Foreclosure activity is robust in the greater Phoenix area so far this year, as home prices continue to come up short compared to a year ago. According to a report from the W.P. Carey School of Business at Arizona State University, foreclosed properties accounted for 43% of the Phoenix market during January, up from 30% the last few months of 2010. Across the Phoenix valley, the amount of foreclosure resales varied. In El Mirage, 52% of sales were attributable to foreclosures, as well as 42% in Surprise, 46% in Maryvale, 38% in Chandler and 29% in Scottsdale. More than 3,600 single-family homes were foreclosed on during January, up from less than 2,500 in December, the report said. About two-thirds of foreclosure-related activity occurred with houses that had been foreclosed on more than once. Jay Butler, associate professor of real estate at ASU and author of the report, said he can’t put his finger on the root of the problem, but either way it means bad news for the housing recovery around Phoenix. “The main question for the coming months is whether the January surge in foreclosure activity is a temporary response in unclogging the pipeline after foreclosure moratoriums ended or a continuation of a market being dominated by foreclosures,” Butler said. The median sale price for all homes was $125,000 in January, flat compared to December but down 8.4% compared to $136,500 in January 2009, according to ASU’s report. With regard to foreclosed properties only, the median sale price was $143,580, up from almost $142,000 in December and down from $153,000 a year prior. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.
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Even in normal conditions foreclosure is a cumbersome solution to the problem of the defaulting borrower. It can produce vacant and abandoned properties, because as soon as the residents receive notice that the house will be going into foreclosure, they face uncertainty about when they will be ousted, which prompts many to vacate the premises before getting thrown out.