Foreclosed Houses Still Flood Arizona Market

by on States

Industry analysts are considering the possibility that the residential real estate industry in Tucson, Arizona has started to show signs that it hit bottom. They noted several signs of market improvements, such as reduced inventory, increased median sale price and home sales volumes.

However, the high number of foreclosed houses that still flood the housing market is causing some of them to be a little bit reserved and cautious in saying that the market has really hit the bottom. They claimed that thousands of foreclosure properties are still out there which could jeopardize any progress made towards market recovery.

Analysts explained that many homeowners have given up hope on their properties while trying to modify their loans. They will walk away from their distressed properties and lenders will file for trustee sales. Typically, a trustee sale occurs 3 months after the filing for foreclosure.

However, analysts said that many lenders are not finalizing foreclosures six months or a year after a foreclosure filing. They pointed out that this is the reason why many unlisted empty, foreclosed properties are flooding the housing market. They added that lenders chose not to foreclose on troubled properties so as not to burden their inventory.

According to analysts, national mortgage lenders including Wells Fargo, are swamped with foreclosures and would prefer to shift the losses they will incur rather than report or release the properties on their portfolio.

A report about foreclosure rates in several major metropolitan areas in the country ranked Tucson as among the top ten cities with high foreclosure rates. For the first six months of this year, Tucson earned the 40th position in the ranking with over 7,000 foreclosure filings or 1.67 percent.

Other areas in Arizona that were higher than the 1.19 percentage point national average rate for foreclosure were Phoenix-Mesa-Scottsdale in the number 9 position and Prescott in the 27th spot.

According to analysts, foreclosure used to be a small portion of the residential real estate market before its collapse. Families or investors would immediately grab distressed properties. However, when property values dropped and credit became difficult to obtain, new home sales declined and homeowners started to default on their mortgages, leading to excess in inventory.

They projected further rise in the number of foreclosed homes due to unemployment and resetting of adjustable rate mortgages.