The sharp surge in Mesa foreclosure homes was largely caused by the record numbers of adjustable rate mortgage loans taken by residents in the area and the sharp home price declines.
While other cities point to unemployment as the major cause of foreclosures, Mesa points to underwater and exotic mortgages as the main culprits.
More than 60 percent of all mortgages taken out since 2005 by residents in the Phoenix metropolitan area, which covers Mesa, are now underwater. In Mesa, house prices have fallen by more than 37 percent from their peak levels in 2005.
According to Mesa broker Lynn Murtagh, many homeowners who bought their homes in 2005 for about $225,000 are now forced to sell them for only about $75,000.
In the final quarter of 2008, the median price for Mesa homes fell to $164,869. The average price now in the area is $141,363, according to an online real estate firm. This firm also said that investors can find foreclosure houses priced at a bargain in Mesa as they make up the huge majority of home sales in the area.
According to Mesa Mayor Scott Smith, Mesa has been among the fastest growing cities in the country before the housing downturn. It has become the 38th biggest city in the nation in terms of population and the biggest suburban city. Mesa attracted people because of its good weather, wide spaces, rolling hills and its proximity to Phoenix.
But the sharp declines in property values battered Mesa hard and forced large numbers of borrowers who took out ARMs into foreclosure. In January 2009, a total of 1,079 foreclosures were filed in Mesa, a 33-percent jump from January 2008 and a staggering 18-percent rise from January 2007.
According to Murtagh, of the 3,149 housing units on the market in February, 25 percent were Mesa foreclosure homes and another 27 percent were distressed properties listed for short sales. All in all, distressed properties made up 52 percent of all houses for sale in Mesa in February.
Similarly, the pace of Arizona foreclosures is still high despite a slowdown in February. Arizona was second only to Nevada in a ranking of states according to foreclosure rates.
According to city government relations director Scott Butler, he believes the city can recover from the continued flow of Mesa foreclosure homes because of the city’s aerospace industry, good climate and the still strong median household income.
Author Resource:-> Original Post: Mesa Foreclosure Homes Driven by ARMs and Price Declines on BankForeclosuresSale.com.
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