Arizona foreclosures rising, but default rate is still low
Jun. 17, 2007 12:00 AM
Arizona, California, Nevada and Florida led the nation for skyrocketing home prices a few years ago. Now these states are leading the nation for increases in foreclosures.
Data from the Mortgage Bankers Association of America released Thursday show these states posted the biggest gains in new foreclosures during the first quarter of 2007. Arizona fared slightly better than the other states and is at the bottom of the dubious list.
Mortgage Bankers Chief Economist Doug Duncan said the nation's overall foreclosure rate wouldn't have climbed during the first quarter if these states hadn't posted such significant increases.
The four states have another thing in common. Speculators sparked their home price run-ups a few years ago. It happened in 2004-05 for Arizona. Investors left Las Vegas after pushing up prices 50 percent there and came to the Valley to do the same. By 2006, prices had shot up 50 percent in metro Phoenix, and most speculators moved on. Many went to Florida.
Despite its recent spike in foreclosures - more than tenfold in the past year - Arizona still ranks in the bottom 10 for the overall number of people losing their homes.
And so far, Arizona's housing prices haven't seen the hit that parts of California, Las Vegas and cities in Florida have taken so far. Some of those areas have seen double-digit drops in housing appreciation during the past year.
In metropolitan Phoenix, which makes up more then 75 percent of the state's housing market, home prices are down about 5 percent from a year ago.
More foreclosures could work to drive down home prices further. But mortgage delinquencies were down 0.50 percent in Arizona during this year's first quarter, and another quarterly drop in delinquencies could mean foreclosures are close to peaking and could start to fall next year.