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Art Welch, Real Estate Pro in Buckeye, AZ

Is there a shadow inventory of foreclosed homes in the Buckeye Area?

Asked by Art Welch, Buckeye, AZ Tue Jun 12, 2012

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Shadow inventory does not exist in Arizona. It is primarily in the judicial foreclosure states. It takes up to 3 years to foreclose on property in the slowest of those states. So you have a build up of inventory coming to the banks. In Arizona it only takes 90 days to foreclose on a home. So we have been through the inventory.
In fact, 4 years ago at the end of March, we had 55,000 homes on MLS for sale. 3 years ago it was down to 35,000 homes. 2 years ago it decreased to 32,000 homes. Today it is under 10,000 homes available on MLS for sale. That is everything. Bank owned, short sales and traditional sales. A price neutral market would have around 30,000 homes. Less than that and you have upward pricing pressure or a "seller's market".
The result is the median price of a home in the Phoenix metro area has risen 25% from August of 2011 to today. This is from the absolute bottom of the market. It is still approximately 10-15% below the duplication costs of a builder.
Last: Wells Fargo, Chase Bank and B of A had a meeting with 600 Realtors in the early spring of this year. They were asked point blank if they were holding any inventory back. The said they are releasing the homes they own as soon as they get them.
It will be some time before builders can catch up to demand. Primarily because no one has been developing lots for them to build on and they are running out of inventory.
2 votes Thank Flag Link Tue Jun 12, 2012
Why would you think there might be a shadow inventory anywhere in the greater Phoenix metro area??
1 vote Thank Flag Link Tue Jun 12, 2012
I don't but I just got done with a class with at least 10 students saying they were sure there was. It amazes me of how uninformed some agents are and I was looking to see how many would respond?
Flag Tue Jun 12, 2012
Hi Art,
I'm a realtor and live in the area. The best answer I can give you is to hook up with a realtor and get access to the MLS. We can see all the inventory on the market - including foreclosures. On the other hand there is another way to look at buying, if you are an investor.

Give me a quick call or email and I would be happy to help.

BJ Gallagher
623.518.0022
bj@myazgolfhome.com
0 votes Thank Flag Link Sat Oct 13, 2012
Lynn, is absolutely correct. No shadow inventory in Central Arizona. I asked Chase and Bank of America representatives how many non performing loans they have on the books. I was given a 7% figure. I asked what the number was before the crash -answer 3%. If every one of those extra 4% delinquents homes were put on the market tomorrow it might double or triple our current inventory. This is unlikely and further points out the fact that the current inventory will be insufficient to handle short term demand. New housing is once again going to need to fill the void. Builders are slowly responding, but not yet building spec homes. Builders are generally waiting for customer orders, probably as a result of insufficient bank financing support.
0 votes Thank Flag Link Tue Jun 12, 2012
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