Bank owned homes – also known as lender owned homes, foreclosures or REO’s (Real Estate Owned) – continue to fly off the shelf in the Phoenix real estate market.
On the chart above, green circles indicate a condition favorable for sellers, red circles indicate favorable for buyers (white is neutral).
Of note, active listings continue to decline. The 6,107 active REO listings are half what they were just three months ago (as indicated in the “Last Qtr” column). There is only a one month supply of REO homes listed.
“Distressed sales” – those sales involving either an REO home or a short sale – make up a significant portion of the home sales across the Phoenix metro area. Virtually every major city in the Valley is showing distressed sales compose well over 50% of all sales, and many cities are over 75%.
Competition for purchasing REOs is fierce. If you are looking for a bank owned home in the Phoenix metro area, odds are you will be facing a multiple offer situation only a few days after a home is listed. Don’t expect to get an REO at much, if anything, below list price, and don’t expect to negotiate price with the lender. Sometimes a lender will come back with a counter for “highest and best” offer. My suggestion is to put your highest and best offer in initially – someone else probably already has.
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Tables and charts from CromfordReport.com using data from public records and data licensed from the Arizona Multiple Listing Service (ARMLS). Cromford Associates LLC, ARMLS and yours truly, Jay Thompson, expressly disclaim and make no representations or warranties of any kind – express, implied or statutory – as to the accuracy of the data, nor its merchantability or fitness for any particular purpose.
In other less legal-like words, if you use this data to make personal, business or investment decisions and something blows up, it’s not our fault and you can’t sue us.
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Interesting active number… it is up about 200 over what it was mid-week
**Dean Ouellette´s last blog post..tempe-edgewater-condo-101-pool.jpg
Jay – is there a moratorium on some foreclosures in your area?
Local paper printed a front-page story here touting how we bucked the trend of more foreclosure listings – down 33% over last year. Yet my other bank sources say they’re just waiting to see about some of the government incentives that may be coming (tax credit as downpayment) before releasing some homes to the market.
Navy Chief, Navy Pride
**Joe´s last blog post..Can the $8,000 Tax Credit save VA Buyers ?
Joe –
My understanding is the vast majority of moratoriums have been lifted.
But certainly lenders could still be holding back.
Personally, I think we’re due for another wave of foreclosures. Also, at least in the Phoenix market, we still have a ton of short sales listed. Simple fact is, most of those don’t sell and wind up as REOs.
But, with only a one month supply of REOs on the market, we could quintuple the amount of REO inventory and still be in a neutral market (assuming of course, sales stayed the same as they are now).
Discouraging numbers along with discouraging words, while watching discouraging news programs each evening, sigh…..
Cheryl Beckham
I hear ya Cheryl, but there is some encouragement in these numbers. At least the foreclosures are selling. The alternative is continued bloating of inventory, which would likely drive prices even lower.
I have to agree, Jay, it is great to see the foreclosures selling, and perhaps that will be the first step to everything else starting to take off.
**MaryAnn Knell-Peoria Real Estate´s last blog post..Help for Peoria’s Homeowners
These numbers are encouraging. You can actually start seeing that tiny light at the end of the tunnel. Hopefully it is not a train still coming.
That is unreal. Who would have thought that this many homes would be pending at a time like this. This is great news for investors that are buying now and or that bought over the last few months. Prices are actually starting to increase. Thanks for the great information.
**Brewer Caldwell´s last blog post..Brewer Caldwell is the BEST
This information pretty encouraging. I hope prices get back to where they were in 05 for my sake! Regardless this is awsome news. Now is definately the time to buy and this report proves it.
**Brewer Caldwell´s last blog post..Brewer Caldwell is the BEST
Jay, if you take a look at the graph on my site from Altos Research at http://johnnyguerra.com/market-trends , you will see that the median home price in Phoenix has risen. I think the bottom for the low end homes is here and is about to pass.
You are correct, RIGHT NOW is the best time to buy.
That is great information. The # of sales per month looks to be going up but yet active listings are going down so the inventory is getting eaten up which is going to cause prices to continue to rise. I also notice prices being fairly stable as well.
Thanks for the information.
The # of pending sales actually went up and the # of active listings went down while the # of pendings stayed pretty much the same. Prices seem to be pretty stable based upon that report and I am confidant that they will go up as the inventory decreases.
**Brewer Caldwell´s last blog post..Brewer Caldwell is the BEST
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Jay T.
You might have already mentioned this in another post, and I apologize if you have and I just missed it; but I was wondering if the REO’s are at drastically reduced prices compared to normal seller listings? Or is it that you just have so many REO listings in your area compared to normal listings that most of the sold homes just by default were REOs. It is great news to see that you are in a neutral market though! Very good signs for both buyers and sellers!
Even though it is depressing to see that so much of your market is distressed listings, it is nice to see that they are selling so quickly! And I am glad to see a few white circles in your graph….hopefully by the end of the summer more numbers will be pointing to a neutral market.
**Jim Dolanch-Pittsburgh Real Estate Expert´s last blog post..Pittsburgh is One of the “Best Cities for a Fresh Start”
It is too bad to see there are so many short sales in your area-though that is good news that there is only a month’s supply of REO’s left-so even if you do get that next wave of foreclosures, your market can handle a jump in the supply number and still be considered a “neutral” market.
It always sad to see foreclosures, but hopefully we can ride this wave out and the trend will slowly and surely creep upward.
McKinney Real Estate
**Ted Jernigan´s last blog post..Texas Housing Prices
Same here in Florida. Seems like our distressed home ratio is at 60% and lenders are inviting bidding wars. It is a great situation if you are a BPO agent but as a buyer it is very very very frustrating right now. Competition is fierce and buyers still don’t get it despite how I warn them!!
**Scott´s last blog post..Real Estate Trouble Still Ahead?
It is great advice for people to put in their highest bid the first time around, esp for a REO home. So many people are out there thinking they can get REO homes at crazy discounts, when instead there are lots of buyers bidding for the same REO, thus driving the price back up, so if you really love a home, put in your best bid so it doesn’t get taken by someone else.
It’s absolutely a good idea to put in a full price or even a little than higher full price bid when you go for a short sale. Here in Central Florida, the competition is so high, that anything less usually gets passed over by lenders.
**Petra Norris´s last blog post..Lakeland Florida – A Great Place to Live
Wow. That is some serious market competition. People should definitely make their first bid their best REO offer. The market is similar here in Florida. We are flooded with REO and Foreclosure properties, but I think we are on the uphill climb now. REOs will continue to rise for a while yet, but recovery is on the distant horizno. Thanks for the post.
Trent Realty´s last blog ..Trent Realty | Florida Real Estate, REO and Foreclosure Properties