What Do Current Foreclosure Numbers Suggest for the Economic Future of Arizona and the Nation?

By
Real Estate Agent with Curtis Johnson Realty

Housing will lead the way on the economic recovery or crash

The foreclosure crisis is still with us—and it is pulling down whatever economic recovery we may have seen. The number of bank owned properties, and the actual repossessions in the last quarter, is at an all-time high. As more and more foreclosures hit the market, it drags down the overall value of homes. And when house prices drop, as we have seen in recent years, the economy drops with it.

After all, why would someone want to pay $50,000 more for house A, a regular listing, than for house B, a foreclosure? If both homes are in good condition and everything else is equal, it’s pretty much a no-brainer. The very presence of house B will force the owner of house A to drop the price just to get an offer.

According to the Mortgage Bankers Association, the number of homes in the foreclosure process was at 4.63%, an increase of 5 points over the previous quarter and up an astonishing 78 basis points from a year ago. Homes considered to be in the foreclosure process do not include simple delinquencies.

The news is not all bad though. According to the same figures, the number of homeowners beginning to be in trouble with their mortgages has declined since the last quarter and compared to a year ago.

According to RealtyTrac, Arizona moved up to 2nd place nation-wide on the list of states with the highest number of foreclosures, however the actual number of foreclosures in Arizona has dropped significantly. The spike in place was due primarily to a much larger drop in California’s foreclosure rates. Still, the number of foreclosures in Arizona is nearly double that of the nation.

Another disturbing trend is the type of mortgages going into default. While the earlier problem-mortgages were the high-risk subprime variety, today’s foreclosures are more likely to be on mortgages that were not considered to be a significant risk.

Add to the economic mix the sharp decline in mortgage applications over the past few weeks since the Home Buyer Tax Credit ended. Potential home purchases, after a surge in the fall and winter months, are now at a 13-year low.

While it is still hotly debated whether the economic improvement in recent months is a temporary spike or a long-term upward trend, there is no denying that the housing crisis is far from over. The next few quarters will show us a more realistic picture of what the economy will do, with the housing market leading the way.

Whether you are looking to buy a home or facing a troubling mortgage situation, give the Curtis Johnson team a call. The Curtis Johnson Team is helping individuals who are facing foreclosure and those who are seeking their dream homes.

Go to www.CurtisJohnson.com or call 1-888-Curtis-J.

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Topic:
ActiveRain Community
Location:
Arizona
Groups:
Arizona Investor/ Realtor
Arizona Real Estate
Everything About ARIZONA Short Sales and Foreclosures
Foreclosures & Short Sales
Sun Lakes Arizona Real Estate
Tags:
foreclosure
arizona economy
foreclosures in arizona
housing crisis
pastdue mortgage
mortgage delinquency

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Rainmaker
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Craig Chapman
The Value Guy
Call Realty / Access Appraisals

You are right on with some of your observations about the market, Curtis.  When I read the clips that say, "the market is improving" etc. & see the numbers of pending foreclosures out there, I really have to wonder what they are thinking.  Well, I suppose we can hope, but I think we a a ways off yet. How long?  I'm thinking next year if we are lucky.  Keep your fingers crossed.

May 29, 2010 12:22 PM
Rainer
22,123
Curtis Johnson
Curtis Johnson Realty

I agree with your assessment, Craig. Should be an interesting ride.

July 04, 2010 08:02 AM
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