This article in the Republic today pretty much sums up the situation in the Phoenix foreclosure market. Lots of shadow foreclosure inventory is looming over the market, even as realtors try to call a bottom to prices. In the 90's in California, the same thing happened, with banks eventually dumping their inventory, causing a double dip price drop. It remains to be seen whether this happens in Phoenix.
A few key passages...
At present, the system is backed up with more than 45,000 "pending" foreclosures, up from about 2,300 in June 2006, according to a historical analysis by the Information Market, a Phoenix research firm.
Most experts expect pending foreclosures to increase even more before leveling off sometime within the next 12 months.
...
There's a widespread belief that banks are purposely limiting the flow of foreclosure homes onto the market, which helps prevent home prices from sliding even further but could prolong the market's long-term recovery.
And, as the article points out, the commercial crash is just getting started.
Although most Valley foreclosures thus far have involved residential property, commercial-property owners and lenders are preparing for apartment, office and retail foreclosures to rise sky-high in the coming months.
Selling those properties back to the market could take years in some cases, analysts said, because there is little interest in new office and retail space, even at the low-rent end.
Commercial real-estate broker Craig Henig of Grubb & Ellis in Phoenix said banks aren't in any rush to foreclose on commercial real estate because it forces the lender to adjust the property's book value to today's considerably lower market price.
Significant write-downs on a few multimillion-dollar commercial loans could put a small or financially stressed bank out of business, he said.
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