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By Reed Lattin
Phoenix foreclosures have become a devastating problem for many families living in the desert. Its estimated that 50% of all homes for sale in Phoenix are either bank owned or short sales. So how and where did all of the phoenix foreclosures start?
Starting in approximately 2003, home prices in the Phoenix area were relatively cheap as compared to national levels. Phoenix foreclosures were present, but were rarely heard of. Interest rates were low, and the job market was solid. In 2003, real estate speculation began to erupt in Las Vegas and many other cities across the country. Many investors from California began to flock to places like Vegas due to the low home prices relative to other major cities. At one point, prices in Vegas had appreciated by over 25% in one year. Very similar to what would take place in Phoenix in 2005.
Many experts believe that a major cause to the huge price run up in Phoenix was due to a large amount of speculators who simply shifted their focus from Las Vegas to Arizona. As a result, 2004 saw huge appreciation gains, and 2005 was even more incredible. Statistics verify that Phoenix had the highest appreciation rate throughout the entire country at over 45%. Speculators as well as regular people looking for a real home contributed to the buying frenzy and boosted prices through the roof.
Unfortunately, these prices became unaffordable to almost everyone. And as a result, prices began to fall and Phoenix foreclosures began to rise. Phoenix foreclosures have been steadily increasing ever since the peak in 2005. Many experts believe that Phoenix foreclosures will continue to climb until 2012. This is due to the adjustable rate mortgages becoming due.
Adjustable rate mortgages (ARMs) have been widely viewed as a major contributor to Phoenix foreclosures. Homeowners who opted for an ARM eventually get a notice in the mail stating that their initial low interest rate is now being set to a higher rate. Often, homeowners cannot afford the new house payment, which leaves them no other choice but a Phoenix foreclosure.
Furthermore, since the home values have declined in value, many homeowners who purchased at the peak are unable to refinance. This is one more explanation of the enormous amount of Phoenix foreclosures. Many homeowners are virtually trapped. They cannot sell due to owing too much and they cannot refinance. There is no other choice, but to face a Phoenix foreclosure. Many view this scenario as extremely negative, but this is simply reality.
So what can be done to ease the amount of Phoenix foreclosures? Experts feel that the government should intervene. In fact, John McCain had pledged to buy up all the bad debt in an effort to relieve homeowners of all the Phoenix foreclosures. Phoenix foreclosures have undoubtedly caused serious problems in thousands of lives here in Arizona. With so many Phoenix foreclosures on record, many peoples credit will be ruined and way of living will be altered. Often times families will have to relocate to find other means of housing.
If you are facing a phoenix foreclosure, call your bank and see if they can help. Many times banks are willing to restructure payments or lower the amount owed. Furthermore, consult with a real estate attorney. When facing a phoenix foreclosure, there will be many legal documents to be reviewed. A good lawyer can be a huge asset.
About the Author: Reed Lattin is real estate investor in Phoenix, AZ Reed works for AllHomesAZ.com which buys all homes AllHomesAZ.com-member of the Better Business Bureau Sell your home fast at
allhomesaz.com Source: isnare.com
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