The number of foreclosures and short sales continues to dwindle in the Phoenix area and across the nation.
And while this downward trend may be a strong sign of the rebounding housing market, it’s also making housing harder to come by for entry-level home buyers looking for affordable options.
“The advantages of buying a short sale are that there are usually fewer buyers competing and the eventual price is likely to be lower,” Michael Orr, director of the Real Estate Center at the W.P. Carey School of Business at Arizona State University, said.
Investors and owner occupiers, however, remain the top consumers of short sales, keeping available inventory tight for other prospective buyers. Over the past 12 months, investors purchased 36 percent of short sales, which is more than twice the percentage of other sales, Orr said.
“This is probably because they tend to sell well under market value, which is a very important factor to investors,” he added.
The disadvantage of buying short sales is that they take longer to close than other real estate sales, which might result in withdrawn offers because of long waits for approval.
But there are signs that might changing.
The month of May saw an uptick in short sale closings in the Phoenix area. According to Orr, 65 percent of short sales closed successfully last month. Since October 2013, that success rate was 60 percent or less, and hit as low as 46 percent in August 2014.
However, short sales still represent just 3.3 percent of overall real estate sales, down from a peak of 30.4 percent in January 2012 in the midst of the housing crisis.
Michael Orr is the creator of the Cromford Report, which provides daily real estate market insight for Realtors and investors in the greater Phoenix residential market.
He can be heard weekly with Realtor and radio host Diane Brennan on That Real Estate Show, which airs Sundays at 8 am on KTAR News 92.3 FM.
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