For the 11th straight month, sales of previously-owned homes, including foreclosed home auction sales, increased in the Phoenix metro area in May, based on real estate sales data in Maricopa and Pinal counties.

In May, a total of 8,587 units of pre-owned homes and units from foreclosed home auction inventories in the Phoenix metro area got sold. Sales prices also increased, marking the first time existing-home sales price increased on a month-over-month basis since 2007.

In the counties of Maricopa and Pinal, which cover the Phoenix metro area, a total of 9,562 homes got sold, representing a 6.1-percent increase from April sales and a 26-percent increase from sales in May last year.

The increase in home sales in May marked the fifth straight month that home sales increased on a year-over-year basis.

In contrast, sales of new homes in May dropped by 51 percent from May 2008 to only 957 units, marking the lowest May sales in more than ten years.

The record low sales of new homes indicate that low foreclosed home auction prices have been enticing home buyers to find properties in the resale sector of the housing market.

The median home price in May in Maricopa and Pinal was $129,435, a drop of nearly 39 percent from the median in May 2008 and an increase of 3.5 percent from the median in April. The month-over-month increase in May was the first time the median home price increased since March 2007, when the February median of $253,500 increased in March to $256,000.

Real estate analysts said that a higher number of traditional buyers accounted for the increased sales in May. These buyers included families moving to communities where the schools are better and individuals taking advantage of sales promotions typically offered during the May home buying season. But the number of buyers looking for foreclosed home auction units in May was still significant.

Because of the uptick in home sales prices, some real estate analysts are considering the possibility that home prices have bottomed out in Phoenix. Some point out to the median sales prices per square foot in April and in May, which remained at $64 – as a positive sign.

Analysts said that the May per-square-foot price was a decrease of more than 46 percent from May 2008 and a drop of nearly 63 percent from the peak rate in June 2006, which was $171.

Nevertheless, despite the uptick in home sales price, the prices of units in foreclosed home auction inventories in the Phoenix metro area are still affordable to many home buyers.

Real estate analysts in the area said that first-time home buyers will soon account for 50 percent of the metro area’s total home sales.

In the first two months of 2009, sales to investors still accounted for many purchases of bargain-priced foreclosed homes for sale across the city, but they did not dominate the market as aggressively as they did in the heydays.

In April, around 19 percent of homes for sale in the metro area were snapped up by investors, based on data from Cromford Report real estate consultant Mike Orr, who analyzes data from the Information Market and the Arizona Regional Multiple Listing Service.

During the heyday of the housing market, home purchases by investors accounted for about 40 percent of home sales in the Phoenix metro area.

Among the factors encouraging first-time homebuyers to plunge into the housing market are the federal $8,000 tax credit for first-time home buyers and various programs offered by states, cities and counties to help first-time home buyers to buy foreclosed homes for sale. Funds from the federal Neighborhood Stabilization Program also enabled cities to help lower-income families to take advantage of the low prices of foreclosed homes for sale.

The median home price in the Phoenix metro area is $116,500, an increase of 1.3 percent from the $115,000 median price in April. Analysts said the increase is negligible, but if the gains continue for the next 12 months, home prices could improve by an annual total of 15.6 percent.

The per-square-foot median price of a home in the Phoenix metro area increased to $84.86 in May, an increase of 2.4 percent compared to the price in April.

Orr also related that Valley homes offered for sale below $150,000 are easily and quickly snapped up. Many foreclosed homes for sale in the $150,000 range have been getting multiple purchase offers.

Realtors have also observed that the investors buying homes in Phoenix now are different from the housing boom speculators who made very small amounts of down payments and who just walked away when the market collapsed.

Now many investors are expressing their faith in the Phoenix metro area by buying in cash or making large down payments for foreclosed homes for sale.

In the first quarter, the metro area covered by Phoenix, Scottsdavle and Mesa is ninth in RealtyTrac’s ranking of metro areas with the highest foreclosure rates. One home in every 40 houses was hit with a foreclosure filing in the first quarter and a total of 41,382 houses received default notices and foreclosure auction notices.

Among investors driving around Phoenix looking for foreclosure auction events and new foreclosure properties is Lou Jarvis, an executive for real estate management company Brewer Caldwell, which has been hired by Alberta-based CBI Group to invest in Phoenix’s housing market. CBI has allotted money to buy 175 houses from foreclosure auction events in Phoenix and then turn them into rental homes.

Jarvis was a former wood molding firm co-owner who also invested in a house that has gone underwater. He said he is working to recoup his losses by working out deals in the same area where he, his adult children and brother have lost money.

One of the homes Jarvis has snapped up for CBI is a house previously owned by the Aguilars. The Aguilars said they bought the house in 1999 for only $111,000, but they refinanced it in 2006. They now regret the refinancing decision, because although they are now renting the house at an amount lower than their monthly mortgage payment, it is no longer their house.

In contrast, the purchase and rental deal has a lot of profit potential for CBI. CBI executive Jarrett Zielinski said CBI’s investment of $52,000 in the Aguilars’ house will be recouped in just five years. He said no other city housing market has fallen the way Phoenix’s market has.

