The ranch home on Via del Palo where the newspaper in the driveway has been sitting unclaimed since April. The house at the corner of 223rd Court with faded fliers stuck in the door. The two-story on Via del Rancho with the phone book on the step.
Not long ago builders were raising home prices here thousands of dollars week after week. Families pitched tents in front of sales offices and waited for Saturday morning lotteries to win the right to buy. Buyers - including more than a few speculators - gambled with loans whose risks were obscured by euphoria.
This is the tale of how America's real estate boom came to a seemingly ordinary subdivision called the Villages at Queen Creek where the whipsaw of easy credit has led to some extraordinary times.
As the nation confronts skyrocketing foreclosures and policymakers try to contain a symptomatic credit crunch what is happening here and in scores of similar neighborhoods is worth considering.
Because while the pressures at work in Queen Creek were extreme the choices people made - and the consequences of those decisions - are not so different from those faced by thousands of other homeowners and their neighbors.
"Honestly," says Joy Kessler a mother of three boys standing on the doorstep of the house she and her husband are surrendering to foreclosure. "if you were in this situation what would you do?"
Back in California they had contented themselves with less than 1,100 square feet. But salesmen here showed them floor plans that would give them 2 1/2 times the space for half the price.
The place they liked the best was a subdivision called the Villages a crescent-shaped warren of streets cradling a golf course quickly filling with sand-colored stucco homes. The local schools had a good reputation. It was affordable. There was an extra-big lot on a cul-de-sac with enough room in back for a pool.
"The sales person was saying that they (homes) were going up $1,000 a week," Dave Gustafson recalls. "So when we came to look we signed right away."
Builders made it easy. A downpayment of $2,000 to $5,000 was all it took to get started. Buyers could borrow at low teaser rates requiring payments of nothing more than interest.
The Gustafsons picked out Corian counters and maple licorice-finished cabinets at the builder's design center and opted for a pool and a whirlpool bath adding more than $50,000 to their loan. The interest rate was fixed for only two years but they didn't worry. With prices rising so fast they could always refinance. And in five or six years the Gustafsons figured they'd sell for $500,000 and downsize.
"I was thinking man if I could have 10 properties. I could just kind of retire.. and kick back and live off the income," says Rowberry a nuclear safety inspector.
But the speculative mind-set confounded buyers like retiree David Pickering. When Pickering and his wife left Pennsylvania in August of 2004 for a new home in the Villages they'd never heard of interest-only loans and the idea of buying a home as an investment hadn't occurred to them.
"There's been a huge shift in the way people view their houses," says John Karevoll who tracks real estate for DataQuick Information Systems. "Your house now can basically be used as an ATM."
Twenty years ago families celebrated when they got a mortgage and again when they retired the loan. A home meant security. The financial commitment promoted both pride and neighborhood roots.
Now a home is more - or less - than a place to live. It is an investment - a way to make money and finance a lifestyle says Robert Manning an expert in consumer credit and debt at the Rochester Institute of Technology.
The housing and lending industries encouraged that transformation promoting not just subprime loans but mortgages requiring little or no documentation of income no money down and interest-only payments.
When easy borrowing combined with a run-up in prices speculators joined the fray. In Arizona and other Sun Belt states where foreclosures are rising fast homes not occupied by their owners account for an outsized portion of foreclosures according to the Mortgage Bankers Association.
But the rise in interest rates and drop in home prices has put the most pressure on people who live in the homes they own and who hadn't counted on the market shift.
It used to be that when things got tough. Americans did everything possible to protect their homes. But now faced with foreclosure many have reordered priorities - making payments on things like credit cards while neglecting mortgages according to the credit scorekeeper Experian.
That is at least partly a matter of psychology. When people who bought almost entirely with borrowed money see that worth disappear there's little incentive to hold on says Stuart A. Feldstein of SMR Research Corp. a Hackettstown. N. J. research firm.
"Lenders never said no," says Jay Butler director of realty studies at Arizona State University. "Nobody expected this to continue but they hoped it would just long enough to get out of it - and they were caught up in the whirlpool."
Buyers lined up for the chance to make a downpayment in the new subdivisions. Rowberry joined 200 people one Saturday morning for a chance at 15 lots. He snapped up builders' price lists. Every week the homes cost $1,000 to $5,000 more.
