Phoenix foreclosures soared with the eighth highest foreclosure rate among metro areas in 2009. A total of 133,809 residential properties were notified of default or foreclosure, representing more than eight percent of all households in the area.
Despite a decline in foreclosure rate ranking from 2008, the pace of listing foreclosures in the area surged by almost 37 percent from 2008 and by a staggering 343 percent from 2007. In 2008, the Phoenix metro area ranked fifth in foreclosure activity, with nearly 98,000 filings and with a foreclosure rate of 6.02 percent.
The decline in Phoenix ranking shows that foreclosures in other metro areas have been worsening at a pace much faster than in Phoenix. A study recently released by the Arizona State University Real Estate Center showed that home prices in Phoenix have been stabilizing since the last months of 2009, with the price decrease of foreclosure homes slowing down from a 15-percent decline in October to an only 2-percent decline in December.
However, many housing analysts contend that home price levels will not be able to return to their peak levels in 2006 within the next four years because of the continued price impact of Phoenix foreclosures. Residential property values in the metro area have fallen by 50 percent from their values in 2007.
The continued rise in Arizona foreclosures in 2009 also put downward pressure on home prices. With more than 163,000 or 6.12 percent of its households in default or in foreclosure, Arizona was second only to Nevada in a ranking of the U.S. states based on foreclosure activity.
Filings in Arizona in 2009 marked a nearly 40-percent increase from 2008 and a jump of more than 323 percent from 2007.
The continued increase in foreclosure in Phoenix and in other parts of Arizona is driven by a mixture of factors: home price inflation during the boom, overbuilding, easy availability of home loans, risky mortgages, high number of borrowers who refinanced their original loans to significantly higher amounts and high number of flippers.
The Phoenix housing market crashed in the summer months of 2007, with thousands of homeowners getting foreclosed on every month to reach a total of almost 98,000 foreclosure filings in 2008 and almost 134,000 in 2008.
This January, another foreclosure prevention legislation was introduced in the Arizona Senate to fight foreclosure. It is hoped that this legislation, crafted to combat loan modification fraud, would help cut down Phoenix foreclosures.