Right before the bottom of the market, foreclosures and short sales made up about two-thirds of all sales each month. Many sellers who had equity would simply chose not to sell because they felt they couldn’t compete with these distressed sales. Starting at about the beginning of 2012, the market started improving drastically. This improvement was spurred by record low interest rates and extremely low levels of inventory. The reason inventory levels got so low is partly because of what I already mentioned…many sellers with equity were choosing not to list their homes. The other reason is that foreclosures and short sales started decreasing more and more each month. Arizona has a very simple, easy, and straight-forward foreclosure process, so the banks cycled through their inventory of foreclosed properties faster than in most cities. Then, when prices of homes starting going up, more and more people could afford to sell their homes without having to do a short sale. By the end of 2012, only about one-third of all sales each month were distressed (either foreclosures or short sales) – this is a 50% improvement from June 2011. Last month, in September 2013, only 16% of all sales were either a foreclosure or a short sale! This means that in the past two years, regular equity sales went from being 33% of monthly sales, to 84% of monthly sales! This is great news and it shows how the health of the Phoenix real estate market has improved!
Check out these graphs summarizing what I discussed above (click on each graph to see a larger version):