Just Last year in Maricopa County, there were roughly 35,000 single family homes that sold. That number almost matches the prior year. Of those homes sold in 2009, 12,975 of them were Short Sales. That’s 37% of the market. That’s HUGE! Most of those can be attributed to the sub-prime mortgage crisis and subsequent market crash.
While there are reports that have surfaced about the market improving, prices on the rise, etc., one of the more important topics that needs to be addressed is the impending wave of 5-year option-arm “smart online loans bad credit” that will be resetting this year. During 2010, I believe that we will see a huge influx of foreclosures in the 400K+ market.
In 2005, buyers were qualifying for homes that were twice as expensive as they could afford because of products that had interest only payments with huge adjustments on the horizon. At the time, people believed that real estate just continued to go up in value, so it seemed to make sense to purchase a $400,000 home based on income that would qualify you for a $200,000 home, in the hopes that within the next 5 years, the home would be worth at least $600,000. That’s not what happened. Now homeowners in the jumbo and luxury market are as stuck as the rest of us, being completely upside-down in their homes. As a result, they are trapped with a ticking time bomb. As soon as those 5/1 ARMs reset, they’ll be headed for foreclosure, and the 2nd wave will begin.
I would encourage you to watch this video created by Jonathan Jarvis which explains why our market experienced what it did, and also makes a great case against borrowing money.