High hopes for Gilbert

You may have read in our "Real Estate News" section there are high hopes for Gilbert to finish ahead of the curve at the bottom of the market.

The research indicates inventory has hit an almost two year low, homes under contract are significantly up from a year ago, foreclosures and REO's are helping to keep prices down, creating demand and closed sales are up 9% for 2008. If this trend continues into the typical spring buying pattern, 2009 will be a good year for Gilbert.

One of these factors research cannot control is the foreclosure rate and the number of REO's that hit the market. For clarification readers should know what the difference between a foreclosure and an REO is. When a mortgage goes into default, the bank will notify the resident they have a 90 day window in which to reach a settlement with the bank before the home is offered at auction. This action is known as a Notice of Trustee Sale. Many times these homes will go to auction, but the price will be to high for anyone to bid, at which point the bank is obligated to take the property back, and thus it becomes "Real Estate Owned" (REO) by the bank. REO's will be a major player in 2009, with conservative estimates predicting them to be approximately 30% of the market.

Another big player will continue to be short sales, which are homes for sale below market and below what's owed on them. These are not necessarily in foreclosure, but the residents are asking the banks to take a lesser price sooner rather than later. These transactions take a lot of time and patience because the bank has yet to determine what price they will accept on these properties as opposed to REO's. REO's have already been reviewed by the banks and put back on the market for below what was typically owed on the property. It's predicted that Short sales could make up another 30% of the market for 2009.

If Gilbert can lead the valley out of the downturn, home values should stay relatively stable and increase faster than other parts of the valley. For more on what the future may hold for Gilbert, see our video interview with Joe Johnston on the main page of the website.

Kurt Sabel