Phoenix Foreclosure Pipeline Continues to Shrink

In october, Phoenix cleared roughly 1500 foreclosures out of the pipeline. Simply stated, there were 1500 more completed and cancelled foreclosures than new notices…[according to Michael Orr, local professor of real estate studies, we had 13,000 in the pipeline, while has it at 17,400. Counting filed foreclosures on the mls tax link, I found a total of 11600 today] At 1500 a month however, we are on a trajectory to zero in 9 to 12 months, depending on whose numbers you use, if this trend continues…

I thought I’d get a jump ahead, and see if November shows anything different, since some national numbers had indicated a reversal in foreclosure trends… NOPE! so far, we have had 400 more homes leave the foreclosure pipeline, then have entered. Precisely the same rate as last month so far.

My gut feeling, is that two powerful effects are going to propel this trend on: The fast price rises in many Phoenix zips are beginning to melt away a lot of the negative equity that can lead to foreclosures, and the high volumes of refinancing under harp.x are going to remove many too.

A phoenix market, without much foreclosure or short sale inventory could be coming, and that will be a big change from the past six years.



Edit, more information:

Using my own methodology, I just searched all filed foreclosures through the local mls tax information link, and found 11,700 as of today. I am feeling more and more confident that by next spring/summer, foreclosure listings are completely finished having any significant effect on the Phoenix housing market.

Digging further, in 3 of the hardest hit zip codes of South Phoenix, 85040,85041,85042, when I look at single family homes built since 1990, under $140K, I found 36 for sale. Fully 16 of these are distressed sales (short sale, bank or HUD owned) of the other 20, all but 5 were investor flips. (the investor bought either a short sale, or a bank owned home in the prior year, and is re-selling it for profit)

Of the remaining five, 3 were longer term investors selling out, and 2 were normal owners. One normal owner was selling for a loss, the other appeared to be trying to break even.

Why do I analyze this in such granularity? Well, as foreclosures and short sales end, in due time, nearly all of this inventory will not re-occur. Fully 31 of the 36 homes require that a foreclosure or short sale happened for them to be available for sale. As foreclosures and short sales end, this cheaper inventory will disappear.



About robertoaribas

Math professor, Realtor. 12 years of buying, selling, investing and managing rental properties. rock-climbing and salsa dancing.
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One Response to Phoenix Foreclosure Pipeline Continues to Shrink

  1. Rob Madden says:

    Glad the worst of it is over…hopefully!

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