If there is a single graph that illustrates at a quick glance how the Arizona housing market has recovered from the foreclosure crisis, this is it. The volume of bank repossessions moving through the system beginning in 2007 resembles a pig in a python. Arizona foreclosures have now returned to pre-crisis levels.
Arizona cracked the top ten states with the highest foreclosure rates during the Great Recession. According to consumer analytics firm CoreLogic, the peak month of foreclosure inventory here was December 2010. In that year, Arizona, combined with only four other states – California, Florida, Illinois and Michigan – accounted for 50% of the home foreclosures across the country.
These states were ground zero for investor activity. Cash buyers were swimming in inventory. By 2011, far-flung corners of the Phoenix metro, like Anthem and San Tan Valley, had fallen almost 50% in value from their peak.
Now, in 2017, the institutional buyers of Phoenix foreclosures, like equity firm Blackstone Group, have tapered their pace of acquisition or have packed up and left entirely. Investor activity in the foreclosure domain has dwindled because fast-and-easy profits aren’t fast and easy anymore. That’s good news for a market that has been trying to find an equilibrium for 10 years. Only smaller property flippers willing to work on narrower margins remain.
The chart was published by the National Association of Realtors® in the May 2017 Congressional District Report for the 115th Congress. It was compiled with data from the Mortgage Bankers Association (MBA) and Haver Analytics.
Foreclosure is to no one’s benefit. I’ve heard estimates that mortgage investors lose 40 to 50 percent on their investment if it goes into foreclosure. – Henry “Hank” Paulson, Former United States Secretary of the Treasury