Here’s a very important reason why the Arizona real estate market will be one of the first to recover. (I expect prices to start recovering next year in most parts of metro Phoenix.)
The time from last payment made to foreclosure sale in judicial states is 761 days, which is six months longer than in non-judicial states.
Consequently, the company’s study shows foreclosure sales in judicial foreclosure states remain very low, with only 1.6 percent of their foreclosure inventories moving to sale. The slow pace of liquidation has caused the foreclosure pipeline to balloon, with nearly seven percent of the entire active loan count in judicial states in foreclosure.
Source: dsnews.com (emphasis added)
Arizona is digesting it’s foreclosures much more quickly than the judicial foreclosure states. That means Arizona will get through this real estate mess much more quickly as well.
This also explains the urban myth that banks have a huge shadow inventory of homes in Arizona that they will foreclose on soon. The banks do indeed have a huge shadow inventory but it’s in judicial foreclosure states, not in Arizona. Arizona’s foreclosure pipeline is large but deflating rapidly according to the data I’ve seen.
Arizona Not in Top 10
Ranked by the percentage of loans that are non-current, seven of the top 10 states are judicial foreclosure states: Florida, New Jersey, Illinois, Ohio, Indiana, Louisiana, and Maryland. Non-judicial states making LPS’ top-10 list include Mississippi, Nevada, and Georgia.
Arizona isn’t in the Top 10. That’s good. I’m sure we were at some point.