pre-foreclosure spike could include the lifting of a moratorium imposed by some banks in February while they were waiting to learn more about a new government loan-modification program, Ion Data analyst Zach Bowers said.

It appears from the early unofficial numbers that M provided for us that sales in Phoenix have increased dramatically and inventory is somewhat decreased:

ACTIVE                              46,283
UNDER CONTRACT               13,567
SOLD(MARCH ’09)                 7,464

According to ARMLS, 4772 homes sold in February.  Sales have not been in the 7,000s since the summer of 2006. There are those who believe that the increase in sales indicates the market has "bottomed".  I disagree- here’s why:

  • Even with sales increasing dramatically, foreclosures exceeded sales in February, and it appears this trend will continue.  According to M, nearly 70% of all homes in escrow were either short sales or REOs, so foreclosures will continue to drive the market and adversely affect home values.
  • While inventory levels are off of their peak, M expects an uptick in inventory mid-month.  Not only are foreclosures increasing, but inventory increases typically this time of year, so I concur.
  • Economic problems continue to plague the market.  According to Dr. Jay Butler, head of ASU’s Realty Studies:

The fundamental problem remains that an extremely weak economy is leading to mounting job losses that could severely impact the ability of a troubled household to have the needed income to qualify for one of the possible programs or even have the needed income to maintain ownership

 

Whether the banks foreclose on all of March’s Notice of Defaults remains to be seen.  It does not appear, however, that even with the homeowner rescue programs out there, that many of the Valley’s troubled homeowners will be able to receive help.

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3 Comments for this entry

  1. azrob says:
    April 2, 2009 at 9:22 AM

    10,800 notice of trustee sales, but only about 3600 foreclosures, and 1800 cancelled trustee sales…

    So, at the end of March, 5000 more homes were actively in the foreclosure process than the month started with. Sales jumped strongly, prices continued to drop, albiet more slowly.

    June/July/August time frame, there will be a bunch of foreclosures, and the end of summer slowdown in buying.

    Maybe price drops stop for a few months, but I’ll still hold with m original predictions: case-shiller under 100, and median under 100K by year’s end.

  2. Russ says:
    April 2, 2009 at 2:08 PM

    Can one pull the statistics directly from the Maricopa County recorder’s website? I remember doing so in the past, but can not seem to find the correct area on their site. I know how to pull a specific filing, but not the numerical data.

  3. Nickster says:
    April 2, 2009 at 7:12 PM

    Looking at the Phoenix market as a whole I agree with most of what you are saying, but there are submarkets where prices have actually increased over the past 3 months. Found a new data site http://www.metrohousingreports.com it breaks down the different areas and actually compares a typical 2000 sf home by submarket.

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