Foreclosed Houses and Bankruptcy Homes Stress Phoenix Market

by on Bankruptcy

Although the housing market of Phoenix, Arizona has been showing signs of stability, analysts believe that it is still vulnerable, owing to the high number of foreclosed dwellings and bankruptcy homes in the metro area. According to them, the market is still stressed despite the relative stability of residential prices.

Market reports showed that the supply of residential properties in the metro area in 2010 primarily came from Phoenix foreclosures, distressed dwellings and short sales that have been purchased by investors and then resold. Along with the high number of distressed and foreclosed homes, analysts stated that the metro region's housing industry is also under threat from poor conditions in the job market, potential interest rate increases and tight lending practices. In addition, analysts stated that a big number of investors are still doubtful about the capability of the industry to recover.

For the housing market to attain a sustained recovery, analysts asserted that it should start shifting from being a market dominated by investors to a housing industry where majority of buyers are potential residents and homebuyer occupants. They also stated that the percentage of bank foreclosures in Arizona accounting for total housing sales should be lowered. Currently, around 40% of Phoenix's housing sales are attributed to foreclosures, with analysts claiming that the percentage should go down to 5% to signify a healthy market condition.

Last year, housing reports showed that residential properties in markets with comparatively low supplies of foreclosures and bankruptcy homes, like Scottsdale and Tempe, had recorded gradual decreases in median selling prices. Local housing experts have explained that this is a necessary step that the market needed to take before it can reestablish pricing levels that are considered healthy.

Despite such developments, a number of analysts are optimistic about the future of Phoenix. Some have reported that filings and notices for foreclosure homes have decreased in some communities at the start of 2011. They stated that this could mean that the metro area is past the worst of the foreclosure crisis. Furthermore, they cited the rise in the prices of houses in Phoenix between 2009 and 2010 which posted a surge of more than 21%.

Although a number of industry analysts have asserted that the housing market looks better this year than last year, they stated that it is still vulnerable from further downturns. They claim that bank foreclosures and bankruptcy homes are still weighing values of properties down and improvements in the labor market are necessary to push the housing sector forward.