Market Outlook - Just my opinion!
With so much talk about "shadow inventory" and really the GUESS of where the market will go, I thought I would throw in my two cents on the Arizona Market. I am the President of NAHREP AZ and we just wrapped up our first annual state conference. What a huge success! And what a learning experience!
From the data I received during the event, coupled with data from "Tamboer Consulting", and just an overall hands on participation in the market, my conclusion is as follows:
While measurable foreclosures will be around for several years, I believe that they will only drive the market for another 12 months. Maybe a little longer but not much. For those of you that don't know, "shadow inventory" are the properties that are likely to go to foreclosure because the property owner is behind on the payments and the bank has filed the paperwork to start the process of foreclosure (notice of Trustee sale).
There are also the properties that have foreclosed and just haven't hit the market yet. As of present you are only looking at about 6 months worth of inventory. That really isn't much. Of course what we don't know is how many property owners will decide to bite the bullet and stop making payments in the next few years. For those, a large portion will opt to short sale rather than foreclose. We have - I believe- around a 60% ratio or more properties that are upside down in Arizona. That means the owner owes more than it is presently worth. But - I believe most people will stay in their homes and wait it out. Kind of like a stock right? You don't have to sell low- it's only when you sell it that you assume the loss or gain. When this wave hit us, short sales were a nightmare. Not so much anymore. Wells Fargo/Wachovia are very accessible to the short sale process and Chase and B of A are getting easier and easier as well. Depending on your situation, many times you don't even have to be late on a payment to be considered for a short sale.
My point is that the options are more user friendly and there are more solutions rather than experience the foreclosure. I also think the panic has subsided a bit. So that's my story - depending on fresh data- I may or may not stick to it! :)
