TEMPE, Ariz. – There’s a big myth going around about Valley real estate, an expert said.
Right now, there are about 8,800 homes for sale in the Phoenix area, compared with 50,000 in 2008. Many people believe the low number is because banks are holding foreclosed homes off of the market in an effort to drive up Valley home prices.
Professor Michael Orr of the ASU Real Estate Studies Department doesn’t believe that.
“I actually keep a file of exactly what houses the banks own and what they’re doing with them,” he said. “When you actually count them out, it’s a relatively trivial amount that they actually own that they haven’t already listed for sale.”
As for banks having a so-called “shadow inventory,” Orr said it’s just not in the cards.
“It’s not possible,” he said. “To own a house, you have to have a deed. A trustee doing the foreclosure writes a deed and records it with the county. You can get those and examine them and see when the bank disposes of the property. It’s not really ‘in the shadows,’ it’s public information.”
Orr said buyers shouldn’t be worried that Valley housing prices will plummet when banks flood the market with foreclosures to sell because it’s not going to happen.
“It’s a bit like the Y2K problem,” he said. “Everyone was really was really scared about that, but when [the year 2000] came around, nothing happened.”
Orr said the same will be true for Valley real estate.