Increasing prices ease struggles for owners

Foreclosures down 86% since height of crisis in 2010

A few years ago, it seemed all metro Phoenix homeowners had a foreclosure on their street — or were facing losing their own house.

Everybody seemed to know someone who was battling with a lender and trying to complete a short sale instead of losing their home to foreclosure.

Those days are gone, and most real-estate talk is about rising home prices again.

Foreclosures have plummeted 86 percent since the peak of the housing crisis in 2010. Short sales are down 68 percent from last year’s peak. And home prices are up 65 percent since hitting the crash low point in September 2011.

“Phoenix’s real-estate market is presently transitioning from the highest num-

ber of foreclosures in our history to a period where we’ll see the lowest number of foreclosures in our history,” said Tom Ruff, real-estate analyst with the Information Market, a data service owned by the Arizona Regional Multiple Listing Service.

In March 2010, a record 5,100 Valley homes were taken back by lenders. In September, 697 houses were foreclosed on, the lowest monthly tally since June 2007.

Most of the houses that have gone back to lenders this year were bought in the boom years of 2004-06, according to foreclosure data.

Another bubble?

The rapid rise in home prices over the past two years has some people concerned that the metro Phoenix market is headed for another bust.

But Ruff said recent trends in tighter lending standards, cash purchases and rising home prices will translate into even fewer foreclosures over the next year.

Metro Phoenix’s foreclosure crisis started in 2008 after home prices started to fall and the economy fell into a recession. Government-backed loan modifications helped some homeowners hold on in 2009, but by 2010 foreclosures were soaring.

In 2011, more than1,500 houses were selling at foreclosure auctions a month, often for less than half of what was owed on the home.

As home prices began to tick up in 2011, lenders realized they could make more money on short sales.

Only about 100 homes are selling at foreclosure auctions each month now.

“Most lenders are still encouraging homeowners facing financial hardship to use short sales as a preferred alternative to foreclosure,” said Mike Orr, real-estate analyst with the W.P. Carey School of Business at Arizona State University. “But rising prices mean that fewer people are underwater on their mortgages, eliminating their need to negotiate short sales.”

Help still available

After the downturn, neither wage increases nor the number of available jobs has rebounded as fast as home prices in metro Phoenix.

But Arizona homeowners who are having trouble making their mortgage payments and can’t sell — or don’t want to sell — have another option.

A new program to help more people pay their mortgages was launched in September. The Arizona Mortgage Relief Fund has been set up to provide counseling and loans to struggling borrowers.

The program was funded last month with $20 million of Arizona’s

Rising prices mean that fewer people are underwater on their mortgages.” MIKE ORR Real-estate analyst with ASU’s W.P. Carey School of Business

share of the $25 billion national mortgage settlement with the nation’s biggest lenders.

“Many people have received help, but the foreclosure problem was so huge and unmanageable that early cases fell through the cracks,” said Patricia Duarte Garcia, executive director of the non-profit Neighborhood Housing Services of Phoenix, which is in charge of the fund. “Unfortunately, some programs to help homeowners have been more successful than others.”

Federal programs also are still available.

The federal Making Home Affordable program, launched in 2009, has helped about 200,000 Arizonans modify their mortgage or refinance to reduce their payments.

About 2,500 Arizona homeowners have received aid from the Hardest Hit program, which provided money to states hit hardest by the housing crash and recession. About $70 million of the $268 million in Hardest Hit funds Arizona received has been committed to programs.

A federal report on how states have spent Hardest Hit funds is due out this week.

“We are doing everything we can to spend the (Hardest Hit) money to appropriately help Arizonans in need,” said Mike Trailor, director of the Arizona Housing Department. “Foreclosures are down, but we know there are still more homeowners struggling.”

Free counseling is available from the Housing Department’s help line at 877-448-1211.