Valley foreclosures set record in 2009 - East Valley Tribune: East Valley Local News

Valley foreclosures set record in 2009

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Posted: Wednesday, January 13, 2010 2:37 pm | Updated: 12:40 pm, Tue Dec 4, 2012.

Last year was a record year for residential foreclosures in the Valley as more homeowners pressured by job losses fell behind on their mortgage payments, according to a report from the W.P. Carey School of Business at Arizona State University.

About 41,000 single-family homes were foreclosed on in 2009 in Maricopa County, beating 2008's previous high of 34,960, said Jay Butler, associate professor of real estate, who follows foreclosures in his monthly Realty Studies reports. Condominium foreclosures also set a record with 5,065 during the year, he said.

The figures represented the number of foreclosure sales recorded with the county. More than 35 percent of existing-home transactions during 2009 were part of foreclosure proceedings.

"Historically, that is an extremely high number," Butler said of the percentage number. "Normally it's a single-digit percentage."

In December alone, more than 4,000 Valley homes were foreclosed on, up from just under 3,000 in November. Last month, 67 percent of the activity in the Valley housing market consisted of foreclosures and the resale of previously foreclosed-on properties, the study said.

The December jump indicates the foreclosure crisis will continue into 2010, Butler said.

"Like 2009, we probably will see an increase in the early part of the year," he said. "The economy is still weak; job losses are continuing every day."

In addition to the weak economy, interest rates are expected to rise, "so the housing market will probably bounce around for a while longer," he said.

One positive sign is that home prices are remaining fairly stable, he said. The median price of a single-family Valley home went down in December to $140,000 from $143,000 in November. In December 2008, the median price was $146,000.

"Hopefully, 2010 will be the transition year when we start to move back to more of a market that you think of as being normal," Butler said.

R.L. Brown, an analyst who publishes the monthly Phoenix Housing Market Letter, is not optimistic.

"There is a continuing problem, and it's long way from being solved," he said.

With continuing job losses and continued resetting of variable-rate mortgages to higher interest rates, the stage is set for more foreclosures unless remedial action is taken by the federal government, he said.

Brown thinks such action could be forthcoming as the November elections draw near and Washington politicians become concerned about their future job security.

What's needed is "significant pressure" on loan servicers and lenders to modify loan terms to reduce balances or lengthen the time for repayment, he said. The lack of such pressure has made President Barack Obama's foreclosure-avoidance programs ineffective so far, he said.

Locally, the foreclosure crisis also is closely intertwined with economic conditions, he said. An economic recovery is needed to reduce the number of foreclosures, but in Arizona so many jobs are tied to housing and real estate that it will be tough for the economy to recover without a stronger housing market.

"What we are seeing is an end to growth as the major engine of our economy," Brown said. "We will have to see a restructuring of this region on a sounder economic base."

In a related report, RealtyTrac, an online foreclosure reporting service, said Arizona finished second in the nation in the percentage of home foreclosures and third in the actual number in 2009.

RealtyTrac, which uses a different method of collecting its data than Butler, said Arizona registered the nation's second-highest state foreclosure rate with 6.1 percent of its housing units receiving at least one foreclosure filing during the year.

A total of 163,210 Arizona properties received a foreclosure-related notice in 2009, up nearly 40 percent from the previous year and 323 percent higher than in 2007, the report said.

Nevada posted the highest rate with more than 10 percent of its housing units receiving at least one foreclosure notice during the year. California ranked No. 1 in the actual number of properties receiving filings at 632,573, which was 4.75 percent of its total housing units.

Nationally, a record 2.8 million households faced foreclosure last year, a 21 percent increase over 2008. One in 45 homes was sent a filing.

"As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James J. Saccacio, chief executive officer of RealtyTrac.

"In the long term a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond as lenders gradually work their way through the backlog."

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