Here’s this week’s Phoenix real estate snapshot – foreclosure tsunami more wishful thinking than reality:
Inventory is stabilizing at about 22 days of inventory – less than 4,000 homes on the market – in Metro Phoenix. Typical inventory is 134 days. Prices continuing to rise quickly with no relief in sight for buyers. The median home price, $360,000, is up 18.8% from last year with appreciation currently 25.1% and rising. Keep in mind that sales price is a lagging indicator of the market – we have yet to see the full effects of the homes actively listed and under contract that will sell well above the asking price.
Total monthly sales are up 4.2 % from last year with an average of 6 days on the market before the home goes under contract. The only bright spot here is that mortgage rates are relatively unchanged from last week.
There’s a lot of talk about the tsunami of foreclosures heading to the Phoenix real estate market once the forbearance periods end and the foreclosure moratorium expires. This falls squarely in the “wishful thinking” category as the number of mortgages in active forbearance is declining without any perceptible impact on the inventory in Metro Phoenix. There were 23 foreclosures in March 2021, about 10% of what we typically see in a “normal’ market, whatever that means anymore!
Homeowners today have record levels of equity in their homes. If the forbearance period ends and the homeowner decides to sell, the sale most likely won’t be a foreclosure or short sell. The seller will be looking for top dollar because that money will go into their pocket, not to the bank. Even if every one of the homes currently in forbearance came on the market, the increase in inventory would still be well below “normal”. We saw that in April of 2020, when the market essentially shut down due to COVID restrictions. It was a short-lived, barely perceptible respite from a severely understocked real estate market. So, in a nutshell, reports of a tsunami of foreclosures flooding the market may be overstated.