"I'm just one guy and it wasn't unusual to get three (calls) a day" from speculators says John Wake a real estate agent. "A lot of them weren't sophisticated. They'd never invested before."
In the Villages already half completed remaining lots looked too good to pass up. One Southern California investor. Alan Jullien bought three homes. A flight attendant. Angela Nazario bought a two-story house even though she lived by herself and was frequently on the road. A local real estate agent. Sean Bacon bought two.
"Talking to a lot of co-workers everyone was doing the same thing - taking out lines of credit milking it for all it's worth," says Matthew Berends a homeowner in Surprise another Phoenix suburb where prices soared. His home is now in foreclosure. "In one year for a house to go up $80,000 it's like too easy."
Greg Giniel and his wife moved into a home on East Sanoque Drive bought by a friend with Giniel as a silent partner. What Giniel hadn't counted on was that the friend had also bought three other homes around the Valley all financed with adjustable rate loans that were bound to rise.
In 2005 - a record-best year for Phoenix real estate - just five homes in the ZIP code containing the Villages were lost to foreclosure according to Information Market a Phoenix real estate research firm.
So far this year. 75 homes have been claimed by banks. But with the market so soft and more adjustable rate mortgages about to reset that could be just the beginning.
In a big subdivision - about 1,400 homes - the problems aren't always obvious. The golf course remains carefully watered the playgrounds neatly swept. Many streets particularly in areas built before prices spiked are filled with families who take walks with strollers in the evening or grill burgers in backyards overlooking the greens.
Then late last year moving vans began to pull up to some homes at odd hours. Auction notices were posted on front doors. The oleander and mesquite trees that do so well here in the desert sun turned brown in yards left without water.
In May the house to the left of the Pickerings' on Calle de Flores went to foreclosure. Two weeks later the house on the right followed. Both had been empty for months. It made David Pickering vaguely uneasy. He couldn't help wondering whether empty houses might attract vandals.
"The weeds in the back are getting so tall now that they are growing over the separating wall into my yard," he e-mailed alerting the homeowners association to one of the vacancies. "Something must be done about this. ... The property must be under financial responsibility of someone."
For a couple of months landscaper Nick Bourque - who lives next door to three foreclosed homes in a row on Via del Palo - made a point of keeping the abandoned yard bordering his free of nutsage and old newspapers.
The problems become self-perpetuating. Researchers say that each foreclosure chips away at neighbors' property values. But foreclosures here compound a larger problem.
Builders continue adding homes to the market at reduced prices. Investors are trying to sell. Lenders are seeking buyers for foreclosures. Homeowners whose financial troubles might be solved by selling can't compete real estate agents say.
"Sometimes the neighbors don't like you so much because you're one of the reasons the values are declining," says Kim Gordon a real estate agent specializing in foreclosures who is listing two homes in the neighborhood. "But everyone has got their part in it. The homeowners overextended themselves."
In many ways the Villages is lucky because so much was built before the market soared says Amanda Shaw president of Associated Asset Management which administers it and 300 other Arizona subdivisions. The company which once saw two foreclosure notices a month in its communities now fields three to five each day and some of its subdivisions have been hit much worse.
"There are people who think they don't have an alternative.. other than to turn the lights off at 1 in the morning hop in the U-Haul and just leave," Shaw says.
Now says Ed Stutz who lives in the subdivision and pastors the nearby Family of Faith Fellowship church at least three Queen Creek homeowners call each week asking for help paying their bills. That never used to happen. In September the church decided to offer budgeting advice.
"They saw a lot of home for a pretty decent price and I don't think they saw the handwriting on the wall," Stutz says of his neighbors. "People took a gamble and now it's hurting."
"I've got to figure out how to buy my own home back," Giniel says. "If God doesn't pull me out of this one. I don't know where else I'm going to go."
They could fight to save their house. But what was the point? It's worth at least $40,000 less than they paid. They can rent in this depressed market for a fraction of their monthly payment.
"It's sad to say but honestly we don't feel like there's anything worth saving in this house," Joy says. "Financially we've got nothing to show for it."
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