Are Short Sales Coming Back? What Homeowners Need to Know

By Lorraine Ryall, Associate Broker, CDPE, CSSN, CNE
KOR Properties

Are Short Sales Coming Back in the Phoenix Area?

In the past few weeks, I have had two clients reach out to me about selling their homes. For very different reasons, both have found themselves in a position where a traditional sale will not work and a short sale may be their best option.

What makes this particularly interesting is that I haven't done a short sale since 2013.

After the housing crash of 2008, short sales and foreclosures became a huge part of the real estate market. At the time, I specialized in short sales and ultimately helped more than 100 homeowners successfully navigate the process.

Thankfully, as home values recovered and homeowners rebuilt equity, short sales virtually disappeared from our market.

So, having two come across my desk at almost the same time naturally raises the question:

Are Short Sales Coming Back?

I certainly wouldn’t say they are coming back, but we have seen a gradual increase each year since 2021 and are seeing more short sales in 2026.

However, we are still talking about very small numbers.

In July 2026, there were just 53 short sales in the Greater Phoenix area. I do think we may continue to see more until home prices begin increasing again, particularly for those who purchased near the peak of the market in May 2022.

Short sales remain a very small fraction of our overall market, and today's circumstances are very different.

After the housing crash, thousands of homeowners owed substantially more than their homes were worth. Many were already behind on their payments, in foreclosure, or so upside down that selling simply wasn't possible without their lender taking a loss.

Today, most homeowners have equity.

However, homeowners who purchased near the peak of the market in 2022 or shortly thereafter have a greater chance of having little or no equity, particularly if they made a small down payment and their home's value has declined since they purchased.

Phoenix-area home prices peaked around May 2022 and, as of July, the median sales price is still down about 6.25% from that peak.

While values vary depending on the city, neighborhood, and type of property, overall prices have remained relatively steady since 2024, moving up and down within a fairly narrow range.

At the same time, we have shifted into a buyer’s market, with increased inventory giving buyers more choices and greater negotiating power.

How Can Someone End Up Needing a Short Sale?

Let's say you purchased a home for $600,000 with a small down payment.

A few years later, circumstances change and you need to sell, but the home is now worth $570,000.

The difference between the purchase price and current value isn't the only consideration.

You also have:

• The remaining mortgage balance

• Real estate commissions

• Title and escrow fees

• Possible buyer concessions

• Repairs

• Other closing costs

Suddenly, selling a $570,000 home could require considerably more money than the homeowner has available.

This is where a short sale may become an option.

What Is a Short Sale?

A short sale occurs when a homeowner sells a property and the proceeds from the sale are not enough to pay the mortgage and other closing costs, so the sale comes up "short" of what is owed.

The homeowner cannot simply decide to sell the property for less than the mortgage balance.

The lender must approve the short sale, and this can be a lengthy process and is not guaranteed.

Why Are More Homeowners Considering Short Sales?

There are many reasons someone may suddenly need to sell:

• Job loss

• Divorce

• Relocation

• Death in the family

• Financial hardship

• A major life change that makes keeping the home impossible

For homeowners who have owned their properties for many years, appreciation has generally provided enough equity to absorb selling expenses.

But someone who purchased more recently with a small down payment may not have that same cushion.

How Today's Market Differs From the 2008 Housing Crash

The circumstances today are dramatically different from 2008.

What we are seeing is a relatively small number of homeowners who bought at higher prices and now find themselves needing to sell before they have accumulated enough equity to cover their mortgage balance and selling expenses.

This is very different from the widespread negative-equity situation that followed the housing crash.

Short sales remain a small part of today's real estate market, but individual homeowners can still find themselves in a difficult position when their mortgage balance, current property value and selling costs do not line up.

What Should You Do If You May Need a Short Sale?

If you or someone you know is facing this situation and would like more information about short sales and the options available, please don’t hesitate to reach out.

I’m always here to help.

Lorraine Ryall
Associate Broker, CDPE, CSSN, CNE
KOR Properties