At its most extreme point, the Phoenix housing market value was down 55 percent with over two-thirds of homeowners underwater. The state lost an estimated 324,000 jobs in three years, of which approximately 33 percent were in construction, according to Lee McPheters, Director of Arizona State’s JPMorgan Chase Economic Outlook Center. The Phoenix metro area endured five years of decline before realizing an astounding turnaround. According to S&P/Case Shiller, the Phoenix metropolitan area was the “only gainer” amid 20 markets surveyed in October 2011.
Market dynamics appear to have purged Phoenix of its glut of REO and other residential inventory. Sales rose in November for the twelfth straight month on a year-over-year basis, according to stats from DataQuick. A staggering nine percent increase in property value is projected for this year, according to Alex Villacorta, director of research at Clear Capital, Inc., a real estate data firm.
Pending foreclosure rates in Mariposa County (Phoenix area) have declined by almost two-thirdsin two years, said Mike Orr, publisher of the Cromford Report, a local housing service in the Phoenix area. In December, first-time foreclosure filings in Arizona fell 41 percent from the previous month to the lowest since 2007, according to data from RealtyTrac Inc.
The recovery has been fueled by Canadian buyers and the expansion of the economic infrastructure from primarily real estate construction to growth industries such as healthcare and semiconductor manufacturing. Growth in these industries is creating construction demand resulting in a 66 percent forecasted increase in single family construction permits in 2012.
Companies like American Residential Properties LLC, have played a role in reducing vacant property inventories. According to Laurie Hawkes, president of the Phoenix-based American Residential Properties LLC, said her company has purchased 800 area homes and is now teaming up on a proposal to purchase Fannie Mae and Freddie Mac properties and manage them as rentals. “Phoenix appears to be leading the nation in terms of major metropolitan areas that are recovering,” Hawkes said. “It’s considerably faster than many people thought.”
The comeback story was written by Dan Levy and John Gittelsohn and published by Bloomberg on January 18. It was also featured in The Vancouver Sun on January 19. The first segment of the article showcases the perspective of a specific Canadian investor who laments that “Now you can’t bargain nearly as much.”
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