Sunday, November 30, 2008

Phoenix-area foreclosures

Yesterday the Arizona Republic had an interactive foreclosure map and document of data (PDF) which includes the monthly foreclosure statistics for the last eighteen months:

April 2007: 553
May 2007: 475
June 2007: 579
July 2007: 676
August 2007: 806
September 2007: 1,093
October 2007: 936
November 2007: 1,344
December 2007: 1,617
January 2008: 2,052
February 2008: 2,249
March 2008: 2,365
April 2008: 2,969
May 2008: 3,402
June 2008: 3,717
July 2008: 4,104
August 2008: 4,013
September 2008: 4,378
October 2008: 4,587

Total foreclosures per year:
2004: 4,444
2005: 1,370
2006: 1,070
2007: 9,920
2008: 33,836 through October

This is not good news for a state where construction and real estate provide a large share of the employment opportunities. It is good news for those who do not own homes and have been waiting to buy at lower prices--it looks like next year will offer significantly better prices than this year, but there are still a lot of delusional sellers out there asking way too much. (There's a two-bedroom, two-bathroom house on a half acre in a quiet neighborhood near us that looks very nice, but is probably worth about half of the $429,000 asking price, based on comparable sales and the current downward trend. Zillow says it's worth $277,000.)

See their summary article, which has links to the map and other documents.


Pierre Stromberg said...

This is stunning. And it must have a collateral effect on Arizona state government operations. Don't they rely heavily on real estate taxes?

Jim Lippard said...

The state doesn't depend on property taxes, but the counties and cities do for services like schools, libraries, and fire protection services.

The county will turn around and sell the property tax debt at auction, in what are called tax lien sales. The county will still get money for most of these properties, but at a reduced rate. Those who purchase the tax liens either get paid back in full plus interest, or if nobody pays the taxes for three years, they get the deed to the property. For properties that end up in the hands of banks, they don't want to hang on to them and be responsible for the property taxes and maintenance, they are selling properties off as quickly as possible by dropping the prices rapidly (e.g., $5,000 drop per week until it sells). They may also end up dumping properties at auction to get them off their hands.

State revenues are primarily from income tax and sales tax. There is currently a huge deficit. The state maintains a budget stabilization fund (or "rainy day fund") for years like this, but I think it's mostly already been drained last year. Nevada also drained their rainy day fund last year.