Just a year ago, David Vega's north Chandler neighborhood was a friendly place where the longtime residents knew one another and held block parties. Not so, these days.
http://www.eastvalleytribune.com/story/141307">Great deals, but Q.C. housing still reels
http://www.eastvalleytribune.com/story/141308">Gilbert sees boom, bust in housing sales
http://www.eastvalleytribune.com/story/141310">Mesa homebuyers take advantage of bargains
The neighborhood is in an area where the number of homes in foreclosure approaches 40 percent, according to city officials. Vega, 41, has lived there for 15 years, and said many houses that used to be home to old familiar faces now lie vacant or are occupied by renters who often don't stay long.
"People are not as friendly because they're coming and going," he said.
The difference between neighbors still in their homes and those who have been foreclosed on is stark. The former generally keep their homes and property neat and tidy. But maintenance on the street's several distressed properties generally has suffered.
"You can tell by the landscaping the people who are going into foreclosure," Vega said.
He said he's been robbed twice in the last six months. Thieves took lawn equipment and some tools, he said. He recently bought a dog to keep out intruders.
Vega is having his own problems, as well, after being laid off from the construction firm Laurel Creek Homes. He said he has two children in college, and his mortgage is delinquent. His family also is trying to raise money for his 4-year-old niece, Gabriella Vega, who needs a heart transplant. She has a congenital heart defect, which restricts blood flow to the lower chambers of her heart and lungs.
"It's finally stressed us out to the point of I don't know what I'm going to do next," Vega said.
The East Valley's existing home market is improving in some ways but not in others. In terms of inventory, houses are selling and inventory is down, but analysts are anticipating another wave of foreclosures in the coming months.
Existing home inventories are down substantially from Jan. 1 in Chandler, Gilbert, Mesa and Queen Creek/San Tan Valley, according to the Cromford Report, which tracks the history and current status of the Valley's residential resale market.
Mike Orr, owner of Cromford Associates, said the buying interest is intense for homes under $350,000.
"This is where most of the sales are," he said. "Above $500,000, there is still far too much supply and prices are still falling."
Jay Butler, director of Arizona State University's Realty Studies Department, said prices have dropped significantly and continue to drop in outlying areas, while more centrally located areas of the south East Valley have seen some stabilizing. Any sort of real recovery, however, is still years away, he said.
"For me, recovery is when you go back to where the traditional owner-occupant is the dominant element of the market, not foreclosures and investors," Butler said.
Vega said investors have been purchasing properties in his neighborhood.
"I've noticed they've been buying them and renting them out," he said. "I don't think they're maintaining them."
THE FORECLOSURE FACTOR
Orr said foreclosures encompass only a small percentage of the East Valley's existing home inventory, but represent a large chunk of the sales.
"Being priced lower than most other homes, they sell fast and do not tend to stay active very long," he said.
In May, bank-owned homes represented 44 percent of sales in Chandler, 51 percent in Gilbert, 57 percent in Mesa and 61 percent in Queen Creek/San Tan Valley.
"Competition among buyers for (bank-owned homes) is fierce, and most get multiple offers," Orr said.
David Donaldson, a real estate agent with Keller Williams Realty East Valley, said of the 20 houses he's sold this year, including nearly 10 last month, only one was a traditional transaction."The rest were either a short-sale, a pre-foreclosure or a bank-owned property, and that's the market," he said.
The East Valley's foreclosure crisis began in outlying areas like Johnson Ranch in the San Tan Valley where people were flocking to buy new homes from 2003 to 2005 and became victims of predatory lending, Donaldson said.
"If you look at the established areas of Gilbert and Mesa, they are now having trouble, but that's been more of the trickle-down effect of everything bottoming out," he said. "You will always see the majority of the sales in those newer neighborhoods for the foreseeable future because there's still a lot of properties that the banks have that they haven't even released for sale yet."
Butler said the rapid sale of foreclosures is no indication that the existing home market is improving.
"It's really not any different than the hypermarket that we were in," he said. "It's not being driven by traditional forces, which is a household buying a residence. So force-wise, it's not really any different than the disaster we went through."
No real improvement is taking place because many owner-occupants still are losing their homes, and a lot of owner-occupants are staying put instead of putting their homes on the market and buying move-up homes, Butler said.
HOMES FOR A STEAL
While prices are taking a slight uptick, analysts say it's nothing to get excited about because prices fell so far.
Orr said existing home prices across the East Valley rose late last month after bottoming out in previous months. As of June 25, average home prices increased nearly 5 percent in Chandler after bottoming out in late April.
In Gilbert, prices rose .7 percent after reaching a low point early last month. Prices in Mesa increased 5.2 percent after hitting bottom in mid-April, and in Queen Creek/San Tan Valley, prices are up 5.2 percent after hitting bottom in mid-March.
"Gilbert has yet to show a significant increase in pricing, but has been moving sideways in recent weeks," Orr said. "The upward trend has existed in (Queen Creek/San Tan Valley) for the longest time, but is more gradual."
Expensive homes are still falling in price, he said.
"It is the extremely low pricing which is fueling a lot of the buying interest, coupled with the $8,000 tax credit for first-time homebuyers and low mortgage interest rates," Orr said. "The main impediment holding sales back is the difficulty many buyers have in qualifying for a loan."
Donaldson said while homes may be selling quickly and multiple offers bring higher prices, neither mean any real improvement in pricing.
"In some areas that were oversaturated with homes ... where all the new builds were and all the foreclosures were taking place and the short-sales, they're pricing them low to generate a buzz. The people flock and give four, five or six offers on them and drive up the price to the highest and best," he said.
"Still, some of these homes you're getting for $55 to $75 per square foot. That is like a free house. You can't build homes for some of these prices. We're talking about a 3,000-square-foot house for $150,000, and the house is less than 5 years old, it has a pool and they have $30,000 to $50,000 in upgrades in the house and the backyard."