During a speech at the Mortgage Bankers Association’s Mid-Winter Housing Finance Conference, Federal Reserve Board Governor Elizabeth A. Duke said that "recent gains in the housing market will continue and perhaps even strengthen."
Her comments were based on the Feds feeling that the influx of distressed homes into the marketplace will not outpace the future demand. She went on to sat that "home price increases of 10 percent or less would be enough to bring about 40 percent of underwater homeowners out of negative equity, which could lead to more homeowners listing their properties during a time when available homes for sale has fallen to the lowest level in a decade." This may be true nationwide but the picture in my community of Maricopa Arizona is quite a bit different!
First of all, although we have experienced value increases of over 10% during the past six months, this will make little difference for most Maricopa distressed homeowners as there property values have plummeted well beyond the 10% mark, up to 50% in most cases. Currently, there are approximately 45 homes scheduled for a Trustee Sale in the next 90 days. In additionh, there are more tham 30 homeowners that are 30,60,90 days late on their mortgage payments. This may not seem like much but, for a town of 40,000 residents, it is still a signifigant number. In addiiton, I talk to numerous homeowners on a weekly basis that are current on their mortgage but are in the process of making a decision on what to do with their distressed situation. Although I feel the "flood" of short sales and foreclosures has passed, there are still plenty of of homes that will enter the market as short sales and foreclosures.
Another factor is that "shadow" invenmtory is very real in the housing market of Maricopa AZ. As I drive through any of our subdivisions, vacant homes that have been foreclosed on but not yet listed by the lender are very apparent. Some of these have remained vacant for over a year.
Without a doubt we are assisting a larger number of clients that, due to recent price increases, are now in the position to conduct a traditional sale of their home. However, inventory of homes for sale in Maricopa AZ is at or near an all time high and, with our seaonal buyers leaving in the next 30-45 days, I expect values to decline 10-20% over the next 6 months or so.
I AM encouraged by the developments in the housing market in general but my emotions are tempered a bit by the volatility of my local market. Becuase almost all of the homes in my community were built after 2002, we were caught squarely in the middle of the housing "crash" and still have quite a ways to go.
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