PHOENIX - As the number of foreclosures rises, and buyers dwindle, some predict a second wave in a devastating housing crisis.
his office in Desert Ridge, realtor Brett Barry can peer into the
pitfalls of any neighborhood in the Valley. Using tax records, Barry can
track the number of homes in “pre-foreclosure.”
called a foreclosure start, it’s any home which is at least three months
behind, and has been given notice of a trustee sale.
map, an icon in the shape of a judge’s gavel marks every home in every
neighborhood facing the same fate. When he zooms out on the map, the
gavels look like a cancer – with at least one or two in every
“I can show you any area of town,” he said as he
moved the mouse from one community to the next. “It doesn't matter
where. We can look in Scottsdale. We can look in metro center, you're
going to see the same density of pre-foreclosures.”
percent of the time, Barry said, those homes wind up in foreclosure and
owned by the bank. Often, however, pre-foreclosures don’t show up in
data used to measure the overall health of the Valley’s real estate
According to the Center for Responsible Lending, a
non-profit which tracks predatory lending practices, Arizona is far from
turning the corner in the foreclosure crisis. This year alone, CRL
predicts 138,500 homes in the state will go into foreclosure. In a
period between 2009 – 2012, the center predicts the number of
foreclosures will top 450,000.
For each of those foreclosed
homes, CRL points to a ripple effect on the economy. The average
homeowner in Arizona has already lost more than $22,879 in property
value. More than 2.2 million homes have been affected by foreclosure,
and by 2012, the center reports, Arizonans will lose a collective $51.7
Market watchers say it could take decades to recover. As
the number of foreclosures has risen, banks have kept homes off the
market, creating what some real estate experts call a “shadow market.”
As banks release more of those homes on the market, inventories will
rise and prices will fall. By some estimates, more than sixty percent of
homeowners in Arizona are underwater on the mortgage, owing more than
the home is worth.
Barry sold his own home last month, believing
prices will continue to drop. He said prices could fall another 20
percent before the market rebounds.
“You combine a slowdown in
activity, with an increasing number of homes on the market. Those two
forces combine, it's going to create the perfect storm.”