Years ago I was visiting friends in Dallas and discovered something interesting about an area surrounded by absolutely no mountains whatsoever – when you see a storm cloud on the horizon, slowly growing larger, it’s coming for you and there’s nothing that’s going to stop it.
That’s not the way storms work here in the Phoenix area; throughout the summer we watch thunderheads build on the horizons, bringing rain to the White Mountains in northeast Arizona or down in Tucson. But in Phoenix itself, a thunderstorm on the horizon only means someone else is getting rain and, with a little luck, we may see some ourselves.
In the real estate realm, we’ve heard for years that there’s a storm a-coming … a cataclysmic number of homes have been held back by the banks, either not foreclosed upon or never put on the market even after being foreclosed upon … a storm that, until it hits and goes, will stall any effort of the housing markets to recover.
Until now, those predictions have been much like the thunderheads on the horizon – they appear, they build ominously, and they disappear without coming anywhere near the Valley. So lacking has the precipitation of foreclosures been that as of this morning there are 8,230 single-family detached homes for sale across the Phoenix real estate market. Drilling down a little bit:
- 1,638 for sale in Phoenix
- 1,450 in Scottsdale
- 296 in Glendale
- 361 in Peoria
- 69 in Avondale
- 259 in Goodyear
- 499 in Surprise (299 of which are in the retirement communities)
That is, in a word, nothing.
Yesterday, I received an e-mail from a colleague whose brokerage has a Fannie Mae contract. The past few months have been like a Maytag repair shop (or so the commercials always have told us) as a bare minimum of bank-owned inventory has come to the market. (Bank owned homes represent about 10 percent of the current active listings.) To say the least, it raised a few questions:
“(We were) asked to do 20 bpos on fannie mae properties, most
which had been foreclosed on in 2010 and 2011. They asked for values and
rents. After wading through 10 of these today while trying to maintain
quality, I am going through the possibilities as to what might be on the
horizon. Bulk sales, rental initiatives or just plain old REOs to give
this market some much needed inventory
What should be a clear positive in this is that Fannie Mae is doing something.
But the desire to know rental rates is a little bit concerning, to be honest, as there is zero reason for Fannie Mae to be concerned about such things. Fannie Mae has laid plans for bulk sales through a so-called foreclosure-to-rental initiative. Such a plan is absolutely unnecessary here in the Phoenix market at the moment, given the heightened demand and the utter dearth of supply. It was my hope that someone at Fannie Mae might realize all markets are not created equally but maybe that’s not actually the case.
Hopefully – very hopefully – these BPOs turn into actual listings and real inventory for real buyers to purchase. When there are a couple dozen offers made on every property until $100,000, it would seem to safe to assume there are more than just the same couple dozen buyers bidding on all the same homes. Which is another way of saying, list it and they will buy. At least right now.
Finally, there’s the slightest hint of a Fannie Mae-created thunderstorm on the horizon. Let’s hope it makes it the Valley.