The Condo Mania Team
Scottsdale Condo ManiaNews > Scottsdale/Phoenix Shadow Inventory?
2010-03-26 by Liz Suto
I can't sit idly by and let our condo buyers draw the wrong conclusions after reading a recent AZ Republic article "Home Values in Phoenix Metro May Fall again because of Shadow Inventory." The AZ Republic was not first to mention this elusive shadow inventory, and home buyers are left to wonder if it is still the right time to buy. My conclusions? In our Scottsdale and Phoenix condo market, Shadow Inventory isn't increasing, and isn't the biggest worry we have.
First, what is shadow inventory? It is either homes that are in the pre-foreclosure state, homes the banks have taken back and have not put on the market, and, according the the article, homes that investors own and are waiting (why???) to put back on the market. Here's why I believe "shadow inventory" will not be a problem for most of the Scottsdale market, and more specifically, the condo market:
Pre-foreclosures are staying steady in Scottsdale. "Pre-foreclosure" is a term that the public uses for homes in Arizona that have been sent a Trustee Sale Notice. Homeowners are given 90 days to bring mortgage payments current or else the home goes to a Trustee Sale Auction, and sold to the highest bidder. These days, the banks are letting that 90 day period slide for a bit longer, especially if the home is for sale as a short sale. Nevertheless, Pre-foreclosures in Scottsdale have been staying steady (according to the Maricopa County Tax Records) between 3100 - 3500 in the last year. Many of these homes may be for sale as short sales, and are being absorbed by home buyers looking for a bargain. Some will end up being purchased at auction or being taken back by the bank.
Bank-owned condo listings in the Phoenix, Scottsdale and Tempe areas are staying steady. I measure the number of bank-owned condo listings in Scottsdale and the Phoenix metro area over $130,000, which has been steady between 90-130 available at any one time in the last 6 months. Bank-owned condos are in demand, because they can close quickly. My team has found that competition for well-priced bank-owned condos is fierce. That doesn't exactly sound like a negative for the market, does it?
Bank-owned inventory off the market just isn't there, at least in the Scottsdale market. We have access to tax records to see condo owners, and I very rarely find more than one or two condos in any development that are owned by a bank and not on the market.
If there is one conclusion you can make from the AZ Republic article, is that generalization is dangerous. The Phoenix metro area real estate market is a collection of smaller markets that are absolutely behaving differently. Perhaps Maricopa and Surprise are riddled with Shadow Inventory. I don't follow those markets. But shadow inventory isn't the biggest risk for Scottsdale condos. The biggest risk is that demand drops off. But right now, sales are brisk and Scottsdale condos that are well-priced are selling quickly.
Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.
The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.
Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.
Last Updated: 2024-11-20 05:12:51