Arizona housing market still likely struggle for new year

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It's become an all too familiar site, locks on doors, "No Trespassing" signs.

From last January through November, nearly 66,000 Arizona homeowners lost their houses.

That's a 12% increase from 2009.

"A record number of houses were built between 2004 and 2007 and the prices kept going up, mortgage terms kept getting looser and looser," said Realtor Peggy Sims.

Tucson broker Peggy Sims says a lot of people bought houses they could afford maybe for the first three years, but after that they were in trouble.

"The mortgage rates went up and they couldn't afford the houses anymore," said Sims.

High unemployment rates over the past couple of years, plus tighter lending standards are to blame for a lot of the foreclosures.  A decrease in home prices has also played a role.

"When the houses prices go down, some people just decided it wasn't worth it to stay in their house and so they let themselves be foreclosed on because they couldn't see their house worth what they're going to be paying for it over the next 20 years."

But efforts by the federal government could keep foreclosures from soaring in 2011.

A program called "Home Afordable Foreclosures Alternatives" or "HAFA" encourages short sales.

That's when lenders and borrowers let the homeowner pay whatever they're able to sell their house for even if its less than what they owe.

"We might see more short sales and fewer foreclosures, but I dont think we're going to see higher prices in the next year."

Which is why Sims isn't too optimistic about a recovery in 2011.  She says recovery is just a matter of supply and demand, but that could take decades, which means for now, home prices will stay level at best.

"I dont think it will ever get to the levels again it was in 2005 and 2006."

Of course Arizona isn't the only state suffering.  Across the country more than a million homes were lost in 2010.  Experts say another million could come this year.