Home sales continue to climb as more and more foreclosures are snatched up by investors. Foreclosure inventory in the last month has dropped from 10,200 to 6,700 – pending home sales are at 8,183, and 5,508 homes were sold in the last 30 days. Investors are buying foreclosures at a faster rate than they are hitting the market.

The percentage of foreclosed homes in Tempe is lower than the rest of the valley (8 percent versus 35 percent), which means Tempe’s absorption rate continues to hover at a 10 or 11 month absorption rate. The absorption rate is the ratio between active and solds: the time it would take at the current rate of sale for the inventory to be completely sold. Valley wide, however, the absorption rate is now 5.0 – the last time the Valley real estate market saw the absorption rate this low was in 2006. In the last 30 days, 8,527 homes have been sold, bringing the inventory of available homes down to 42,466.

While foreclosed homes continue to close at a rapid pace, the real estate market is having a more difficult time moving short sales and pre-closure properties. Short sales and preclosed homes only have a 1 in 15 chance of closing. At present, there are 12,054 short sales on the market and last month, only 804 of those closed. It is for this reason that many of my clients are choosing not to pursue short sales – they are waiting until the banks are more responsive to buyers.

This stunning turn around in the market occurred in the time span of a few weeks. Some insiders are claiming that another wave of foreclosures is about to hit the market, but judging by the high demand for foreclosed properties, these homes won’t last long. As we move into the prime buying time for homes, the demand will continue to increase on the retail end of the market.