PHOENIX - As the number of foreclosures rises, and buyers dwindle, some predict a second wave in a devastating housing crisis.
From 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.”
Also sometimes called a foreclosure start, it’s any home which is at least three months behind, and has been given notice of a trustee sale.
On Barry’s 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 neighborhood.
“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.”
Ninety 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 market.
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 billion.
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.”
Copyright 2010 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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