The republic | azcentral.com Jun. 29, 2010 01:49 PM
Real-estate agent Russell Shaw of John Hall & Associates says the reason home prices are not going up is because of increasing short sales, which largely have replaced foreclosures in the market.
Short sales are an arrangement between a borrower who owes more than a house is worth and a lender. The lender agrees to settle the loan for a smaller amount than owed, sparing itself the difficulty of going through a foreclosure, and the homeowner walks away from the sale with no loss.
Frequently, short sales are done for people who can continue to pay mortgages but realize they are in a precarious position with their homes.
Foreclosures are declining, Shaw said, and some agents working the foreclosure market are "practically out of business."
He says northeast Phoenix is not unusual, with rising sales but continued price declines.
"The prices of late 2005 and 2006, the height of the market, are not likely to come back for 10 to 15 years," Shaw said.
Short sales make sense for banks because the homeowner/borrower continues to live in and maintain the home until it is sold, and the bank loses almost $40,000 less than it would lose in a foreclosure.
Shaw said banks want to avoid having vacant houses on their books because of vandalism and theft.
Shaw said about half his business is in short sales, but in the past three months he is beginning to see traditional sellers return to the market. Many purchased their homes years ago and will make a profit, although smaller than a few years ago.
Short sales up, foreclosures down in Valley housing market