Because of the apparent success of CBI’s first round of investments, it has opened another fund to finance the purchase of 160 more Phoenix homes from foreclosure auction events and from other sellers of foreclosure homes.

CBI is also planning to conduct investment seminars for its renters with the goal of making them acquire their house back.

Jarvis’ company Brewer Caldwell has already purchased about 125 homes in 2009 for CBI. About one-fourth of these homes were occupied by former owners who were willing to rent them.

Although Jarvis’ company is benefitting from foreclosure auction events in Phoenix, Jarvis is sad that he had to advise his daughter to walk away from her house whose value has declined by 60 percent.

Data from RealtyTrac, a foreclosure listing service firm, showed that 75,000 of foreclosure properties were in Phoenix and Maricopa County. Additionally, 7,100 foreclosure properties were located in Pima County and Tucson.

The overall picture of Arizona foreclosures may seem grim but homeowners are starting to see a light at the end of the tunnel of foreclosure properties brought about by the $75 billion foreclosure prevention program which was announced in February.

As of March 2009, mortgage brokers and housing counselors noted that lenders started to adjust interest rates and loan principals to make them affordable to distressed homeowners.

And also last month, the number of foreclosure properties started to decline in metro Phoenix area. And together with the decline, over 3,000 pending foreclosure activities were canceled.

When President Barack Obama announced his Homeowner Affordability and Stability Plan in February, lenders were slow to follow the foreclosure properties prevention program’s guidelines for either loan modification or refinancing.

Community Housing Resources of Arizona director Joann Hauger said that when distressed borrowers heard about the program, they called their lenders to ask if they were qualified. She said that most lenders were unprepared about the onslaught of questions that they were unable to help homeowners.

Hauger noted that after the initial confusion, lenders started to catch up and modified loans.

Under the loan modification program, distressed homeowners who are facing the threat of foreclosures because their incomes were reduced are eligible to have their loans modified. The modification should be that the monthly mortgage payment is not over 31 percent of the distressed homeowner’s income.

To encourage lenders to modify loans, the Obama Administration is offering incentives of up to $2,000 for each loan they adjust to prevent foreclosure properties.

The modification program also expands the terms of mortgage loans and lowers interest rates and principals. In refinancing, only interest rates are lowered.

According to industry experts, lenders find it difficult to do loan modifications all together because the adjustments are based on every homeowner’s situation. However, loan modifications have started to get a foothold as some lenders and homeowners are finally negotiating.

A report released by the Pew Charitable Trust said that over the next two years, one out of every eighteen household could be part of foreclosure homes in Arizona.

Napolitano went on to say that the state would receive benefits from provisions in the passed housing bill in the form of more options for refinancing loans and additional funds for revitalizing affected neighborhoods. The funding, she said, would help the state tackle the issues of increasing foreclosures and improving neighborhood conditions.

Napolitano, along with thirteen other governors had urged President Bush to lend his support in passing the legislation.

Arizona has also created a task force to work on prevention of foreclosures and has also set up a toll free helpline to address questions put forward by homeowners part of the Arizona foreclosure homes.

A measure passed by the Legislature and signed by Napolitano will now see the licensing of loan-originators. This move was supported by the Attorney General’s Office, the Department of Housing, the Department of Real Estate and the Arizona Department of Financial Institutions.

Only time can judge the effect of these measures on people who are part of foreclosure homes in Arizona.

J.D. Bondurant, a research analyst working with the Virginia Housing Development Authority, said that because proceedings for foreclosures were not recorded at one place in individual jurisdictions, accurate statistics were impossible to be compiled.

He went on to say that there existed a large number of high cost loans, where the borrowers would ideally qualify for conventional mortgages, leaving one with the feeling that these borrowers had been preyed upon.

While Southwest Virginia has a comparatively lower rate of foreclosures, he said that this wouldn’t take long to change due to a prevalence of possibly unstable loans with adjustable interest rates.
Homeowners with the possibility of refinancing will now breathe easier.

There has been a drastic increase in Arizona foreclosure homes with 37,230 foreclosures filings this quarter. The number of Arizona foreclosure homes has increased by 36% from the previous quarter and are four times from those reported in the same period last year. As far as states are concerned, Foreclosed homes in Arizona are running the race having the third highest rate in the country. The rate of Arizona foreclosures suggests that one in every seventy households here is an Arizona foreclosure home.

Arizona foreclosure homes are one of those very few in the country which have experienced a bit of decrease in the foreclosure activity when compared with the majority of states. The national scenario is a bit different in which 96% states and 95% of the metropolitan or developed areas have shown consistent increase in foreclosed homes.

One of the very important aspects worth considering about Arizona foreclosures is though the foreclosure homes in Arizona are increasing, cities like Scottsdale are also experiencing stable market due to less number of foreclosures as compared to other cities and increase in sales of these foreclosure homes. The median price for a foreclosed property was $360,000 while for a regular home was $525,000 in the month of June which allowed people to purchase more of foreclosure homes. Arizona foreclosure homes can be considered as one of rare scenarios having a brighter side.