Foreclosures and Short Sale properties now account for roughly 40% of the single family homes listed for sale in the greater Phoenix marketplace. A recent search of the MLS system showed that there are 18,227 distressed properties out of a total of 45,159 single family homes that are currently listed.
REO, Short Sales, Foreclosures Majority Of Home Sales In Phoenix
The year over year increase was even more dramatic when looking at homes that closed during the month. 2,373 single family homes out of the total 4,091 that closed during November, or a solid 58%, were listed as either Short Sale or REO (real estate owned).
To gain some perspective one need only look at how the value of closed properties has changed over the past year as represented by Sales Price and $/SF (square foot) in the Phoenix Single Family 12 Month History found at: AZ Real Estate Market Trends.Other market sectors can be seen here as well.
In November of 2007, 316 of the 2,711 single family homes that closed were listed as distressed properties. Clearly then, over the past year, Foreclosures and Short Sale properties have come to dominate the marketplace, ballooning from just 11.7% of single family homes closed to a whopping 58% in just a years time.
Distressed Property Inventory Driving Home Prices Down In Phoenix
Increased competition among distressed properties is widely held to be the primary cause of deflation in the marketplace. As the number of listings of distressed properties increased over the past year, the banks and homeowners hoping to sell before the bank started foreclosure proceedings continued to play leap frog with each other dropping their asking prices from an average of $251,955 in November of 2007 to just $164,611 last month; a precipitous drop of just over 34%.
One would hope to see a similar decline in the square footage (SF) of the homes sold but that was not the case as the average square footage of distressed properties fell slightly less than 4% from 2,019 in November of 2007 to 1,969 last month. So $/SF sales prices were also off an amount comparable to overall sales prices, dipping 33.7% during the period.
Average Home Price In Phoenix Drops Like A Rock
The result, of course was a dramatic decline in the average market value of homes closed over the past year. In November of 2007, the average home sold for $340,166 while last month the average sales price of single family homes closed was just $208,384. Overall the drop was most pronounced in distressed properties as they dropped from $244,450 in 2007 to just $160,536 last month. The remainder of the market, those homes sold and closed NOT under distressed conditions, has faired substantially better over the past year, dropping 22.2% overall from $352,795 to $274,556.
The other part of the puzzle is Days on the Market (the time it takes the average home to sell) which really improved just slightly over the past year, falling from 120 in November of 2007 to 110 last month. Even the average distressed property that closed last month, despite the tremendous decrease in asking price, was still on the market for 104 days prior to closing.
Some Good News Lower Rates And More Homes Selling
The two bright spots in today’s market continue to be the volume of homes that are being sold and the decline of 30 year fixed interest rates.
Total volume of single family that closed in November was up 49.5% from a year ago. Thanks in part to the decline in price and interest rates combining to vastly improve affordability.
The jump in volume naturally occurred in distressed properties, sales of which increased a whopping 744%. The volume of the rest of the market actually declined by 29% year over year, which would suggest that homeowners hoping to compete with the REO across the street may have to cut prices further in order to do so.
30 year interest rates recently ratcheted down below to the 4.75% level, which makes many, many of the lower priced distressed properties more affordable then rent.
Foreclosures And Short Sale Properties Make For Great Deals
Finally, it is also clear that buyers today are recognizing that the foreclosures and short sale properties domination of the Phoenix marketplace represents a unique window of opportunity which they may never see again.
Naturally some locations are more sought after than others and have therefore retained their values while other areas have declined more than then norm. To find out what exactly has happened in your community please visit AZREAdv.com
The lower prices combined with lower interest rates make today’s market truly the best buying opportunity of a lifetime!
Article Sumitted by Jim Greisiger. Jim is a licensed Real EState Broker in the state of Arizona. He has over 30 years residential real estate experience. His website is: AZREAdv.com and he can be reached at 480.298.2884 or emailed at: jgreisiger (at) qwest.net.
(New site)