According to a CNBC article found here, the national real estate market is facing a double dip. This includes homes in the Phoenix – Metro area including Tempe, Chandler and Mesa. According to the article, 34.5% of houses are Real Estate Owned (“REO”). This means that they are owned by the banks either due to a foreclosure or a bankruptcy. Those homes are now entering the market after banks have held onto them for a long period of time. On a side note – the banks are finally putting these houses up for sale for tax reasons, otherwise they would take a much larger loss in future.
Fortunately (maybe???) for Arizona homeowners, this second dip is not affecting the home prices as much in Arizona, especially in places like Tempe, Chandler, Mesa, Scottsdale, because Arizona has already been hit so hard. However, according to this article, the national home prices have slid a whooping 4.9% quarter over quarter and 5% year over year. This means that the loss of home prices has occurred in the last three months, and that this loss of price is nearly as much as the entire drop the last year.
This clearly indicates that the housing market is in a sharp decline nationally. The government attempted to artificially prop up home prices by introducing the first time homebuyers’ tax credit. This tax credit has expired and no one is buying homes anymore. This creates a loss of demand and therefore a sharp loss in price.
It remains to be seen if the government will attempt to prop of home prices again by offering another incentive. Personally, I believe that the housing market will only recover once the actual market value has stabilized naturally. By naturally, I mean that once the houses reach the true fair market value of the property that reflects the amount of demand for those houses on the market. Government interference with this natural balance point causes false balance points to arise and will continue to prevent the actual natural price point from being reached. An obvious example of this is the recent housing boom that was created by the government “printing” arge amounts of money and giving it to banks with no interest rate.
In any event, it is clear that this is even more bad news for the national real estate market and also for those real estate markets closer to home.
Thank you for taking the time to read this article by Tempe Bankruptcy lawyer Glenn W. Roethler. The views expressed in this article are his alone and do not reflect the views of all the members of Greeves, Price & Roethler, PLC.