Getting a Phoenix Short Sale is easier than ever with rising market prices, fewer foreclosures
If you had been considering getting a Phoenix short sale, as a Buyer OR Seller, now is a better time than ever. Short sales continue to be the resource for under market-value properties, and make the metro Phoenix area one of the top in the nation for finding beautiful homes at majorly discounted prices.
Short sales are an alternative option to foreclosures, in which a bank agrees to sell a home for less than the total mortgage amount owed in order to avoid foreclosure. Nationally, short sales have risen dramatically over the last year and continue to do so as the housing market improves.
The real estate analysis company RealtyTrac ranked the Phoenix short sale market as the 14th best in the nation. In the fourth quarter 2012, short sales in Arizona had increased 43 percent from the year prior, with the average short sale price at $149,094 and the average amount of time necessary to close a sale at just over six months.
This is much higher than the 17 percent average year-to-year increase in short sales reported nationally, but even that number is impressive and a sign of the major improvements happening in housing markets across the country.
Foreclosure inventory down
It’s even more impressive when considering the state of foreclosures – the average number of foreclosures nationally in the fourth quarter 2012 decreased by 6 percent from 2011 and 11 percent from 2010.
The Phoenix market was also significantly higher in the average amount short, or the amount lost by the bank between the sale price and what was still owed on the mortgage. In Phoenix, it was $98,479; nationally, the average was $81,621, down 7 percent from the year prior.
Even though losses on short sales are down on average, that is still a high amount – regardless, RealtyTrac says that banks would much rather take the loss than go through the foreclosure process, which comes with additional expenses, time, and complications.
Of RealtyTrac’s list of the top 15 markets for short sales, seven saw an average amount short over $100,000. The average short sale price in these markets ranged from $283,825 in Santa Monica, CA to $91,145 in Grand Rapids, MI. Only markets with at least 200 short sales made in the fourth quarter 2012 were considered.
Top Pre-Foreclosure Markets
On their list of the top 15 markets for foreclosures, Phoenix was not present. However, 34 percent of home sales Valleywide last year were foreclosure-related, while the number of pre-foreclosure sales, or sales of homes that are still in default or headed toward auction, rose in 28 states. Pre-foreclosure sales were actually higher than foreclosure sales in 12 states, including Arizona. Phoenix short sale inventory has decreased year over year the last several years, but is still well above what’s considered a “normal” average.
Nationally, foreclosures comprised 21 percent of all home sales in 2012, down 2 percent from 2011 and 7 percent from 2010. With most banks preferring short sales – and with the short sale process becoming increasingly easier – that number is expected to decrease even further in the coming years.
A shrinking bank-owned inventory is also decreasing the number of foreclosures. Although distressed property sales, including both short sales and foreclosures, made up 43 percent of all home sales in 2012, short sales now contribute a larger portion of that share.
The limited foreclosure inventory and strong demand by consumers are pushing the average price of distressed properties higher and higher, which is a good thing for banks looking to make back as much money as possible and the overall state of housing market.
With short sales on the rise in the improved Phoenix housing market, now is a great time to see if you qualify for a Phoenix short sale.
Tracy (G+) is an Arizona Short Sale Realtor, Investor, Rehabber, and Foreclosure Expert.
She also is an avid blogger, vlogger, contributor to the Bigger Pockets Blog, and consultant on all things Arizona Foreclosures.