“Drive Until You Qualify” Foreclosures Nearly Tripled Since Last Year With The Number Of People In Danger Of Losing Homes Quadrupling
August 15th, 2022 by MG
Earlier the Arizona Republic remarked:
Home buyers have long flocked to metropolitan Phoenix’s farthest flung suburbs to get the most house for their buck.
In the housing market, it’s known as “drive until you qualify” - the farther out you go, the less expensive the homes.
But where affordability and steady appreciation once enticed many to the Valley’s edges, foreclosures are now forcing them out.
Neighborhoods from Queen Creek and Pinal County in the southeast to Laveen, Goodyear and Buckeye in the southwest to Surprise and Anthem in the northwest have at least three times as many homeowners struggling to hold on than communities closer in, according to an Arizona Republic analysis of data from the real-estate research firm Information Market.
“The fringes are where affordable houses were and where investors went,” said Jay Butler, director of realty studies at Arizona State University’s Morrison School. “A lot of people stretched to buy at peak prices and can’t hold on.”
The number of Valley residents who lost their homes to foreclosure has nearly tripled since last year, from 1,073 in all of 2006 to 2,954 through June of this year. Of that, most are in fringe neighborhoods, which are outside the Valley’s main freeway corridors that loop around the center of metro Phoenix.
Some suburbs like El Mirage, northwest Peoria, Buckeye, Queen Creek and parts of Gilbert were hit especially hard, with the number of people in danger of losing their homes quadrupling in the past year.
Many of these suburbs also have higher household credit-card debt than more affluent areas like Scottsdale and north Phoenix, signaling how strapped homeowners are now.
Real-estate analysts say foreclosures in Arizona and nationally likely have yet to peak. Interest rates on the biggest block of subprime adjustable mortgages in the country are set to climb this fall, prompting market watchers to call for the biggest jump in foreclosures to happen in late 2007 and early 2008.
Lenders lose money on foreclosures. Homeowners in neighborhoods riddled with foreclosures can lose value in their homes.
How Do These Numbers Compare To Last Year?
According to the article, we’re given the following details:
- During the first half of this year, 84 homes were foreclosed in Anthem in the north Valley near New River. Last year, there were only three foreclosures during the same time period.
- In Avondale, 122 people lost their homes during the first six months of 2007, compared with five in the first half of 2006.
- Queen Creek’s foreclosures totaled 45 during the first half of this year, compared with two in the same period last year.
- In Buckeye, foreclosures reached 245 through June, compared with 66 in the same period last year.
Maxine Gordon’s story:
Maxine Gordon bought a new home in Surprise in early 2005, at the height of the housing boom. She had very little to put down in cash, so she was advised to get two loans, one of which would cover her down payment. That loan came with a rapidly rising interest rate and now has a payment she can’t afford.
“I am stuck,” the retirement-home nurse said. “I can’t afford it, and I can’t refinance and I can’t sell.”
Her lender filed to foreclose on her home in June.
More than 130 homeowners in her neighborhood are behind on their mortgage payments, according to the Republic analysis. That’s almost one out of every 10 homeowners in the area.
Gordon, like many other struggling home buyers in new edge developments who are trying to sell to avoid foreclosure, is competing with home builders offering huge incentives of $50,000 or more to sell homes. Builders are motivated, too, because more than 20,000 new homes are unsold across the Valley.
Add to those houses the multiple homes that speculators snatched up during the boom and now want to unload.
And then there’s the glut of homes on the market. A record 50,000-plus homes are for sale across metropolitan Phoenix, compared with 12,000 two years ago.
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