Foreclosures Impact on New Construction
January 26, 2009
Post Tags: foreclosure notices , tucson-foreclosure-rates , Tucson-New-Construction
Tucson Foreclosures Impacting New Construction
I read Home building permits fall 41% in 2008; this year to be down more
It is being predicted that a lot more foreclosures are going to be on the market in 2009 which is part of the reasoning behind the estimate there will be even few building permits issued in 2009 than were in 2008. Can this lead to a shortage of New Construction in Tucson?
Foreclosure Notices and Sold Units
Realtytrac says there were 9,043 foreclosure notices in Pima County in 2008. A notice is not a foreclosure it self it mean a notice of foreclosure was issued. FORECLOSURES ARE ON LOANS NOT ON HOUSES as I pointed out in a post How Many F’s for a Single Property . If a home owner had a first and a second loan on the home (many did since 2005) then there are TWO loans being foreclosed on ONE house.
Default Research out of Mount Pleasant, Pa said there were 5,095 foreclosures in the Tucson area in 2008. Default Research is reporting houses. The logic in the article says:
“The difference between Default’s numbers and the 9,043 foreclosure notice statistic issued RealtyTrac, based in Irvine, Calif., is attributed to the fact not all of the homes have been foreclosed, which could mean many of them will hit the market this year.”
I think that is faulty logic. The difference is in the number of homes and the number of loans being foreclosed.
John Strobeck also stated in the article
There were 2,068 foreclosure sales for all of 2008, representing 18.2 percent of the resale total of 11,393.
The conclusion being drawn:
Strobeck says that statistic would indicate there are more than 6,000 units still in foreclosure that are yet to be sold, which will take more than a year to clear out of the sales pipeline.
I don’t think there are 6,000 units out there yet in the pipeline. Following Default number also come into question on this basis: They show 5,095 homes foreclosed in Tucson area in 2008. If 2,068 were sold in 2008 that leaves 3,027 homes in foreclosure that are on the market yet. There were 7,627 active listings in the Tucson MLS in December 2008. That would mean of 40% of the active listing in Tucson are currently in foreclosure.
Believe me if 40% of the homes on the market in Tucson were in foreclosure it would be front page news. It isn’t.
The answer is . . . no one really knows, but it isn’t anywhere near 40%.
Foreclosures in Tucson MLS
Here is what I could find as I write this post. There are a total of 7775 active residential listings in the Tucson MLS. When I query those with the word “foreclosure” in the property description there are 193 active listings with the word foreclosure in the description. 193 out of 7775 active listings.
The one area Tucson really needs New Construction is Town Homes. We have buyers always asking for New Town Homes and they simply aren’t being built in Tucson.
Is it possible that by the end of the year we would have shortage of New Construction homes available in Tucson?
January 26th, 2009 at 3:23 pm
I can’t stand it when the media exaggerates stories to create hype. You are completely right that there are not 9,043 families being foreclosed on. There are probably 2/3’s that number.
Just this morning I read a headline in our local newspaper that “Guide neighborhood grows fastest, Fairhaven condos soar”. They are suggesting that our growth is out of control. The fact is, of the 300 new condominium units there are only 11 that are on the market right now.
Anyway, I like the way you think. Keep in real.