Many people walk away as home values sink
by Hanna Scott/KTAR (July 9th, 2009 @ 6:29am)
Not all homes going into foreclosure in the Valley belong to people who can't afford their mortgage payments.
In fact, many of them involve people who can make their payments but whose home loan is now far more than their property's value.
"They might owe $250,000 and the current value of the home is $150,000," said Valley realtor Russell Shaw.
Shaw said he gets between 10 and 25 calls a day from people who want to know when housing values are coming back and when their homes will be worth what they paid for them.
The answer, Shaw said, is "maybe not in their lifetime."
A recent study showed that, nationwide, 26 percent of homeowners who stopped making mortgage payments did no because they were upside down, not because they couldn't pay. That number is believed to be even higher in Arizona.
In the Valley, Shaw said, "There's a lot of that, where people are just going, `It's not going to go back to what I owe.' And they're going, `Why should I keep paying this? It's not worth what I owe.'"
Some people contact their lenders about a "short sale," in which the lender accepts the sale price for the loan, but, "If they are current on the loan, in most cases, the lender will not discuss with them doing a short sale," Shaw said.
He expects foreclosures and short sales to continue to dominate the Valley's housing market for a time.
About everyone in the Valley who bought after 2005 is upside down on their mortgages because inflated prices sank as fast as values had soared during the boom, Shaw said. He said, unfortunately, it will take decades for most homes to rebound to the values at which they were bought.
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