Jay Shaver

Maricopa, Arizona Market Update 1/28/12

Market Notes January 28, 2012: A busy week on the market, but active listings remained consistent at 252, down from 254 last week, and listed at an average of $60.79 per square foot. Homes pending close of escrow stand at 238, a mirror image of last week, and another 35 homes closed escrow last week, closing at an average of  $48.70 per square foot and bringing this years sales total now to 128 homes. 2012 may be one of our final transition years from a distressed housing market to a more normal traditional resale market, but one local observation, and one piece of national news suggests that the shadow inventory of distressed homes may vary well bleed into next year. Locally, nearly 50% of the foreclosure homes at the daily trustee auction have been postponed this last month, most likely as a result of deed issues or pending short sale contracts, but that number of postponements is unusually high. The postponement is usually just a week or two out, but lately we have been seeing 30-60 days postponements which again is unusual. This is also at a time when the foreclosure starts are down considerably year over year. The number of foreclosure actions initiated in 2011 was down 38.7 percent compared to 2010, according to a new report from Lender Processing Services. The company reported that delinquencies at the end of 2011 were down nearly 8 percent from the previous year and were 25 percent below their peak in January 2010. However, the overall foreclosure inventory remains near historic highs, at 4.11 percent as of the end of December.

The numbers illustrate the impact of foreclosure processing delays brought on by the robo-signing controversy that surfaced in the fall of 2010, the impact of which remains strong mostly in judicial states. LPS says foreclosure inventories in judicial states remain 2.5 times that of non-judicial, while foreclosure sale rates in non-judicial states stood at approximately four times that of their judicial counterparts in December. The company also found that half of all loans in foreclosure in judicial states have not made a payment in more than two years compared to 28 percent in non-judicial states. Still, on average, LPS says pipeline ratios – which is the amount of time it would take to clear the inventory of loans seriously delinquent and in foreclosure at the current rate – have declined significantly from earlier this year, again suggesting that 2012 may finally be the recovery year we have all been waiting for. The company’s data show that the states with the largest declines in non-current loans are all non-judicial, including Nevada, Arizona, Michigan, and California.

Buyers currently on the market should understand that while the distressed inventory is waning, the “distressed” values will continue, as real appreciation will take a while to get a foot hold. This current Arizona market continues to be a once in a generational opportunity to take advantage of historically low home values and an improving economy which will serve your financial interests very well over the long run, and I think many primary residence buyers have discovered this, and are taking advantage of that dynamic as well as a more favorable lending environment. In fact, Capital Economics expects the housing crisis to end this year, and one of the reasons? Loosening credit. Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings. Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.” In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.  So conditions are favorable to those first time home buyers, as well as second home buyers that would like to leverage their capital. If you would like help navigating this real estate market, please call or shoot me an email at anytime. I would like to assist you find your place in the Sun.

Published Saturday, January 28, 2012 7:08 AM by Jay Shaver