While 2009 was an awful year in terms of foreclosure activity across the Valley, the fourth quarter showed some glimmer of hope for improvement, according to the latest foreclosure market report from RealtyTrac, an online marketplace for foreclosure properties.
For the year, Phoenix-Mesa-Scottsdale ranked as the eighth-worst metropolitan area nationally in terms of foreclosure filings - default notices, auction sale notices and bank repossessions. Las Vegas ranked No. 1, while the rest of the metropolitan areas above the Valley were in California and Florida.
In 2009, foreclosure filings were reported on 133,809 houses, or more than 8 percent of all houses, up 39 percent from 2008 and 343 percent from 2007. One in every 12 households received a foreclosure notice last year.
"The good news is, in the fourth quarter, there was a 10 percent decrease in foreclosure activity in Phoenix-Mesa-Scottsdale from the previous quarter," said Daren Blomquist, RealtyTrac spokesman. "There was also a decrease even from a year ago, a 6 percent decrease from the fourth quarter of 2008."
Much of the decrease resulted from federal programs aimed at preventing distressed homeowners from losing their homes, he said.
"There's still a lot of people in trouble and potentially facing foreclosure, but instead of going right to foreclosure now they're being diverted into these different (programs) to help them avoid foreclosure," Blomquist said. "And I think you'll see in 2010 a push on the short-sale front to try to get streamlined short-sales to help people sell their properties rather than have it foreclosed on."
The majority of foreclosures are not homeowners who can no longer afford their mortgages, but instead are unhappy because their mortgages are higher than the value of their homes, said Eric Bowlby, president of Amerifirst Financial in Mesa.
"It may be their (mortgage interest) rate is adjusting and they can't refinance and get on a fixed rate because they're upside-down on the house, and that causes frustration and they get mad, and they just walk away," he said. "I don't think that long term you'll see foreclosures slow ... until the market actually rebounds and houses go up in value."
With the fourth quarter showing improvement, the big question is whether that improvement will continue into the first quarter, Blomquist said.
"We still see 2010 as a roller-coaster ride with ups and downs with the foreclosure numbers, but I think we'll start to see more positive signs," he said.