Click here for the entire article, which is a nationwide view of foreclosure rates and economic foreshadowing.  Contact me to discuss your circumstances.

On average, 21.2% of single family homes have received at least one Notice of Trustee Sale (the bank is letting you know that you have an auction date) since the beginning of 2006.  !!!!!

On average, 12.6% of the single family homes in Maricopa County have been foreclosed (ie the bank took them back) with a recorded Trustee Deed since the beginning of 2006.  That’s just over one in eight homes.  !!!!!  NOTE:  there are some 1,300 or so unrecorded Trustee Deeds as of December 22.

So where in the Valley has this foreclosure percentage been highest?  Here are the top 10 zip codes with the highest foreclosure rates:

1-85043 Phoenix

2-85353 Tolleson

3-85037 Phoenix

4-85335 El Mirage

5-85354 Tonopah

6-85326 Buckeye

7-85323 Avondale

8-85033 Phoenix

9-85379 Surprise

10-85031 Phoenix

All of these are in the West Valley; in fact, it isn’t until #24 that you find a property not in the West Valley (it’s in S. Phx).    There’s also evidence that foreclosure prevention attempts are not successful in these areas (or maybe not attempted?).

We see that the two types of areas least affected by foreclosures are those containing higher end homes and the 55+ communities. In many of the luxury home areas there is evidence reflecting a higher success rate in avoiding foreclosure, most frequently through a short sale (or maybe more aggressively or consistently pursued?).

It almost goes without saying that foreclosures have a direct effect on home pricing. Hence the ZIP Codes with the most foreclosures are usually those where home prices have fallen the most, while those with lesser foreclosures have fallen the least. However, the relationship is not exact.

Sun City West 85375 has the greatest preservation of $/SF across the whole valley. But then it also has had the lowest percentage of foreclosures. Again looking for anomalies we see that Chandler 85286 and 85249, Gilbert 85233 and Mesa 85205 have preserved their pricing better than would be expected based on their foreclosure rates.

We can also see that many parts of the Southeast Valley, particularly Tempe, Ahwatukee and South Chandler have preserved their pricing much better than Maricopa County as a whole. This is also true of most of the Northeast Valley.

It is true that foreclosures cause home prices to fall, but it is a vicious cycle since it is also true that falling home prices cause foreclosures – they cause more homes to go underwater and their owners to feel less motivated to maintain their loan payments.

What does this mean to you? It depends from what angle you’re looking.  If you’re looking to short sell, we should look at the trends in your neighborhood and act accordingly.  If you’re looking to buy, ‘a deal’ isn’t necessarily found in a neighborhood with high foreclosures.  A deal is a good price on a home you love in a neighborhood you’re excited about.

Please contact me to discuss your specific situation and needs.

The 20-City index in September’s Case-Shiller reports fell by 0.7 percent, with only Washington, D.C. and Las Vegas posting modest gains. The other 18 cities all had declining house prices for the month (including Phoenix).

Phoenix is seeing sharp price declines again with prices dropping 1.5 percent in September and having fallen at a 13.1 percent annual rate over the last quarter.   The price declines are being driven primarily by sharp drops in the bottom tier of the market. Prices for homes in the bottom tier had a 3.4 percent in Phoenix.

The annual rate of price decline over the last quarter for bottom-tier homes has been incredible in several of these cities, with prices dropping at a 27.0 percent annual rate in Phoenix.

Clearly, this plunge is a response to the end of the first-time homebuyers tax credit. This credit disproportionately affected homes in the bottom tier both because these were the homes most likely to be purchased by first-time buyers and also because the credit was a larger share of the price.

With the sharp price declines in many cities since the expiration of the tax credit, the loss of equity has likely exceeded the amount of the credit for many buyers. In other words, they would have been far better off buying at current prices without the credit than having bought earlier in the year and received the benefit of the credit.

For these buyers, the credit effectively amounted to a transfer to the seller, or in the case of many underwater sellers, to the investors holding the mortgage. From this perspective, the tax credits were good policy for banks and other mortgage holders but provided little benefit to homebuyers. They also did nothing to sustain the housing market over the long run.

(THAT’S unbelievable to me-to those who opted to not buy since they missed the tax credit, here’s a gift for you!)

The October data on new home prices provide serious grounds for concern about the future direction of house prices. It is important to remember that Case-Shiller data is a three-month average, based on sales prices, for a period that ends two months before the release of the data. Given the lag between contracts and closings, the period of contracting for the most recent data ran primarily from May-July, the period immediately after the expiration of the tax credit.

By contrast, the new home sales data reflect contracts that were actually signed in October. For this reason, it gives a much more up-to-date picture of the state of the market. It is likely that with homes sitting unsold for many months, and little prospect for new government assistance in sight, sellers are now cutting prices in a desperate effort to unload their homes. This could mean another period of rapid price declines as the bubble completes its process of deflation

WHAT I TOOK AWAY FROM THIS ARTICLE:  This market is the one that we’re going to be sitting with for a while.  There’s nothing artificially supporting it; run on supply, demand and credit.  Only those who truly want and can qualify to buy, will.  Fewer buyers, more inventory means lower prices…another dip in value.  THE GOOD NEWS IS:  If you’re a qualified buyer, this market was destined for you! If I wasn’t going through a short sale myself, I’d be finding the perfect house at an amazing price right now.  I’m jealous.  And wishing I had been reading these types of articles 7 years ago!!

Because the short-sale concept, which allows people to sell their homes for less than they owe, is designed specifically to help homeowners avoid having to pay their lenders more money, some sellers have been careful to negotiate their deals so the lender, by contract, can’t later seek payment. Those who haven’t done so are at risk.

“I know that there is a great deal of confusion and uncertainty about this issue,” said Michelle Lind, general counsel for the Arizona Association of Realtors. In Arizona, many people thought they were covered by a law that bars lenders from seeking payment from a borrower after foreclosure if a bank cannot sell a property for as much as was owed.

“The law is unclear,” she said, “and there are many variables that factor in.”

Tricia Goldblatt sold her Phoenix home through a short sale last year after losing her job as an executive assistant at an engineering firm. A few months ago, she started receiving calls from a collection agency.

“They are telling me I owe $10,000. I did a short sale to get out from under my mortgage,” she said. “I don’t have that money. I had to move in with my mom.”

Goldblatt said she thought the documents for her short sale specifically stated her liability for both her first and second mortgage would be terminated. But the collection agency said it bought the note on her home-equity loan from her lender and wants to be paid.

Home-equity loans, or second mortgages, appear to be the biggest pitfall.

Click here for the complete article link.