Once my mother calmed down about President Obama’s change of route on Tuesday, she asked what more or less is the pressing question regarding the Homeowner Affordability and Stability Plan … is this going to help?
As I’ve said over the last couple of days, the parameters of the plan make it unlikely that it will have any sweeping impact on the Phoenix real estate market. In some of the harder hit areas homeowners are far more under water than what this plan is ready to handle.
The end result is a limited pool of homeowners who can benefit, refinance and hold on to their homes versus going into foreclosure.
But it’s really not that simple. And completely writing off the plan as useless for those of us in the Phoenix market is a bit short-sighted.
First, anything that will keep at least some homes from being foreclosed upon and being added to the already swollen inventory only can be of benefit. And second, the banks have been embracing this plan – more likely than not because of the financial carrots attached – and in doing so also have announced an extension of their moratoriums on foreclosures.
To date, foreclosures in the Phoenix real estate market have been absorbed fairly well … we’re still seeing a 3 – 4 month inventory of bank owned homes on the market, which is half to one third of the absorption rate for traditional sales. This is where the greatest demand has been and this is where the latent buyer demand many of us believe exists has been most apparent.
There still are foresclosures coming to the market – most moratoriums deal only with primary residents where the owners still reside – but at least to date at a somewhat manageable pace. As the traditional spring buyers blossom, the expectation would be for the inventory of these homes to drop as more or purchased.
For those looking for a direct benefit to the local market, the Homeowner Affordability and Stability Plan almost certainly will fall short. But add in some of the trickle-down effect that we might see, and there’s potential of a little help happening.
[tags]Phoenix real estate, Homeowner Affordability and Stability Plan[/tags]