In his monthly Phoenix housing market report Jay Butler, associate professor of real estate at ASU, said that the market isn’t back to normal yet, but it’s getting there. You can read the April Phoenix Realty Studies report here, and listen to an interview with Jay Butler here.
Some highlights from the interview:
Knowledge@W.P. Carey: “There were 10,255 Phoenix homes sold in April, which was a tiny bit down from March, but still much stronger than April 2009. What factors are at work?”
Butler: Two factors were really at work. One is that the year’s strongest home sales are between March and August. That’s typical, but it’s a good sign that in April this year there were more homes sold than in April 2009.
The other factor is the strength of the Phoenix foreclosure market. Foreclosures dropped a bit in April, but they still make up 35% of Phoenix real estate market activity. Another 42% is the sale of previously foreclosed homes — that segment of the Phoenix homes market is moving heavily, prices are up there.
The median mark-down on foreclosed homes is 16% of full market value, which is better than a year ago, when it was at 25%. In some areas, in fact, previously-foreclosed homes are sold for more than the foreclosure price.
While we of course like to see higher numbers of Phoenix homes sold, the market is still largely driven by foreclosure-related activity, so it’s still not “normal.”
Knowledge@W.P. Carey: Last weekend 60 Minutes did a story on strategic mortgage defaults and one of the guests was a Phoenix area homeowner who had walked away from her home.
Butler: Strategic mortgage defaults — also referred to sometimes as “jingle mail” — aren’t a new concept. They’ve come to the forefront because of an article written by a professor at the University of Arizona but nevertheless the concept is not new.
And strategic mortgage defaults probably aren’t a large percentage of the foreclosure market, but they’re representative of homeowners’ frustration. Many homeowners are so far underwater they can’t imagine when they will have equity in their homes, even as prices in the Phoenix real estate market begin to rise.
Plus, strategic mortgage defaulters see homes down the street renting or selling for far, far less. “They’re paying a monthly mortgage payment on a home that’s worth half what it was when they bought it, so they’re very frustrated. So strategic default really represents a heightened frustration with the housing market.”
If you’re feeling frustrated, I can help. (Give me a call anytime at 602-318-1114.)
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