The Facts On Shadow Inventory In Phoenix Housing Market

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With a little bit of investigation, the claim that there is a tremendous shadow inventory on the Phoenix real estate market is easily dispelled. Unfortunately, homeowners and homebuyers are oftentimes led adrift by erroneous reporting, even in major news outlets. There are resources that should be verified to get an accurate appraisal of how much stock may be on the market and that is currently with lenders.

Erroneous Reporting

Reuters, one of the major news outlets in the world, reported in July of 2012 that price gains in Phoenix – and other allegedly foreclosure-heavy cities such as Miami – are largely because banks own an abundance of inventory that they’re not putting on the market. The excuse given for this is a possible scandal due to robo-signing on the part of banks. Unfortunately, the data distributed in the media is unreliable.

In the Phoenix market, at least, if the banks were to let the inventory that they currently hold onto the market, it would make a negligible or no difference at all in the prices for homes, specifically considering how much demand has increased over the last year.

Not That Many

The Cromford Report follows the amount of inventory that is owned by lenders. This tracking is only accessible by subscription, but it keeps record of Phoenix real estate inventory to a very precise degree. According to these reports, there aren’t even 5,900 residential properties in the hands of lenders. Almost half of them are already active, some of them are pending sales and others are off of the market on ARMLS, according to Arizona Real Estate Trends.

Of the inventory not included in that number, lots of them are under leases and are occupied by tenants. The summarizing goes on to mention that, even if that entire amount of housing inventory was released onto the market, it would account for less than two weeks of inventory in the Phoenix market. This would not have any significant effect on the prices of real estate in the overall market. In fact, in a healthy real estate market, the inventory is usually in the neighborhood of six month’s worth of homes.

Not Many Foreclosures

Another popular thought is that Arizona is one of the worst states as far as foreclosure rates go. In fact, Arizona’s foreclosure rate is below the national average. Currently, according to the reporting, Arizona has almost 5.9 percent of its homes which are 30 days delinquent and not yet in foreclosure. The national average for that same figure is 7.6 percent. As for homes that are more than 30 days delinquent and that are in foreclosure, Arizona has a rate of 8.7 percent, while the nation as a whole has an average of 11.3 percent.

Though the two states are oftentimes mentioned side-by-side in real estate reporting, Florida has a 21.3 percent rate of loans that are 30 days or more past due and that are in foreclosure, showing that Arizona is in much better shape than is portrayed in the media. Shadow inventory on the Arizona real estate market, quite simply, is a fantasy.

If you are interested in learning more about Phoenix homes or have any questions about buying or selling homes in Phoenix or the surrounding areas, please feel free to SEARCH PHOENIX REAL ESTATE or contact PHOENIX ARIZONA REALTOR Jen Wehner.