How long will Foreclosures Dominate the Maricopa Real Estate Market?
The Maricopa real estate market continues to work through a large volume of Foreclosure inventory. There are 375 active foreclosure listings as of 12/20/2008. This is well above the 130 to 180 we experienced throughout most of 2008. Banks appear to be aggressively trying to unload inventory at this time. Price declines continue however at a much slower pace. MLS data for December is actually showing a rise in the Median Price from November. The most positive indicator at this time is the Sales volume. Despite absolutely terrible lending conditions for investors in particular sales volume is very strong compared to activity from previous years. Primary Home Buyers are very hesitant at this time likely an effect of the dismal US Economy and the weak and insecure job market. Affordability and access to quality loans for Primary Home Buyers is not the issue. A recent study indicates that affordability for the Phoenix-Metro area has increased to 72% compared to only 27% a few years ago. FHA loans, which require a low down payment (3% increasing to 3.5% soon), are readily available for Primary home buyers with credit scores as low as 580. 100% financing is also still available through the USDA Rural Development program. This program has been around since 1991 but its use is absolutely sky rocketing at this time. This government backed program offers great options for primary home buyers. Qualifications are also very reasonable. Primary home buyers with steady income and a credit score above 620 are likely to qualify. Individuals with credit scores as low as 580 may also qualify depending on the overall financial situation of the individual. Maricopa is one of several areas of the Valley that qualifies for this program. The Maricopa real estate market will continue to be dominated by foreclosure listings and sales for at least several months to come. It is hard to imagine that the market conditions could get any worse than we have seen in 2008. The market is already showing signs of improvement with the high volume of sales despite terrible market conditions. The million dollar question is how many more foreclosures are coming in 2009? If the wave subsides and sales remain strong we could see a major shift in the market. Foreclosures and Short Sales are the majority of the active inventory. There are less than 100 Active listings on the market that are “Regular Resales”. The other primary source of listings Builders are trying to survive and simply can’t afford to sell at current market prices and make a profit. It will likely take at least several years before builders aggressively build in Maricopa again. Many have already sold off land in subdivisions already in progress. It is very logical that the dynamic could shift rapidly from too many homes and not enough buyers to too many buyers and not enough homes. Maricopa has seen pretty incredible things in its brief history. Wild swings are more the normal than the abnormal in the Maricopa real estate market.
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