Tuesday, July 25, 2006

A 'Self-Correcting Process' In Arizona

The Sierra Vista Herald has this report from Arizona. "Home foreclosures are on the rise in Arizona, including in Sierra Vista. In the last couple of years the city has enjoyed a boom in home prices and sales, but those days are now over, said Melissa Clayton, president-elect of the Southeast Arizona Association of Realtors."

"The agent, who specializes in foreclosures, said she has seen a recent increase in the number of people defaulting on their mortgage, and she expects that trend to continue. 'In the past two years a lot of home owners bought at high prices and borrowed against that,' Clayton said. 'But they have taken on more than their home is really worth.'"

"The situation has been exacerbated by the recent turnaround in the market, which now sees more homes than there are current buyers. This has stabilized the market, bringing it back down to a more normal level, Clayton said. But it has left some owners with a property that is overpriced."

"There is also an estimated 350 homes currently for sale within the city, around double what was available 12 months ago, Clayton added. 'We have a lot of sellers now who need to be more realistic about their expectations,' she said. 'There’s an awful lot of homes on the market, some of which have been on for a long time and were overpriced to begin with. I think if people are more realistic then there will be a home for everyone who wants one.'"

"Robert Carreira, at Cochise College, said the rise in property prices last year had inevitably led to more homes coming onto the market as owners try and cash in. 'If people bought their house a few years ago for, say, $100,000, then they might be looking to downsize or move to a more remote area outside the city limits where the prices are lower,' he said. 'That means you are going to get this flood of housing on the market, which is something we started to see last year."

"'But it’s the normal supply-and-demand relationship and what we are seeing is a self-correcting process,' he said."


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