Vibrant to vacant: Queen Creek foreclosed?

Reading reports on Queen Creek are often an exercise in separating myth from reality for town manager John Kross.

Part I: Vibrant to vacant: Foreclosures drain community

That’s because there’s rarely a distinction made between what happens in Queen Creek and the areas around it, which leads to perceptions that don’t necessarily match reality when it comes to such things as foreclosure rates.

While areas surrounding Queen Creek have reported foreclosure rates as high as 10 percent, the rate in town limits was closer to 3.5 percent in the past year, according to a new foreclosure rate analysis by the town.

The reason for the discrepancy is an old problem: Two zip codes encompass Queen Creek and the surrounding areas that aren’t part of any town. For post office purposes, these areas have a Queen Creek address.

But these surrounding areas aren’t in town limits, meaning the town has no oversight.

Nevertheless, they get identified as Queen Creek — and the town gets lumped into many things that happen outside of town limits.

That frustrates Kross when people make assumptions about the town based on things that happened outside of it.

“Perception is a huge issue for people that are not familiar with the specifics of a geographic area,” Kross said. “We find ourselves spending a lot of time trying to flesh out the myth versus reality side of things.”

View a map of home foreclosure saturation in Queen Creek

Kross isn’t the only one to notice this. Bill Lehman, treasurer of the Villages at Queen Creek homeowners association, said his group frequently gets prospective buyers coming in and asking pointed questions about foreclosure rates, HOA fees and the financial viability of the HOA.

“I think we get lumped in with this collapsing area, but we’re holding our own,” Lehman said. “It’s frustrating because Queen Creek always seems to be in negative stories about foreclosures, as if the town is slowly collapsing.”

Kross says the perception concern isn’t just a vanity thing; he occasionally fields calls from credit ratings agencies that see a report about Queen Creek and ask what’s going on in the town. Kross has to explain when something happens in Queen Creek and when it’s the surrounding area.

Queen Creek’s credit rating is an A at the moment, he said.

And while he doesn’t have an example to point to, Kross believes high foreclosure rates influence the decisions investors make as they’re looking at whether to come into town.

“Comparatively speaking, we had seen percentages as high as 10 percent in some of the outlying areas,” Kross said. “That’s a pretty significant difference when you drill down and look at what’s in the town limits.”

To separate those numbers out, Dave Williams, a planner from the town, spent more than a week in December putting together a computer program that lets the town analyze how many foreclosures are actually in town limits.

Williams found there were 253 of the 7,154 homes in town that went into foreclosure from the beginning of 2008 through Dec. 18, giving the town a 3.5 percent foreclosure rate.

That doesn’t include 250 Queen Creek homes in Pinal County, which didn’t have good information, Williams said. But Williams didn’t expect foreclosures in those areas to change the numbers significantly.

That’s not to say Queen Creek hasn’t been hit by the severe downturn in the housing market. Growth has severely slowed, with an expected 3 percent to 3.5 percent growth rate this year, down from the 14 percent to 16 percent growth rate it had seen, Kross said.

Housing permits have also slowed considerably, plummeting from more than 1,300 in 2005 to just over 200 in 2008.

Local real estate agent Bob Hildebrandt confirmed that most of his work has been in foreclosures lately.

He’s seeing some positive signs, like supply and demand numbers being closer together than they have been in past months. And the U-Haul garage near his office frequently has about five trucks sitting there every Monday, indicating to Hildebrandt that people have moved in to town over the weekend and dropped their trucks off.

”(Homes are) selling. The ones that are really priced right, and by right I mean the low priced, they’re selling,” Hildebrandt said.

It’s the people who are trying to sell their homes at prices to recoup all of what they paid in 2005 that are having problems, he said.

Lehman said the Villages has also noticed homes still selling in the neighborhood, some short sales, some normal.

“As an HOA we don’t know why that’s happening. We keep hearing the economy’s bad, the economy’s bad, the economy’s bad, but homes are still selling,” he said.

The Villages has steadily had between 25 and 35 homes in foreclosure this year of the 1,684 homes in the development.

The HOA has also been working with residents who are on the verge of foreclosure, allowing people to put HOA payments on hold until they get back on their feet in some cases.

Eight of the 10 residents who were in that situation in the past year are now up to date on their payments and escaped foreclosure, he said.

The Villages has also made a point to maintain common areas and keep HOA payments low, which Lehman views as ways HOAs can adjust to the economy.

Lehman pointed out that if a home goes into foreclosure, the HOA is a low priority when it comes to getting paid back, so it’s in the community’s best interest to do its part in working with people.

“If you’re having problems, don’t wait to come talk to us,” Lehman said. “Tell us what’s going on.”

Vibrant to Vacant series

Part I: Foreclosures drain community

Part II: Queen Creek foreclosed?

Part III: Foreclosures stall growth