Morgan: Foreclosures shouldn’t change the market
Historically speaking, foreclosures have played a role in Maricopa housing prices.
A foreclosure, in a nutshell, is when a homeowner falls behind on their payments and the lender begins legal proceedings to recover the amount owed. Owners receive 90 days notice to update their payments. At the end of the 90 days, there is a trustee‘s sale, or auction, where the lender sets the minimum bid at the amount to satisfy the loan. If this minimum is not reached, the bank becomes the owner of the asset and sells it.
During the Great Recession, a wave of foreclosures from 2008 to 2011 sent the market sinking like a stone.
The peak of the trend came in 2009 when 1,651 homes were sold, either owned by lenders or HUD homes, meaning the homes weren’t bought in the trustee sale and the lenders took possession of it.
Many things have changed since those days. Most notably, for almost two years, there has not been a single seizure in Maricopa, or anywhere else for that matter. In early 2020, the federal government imposed a moratorium on foreclosures, which was lifted earlier this year in January.
Logic would dictate that after nearly two years of moratorium, there is a backlog of foreclosures that need to be dealt with.
So, does this mean there will soon be a flood of cheap homes on the market?
Unlike the Great Recession, house prices have risen during the pandemic, so homeowners who fall behind on their payments can usually simply sell their home, avoid foreclosure, and even make a profit.
And homes that still make it to auction are bought by investors bidding more than the minimum bid amount. These homes are then flipped and sold at market value.
There are currently only 19 “pre-foreclosure” homes in Maricopa where a trustee sale date has been set. But even if that starts to increase, the number of homes that will become lender-owned properties will likely remain at or near zero.
All of this means that the market is still hot and the few potential foreclosures that arise are quickly absorbed and have no effect on prices.
Dayv Morgan is a Maricopa realtor and owner of HomeSmart Premier.
This sponsored content was first published in the July edition of InMaricopa magazine.