Phoenix Sees Fewer Foreclosed Homes, Lower Housing Inventory
- Courtney Lynch
- Real Estate Business
When the recession hit Phoenix, it hit the city hard. Homes were being foreclosed and construction workers actually fled the area, looking for better work elsewhere, according to the New York Times. However, Phoenix is coming back strong. Many home buyers are becoming interested in Phoenix again, and the city was pegged at number 92 on a list of cities with the highest rates of foreclosures.
According to azcentral.com, home builders have come back and home sellers have recovered their confidence. Almost 90 percent of sales in June, 2015 weren't related to foreclosure, an increase of about 40 percentage points from three years ago.
Foreclosure Rate Goes Down
A report from RealtyTrac listed Phoenix as one of the top five metro areas with decreased foreclosure activity in the first half of 2015. About one home for every 1,507 is in foreclosure. This is lower than the U.S. average of one in every 1,147.
The decreased number of homes available means home buyers are having a difficult time finding what they are looking for. ESPN affiliate KTAR, based in Phoenix, explained that home sellers have the advantage right now. However, more people are starting to sell their homes, adding to the housing supply.
Today, the number of homes for sale is lower than the demand, raising the price of housing and encouraging more homeowners to sell. USA Today said the lack of available homes has even caused people to enter bidding wars.
Michelle Roca, a homebuyer in Phoenix, told CNN affiliate KPHO that right now is also a good time to make a purchase. Though inventory is low, prices are also reasonable as the market is still recovering from the housing crash. She explained that buyers need to move fast if they're going to claim the home they want, at the price the want.
The Fate of Foreclosed Homes
Many of the foreclosed homes were bought early on by investors. The homes were turned into rental properties, hoping to give families who lost their homes in the crash a place to rent.
Many of these investors assumed people would view the rentals as a temporary fix. However, according to Housing Predictor, two unlikely populations have taken advantage of these homes. Millennials prefer to rent before they decide where to settle down and buy a home. A rental is an easy place to live in the meantime, with fewer responsibilities and more freedoms than a purchased home.
Baby boomers have enjoyed the increase in rental homes as well. Once their children are grown and moved out, they are left with a big home and no one to fill the rooms. Downsizing helps many empty nesters relieve the burden of having to maintain a large house. Renting further reduces this stress because the landlord is responsible for much of the upkeep.
USA Today explained the large number of investors buying foreclosed properties didn't just help those who needed to find a place to rent after losing their home. The high rate of purchases also gave traditional homebuyers the hint that it was OK to return to Phoenix and find a home.
"Metro Phoenix's foreclosure problem was fixed faster than expected, thanks to investors. It's great not to see so many empty houses," Mark Stapp, Arizona State University's executive director of real estate development, told USA Today. "Now, we have another problem. We don't have enough houses for sale, and that could stall growth later on."
The solution to this is for home construction to start up again. According to azcentral.com and Housing Predictor, this may not be so far off as building permits for homes ranging from $200,000 to $500,000 have steadily increased every quarter in 2015. This is sure to increase buyer options in the coming years.