Foreclosures represented 43 percent of the transactions in the single-family-home resale market by January's end, up from 30 percent in the last few months of 2010. More than 3,600 single-family homes were foreclosed in January. That's way up from less than 2,500 in December.
"The main question for the coming months is whether the January surge in foreclosure activity is a temporary response in unclogging the pipeline after foreclosure moratoriums ended or a continuation of a market being dominated by foreclosures," says Jay Butler, an associate professor of real estate at the W. P. Carey School of Business at Arizona State University who writes a monthly report on the areas real estate market.
In Phoenix, it is estimated that as many as 70 percent of homeowners are underwater on their loans, as AOL Real Estate reported earlier today in "Underwater Nation: Are Home Prices Drowning."
Single-family home prices for resales in the Phoenix area are below the national median, and is dropping while the nation saw a small increase. Not including new foreclosures, the Phoenix median was $125,000 View Gallery > in January, a big drop from the year-over-year median of $136,500, according to Butler's report. The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 from the fourth quarter of 2009.
Lawrence Yun, chief economist for the National Association of Realtors, says compared to a year ago, there was a rebound in home sales nationally in just more than half of the 78 metropolitan areas it tracked."
But in Phoenix, foreclosed homes sold with a median price markdown of 14 percent from the
"Beyond the impact of foreclosure activity, the absence of a strong move-up market, which is fundamental to a housing recovery, will also limit any growth in home prices," says Butler. "While lower prices can greatly improve affordability, they can adversely impact many owners and potential sellers whom are watching their limited equity erode, as prices decline to and even below existing debt level."
To be fair, since the Greater Phoenix area is so large, the median price can range significantly area to area. In North Scottsdale, for example, the median price for a foreclosed property was $365,250 (down from $374,775 in December) while the traditional market was $421,000 ($401,000 in December). In South Scottsdale, the splits were $148,500 ($159,000 in December) and $163,500 ($166,500 in December), respectively.
In Maryvale, traditional transactions were $46,000 ($43,000 in December) and foreclosures were $76,005 ($61,500 in December), while in Union Hills it was $156,600 ($156,500 in December) and $170,500 ($179,870 in December), respectively.
Gallery: Phoenix Homes for $125,000
Sheree R. Curry, who has owned three homes so far, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the Wall Street Journal, TV Week, and Fortune. She's been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher -- or at least a lender who'll give a reasonable mortgage rate to a self-employed mom.
To read more on the Phoenix housing market, check out these other AOL Real Estate stories:
Foreclosures Fall, and Why That's Bad News
All-Cash Deals Are Back: Has Housing Hit Bottom?
For more on mortgages and related topics see these AOL Real Estate guides: