Buyers Take Advantage of Cheap Homes on Bank Foreclosure List

by on Foreclosure Crisis

It used to be that many neighborhoods in Mesa, Arizona are inundated by abandoned and vacant foreclosed properties, an everyday reminder of the housing market collapse and economic downturn.

But now, many properties on bank foreclosure list are starting to show some life as homebuyers take advantage of cheap houses. Industry experts have noticed a dramatic rise in foreclosed homes purchases and attributed the development on the federal tax credit given by the Obama Administration to first-time homebuyers.

Experts said that the tax credit helps shave off the bank foreclosure list with bank owned properties and short sales. They added that demand for bargain foreclosure houses helped boost home prices.

They pointed out that a foreclosed property that used to fetch $115,000 on the market could now be sold for $140,000. Home prices in some areas in Mesa have inched up by almost 10 percent.

In the East Valley, there are some significant improvements in the existing home market with homes on bank foreclosure list selling and the inventory declining. But industry analysts are expecting a second wave of foreclosure this year.

January 1 inventories of existing homes declined slightly, particularly in Mesa, Gilbert, Chandler and Queen Creek/San Tan Valley. Cromford Associates LLC owner Mike Orr pointed out that homebuying competition is notably intense for foreclosed properties under $350,000. Meanwhile, prices continue to fall for properties above $500,000 because of the abundance of supply.

In outlying areas of Arizona, prices for homes on bank foreclosure list continue to drop significantly.

But on a positive note, prices for properties located at South East Valley are stabilizing, according to Arizona State University’s Realty Studies Department director Jay Butler. However, he warns that a true housing market recovery is still not feasible in the near future.

Butler pointed out the flatness of the traditional segment of the housing market, which involves owners selling and buying their distressed properties. He believes that there is real recovery if the traditional process of owners dominating the housing market instead of investors and foreclosures occurs.

May data showed that bank owned houses represented almost 44 percent of home sales in Chandler, 61 percentage in Queen Creek/San Tan Valley and 57 percentage in Mesa and 51 units in Gilbert.

Industry experts noted that competition among bank foreclosure list buyers is intense and many make multiple offers.