Arizona Foreclosure Rates Confusing at Best

The new statistics are out and Arizona's foreclosure rate continues to remain high as more homeowners default on loans. According to the latest report by RealtyTrac, Arizona foreclosures have increased 74% from the first six months of 2007. Compare that number to a 58% increase in foreclosures for the rest of the nation and Arizona ranks in the top ten highest foreclosure rates. In Arizona alone, 27,515 foreclosure filings were reported for the first six months of 2007, amounting to 1 filing in every 92 homes.

Still foreclosure numbers for Tucson and it's surrounding communities don't seem quite as terrifying once the numbers are broken down. In May the Tucson Citizen reported that Pima County had 1,427 foreclosures in the first quarter of 2007, which is a 19% increase from first quarter 2006 foreclosures. That percentage is actually lower then the first quarter foreclosure rate in Tucson for 2005 to 2006, which was 27%. Although the Tucson foreclosure rate is still high, the upside is there has been a significant decline over the previous year.

What's fueling this surge in foreclosures? Seems that "creative lending" or sub prime loans are the biggest contributors to the significant rise. Homeowners that financed or refinanced with sub prime loans now find themselves unable to make payments as they cannot afford rising interest rate. Tucson ranks 19th among 420 US metro areas for sub prime foreclosure rates. Lenders are now becoming much stricter with their underwriting practices, so while it may be harder for an individual to initially get a loan, there is less likelihood that they will default.

Where does this leave Tucson Real Estate? With a June inventory of 8,665 actives listings and fewer buyers qualifying for loans, inventory will remain high. For sellers this means pricing their home correctly up front and realizing that negotiation is a must to close a deal. For buyers, the excessive inventory provides lots of choices and the power to find the deal and home that's best for them.