Greater Phoenix REO Properties: The Unbeatable Competition

October 07, 2008

Real Estate Owned sales dominate or take a significant part of the Phoenix home sales market making it very difficult for others to sell.

REO sales dominate the market...

The chart below shows Real Estate Owned (REO) sales by city in the last month. The totals include single family homes and condos recorded with the Maricopa County Assessor Office.

Looking at how high the sales are of REO properties makes it easy to understand why a seller not in a distressed situation simply has no way to compete with these properties being sold for prices often not seen in over a decade.

To give you just one example out of thousands. A client asked me to establish a price for a home she has had since the mid 1980's. It's a normal home in good condition. It was purchased for $87,000 and valued at $210,000 during the peak. The situation for selling is not as important as what she can ask to be able to compete with the REO properties out there.

There are 12 competing properties. 9 are REO and range in price from $90.000 to $111,000 and 3 are normal (not distressed sellers) asking from $145,000 to $169,000. Recent sales include only REO properties.

Assuming the normal average apprecation, her home should-reasonably, be worth $180,000 at 3% appreciation which is below the actual average. What is it worth if the competition is priced at $90-$111K because that is the price being paid.

Unless her home offers much more in value via condition of location that is the value range. So it's now not only people who got these stupid obnoxious unreasonable loans suffering but even people who invested with prudence patience and frugality.

City	Percentage of Total Sales
Avondale	59%
Buckeye	27%
Cave Creek	19%
Chandler	26%
El Mirage	71%
Fountain Hills	17%
Gilbert	25%
Glendale	49%
Goodyear	36%
Laveen	40%
Litchfield Park	56%
Mesa	36%
Peoria	33%
Phoenix	42%
Queen Creek (only Maricopa county)	40%
Scottsdale	20%
Sun City	9%
Sun City West	7%
Surprise	41%
Tempe	14%
Tolleson	56%