Tucson Ghost Town

One thing that really spooked me on my recent drive across the Southwest was the vast ring of virtually empty neighborhoods on the fringes of Las Vegas and Phoenix. Northwestern Las Vegas along Highway 95 was really, really bad, especially after dark: thousands of shuttered, darkened homes almost devoid of people.

I suppose what's true for these two cities is true as well for Tucson, Sacramento, and other cities in the West:

Though the residential real estate market has begun to show signs of hitting bottom — and possible signs of improvement including declining inventory, increased sales volumes and a median price that’s holding steady — there are still thousands of foreclosed homes out there.

“What we are seeing is people give up hope as they try doing a loan modification,” said Long Realty Senior Associate Broker Rebecca Patsch. “They’ll leave their house and then the lender will file for a trustee sale, which typically the trustee sale will happen 90 days after the filing. But what we’re seeing is lenders are not completing the foreclosure for six months to a year after the filing. So that’s why a lot of these houses are just sitting there with no one in them and they’re not listed for sale; the lender hasn’t foreclosed. The lender is just holding them on their books.”

...Tucson ranks among top metro areas for foreclosures, according to a report released July 29 by RealtyTrac. For the first half of 2009, Tucson ranks 40th, with more than 7,000 properties, or 1.67 percent, having foreclosure filings. Other areas in Arizona above the 1.19 percent national average for foreclosures were Phoenix-Mesa-Scottsdale (ranked No. 9) and Prescott (No. 27). No. 1 in the country is Las Vegas.

...More foreclosures are on the horizon thanks to the risky mortgages types that were taken out when home sales shot upward a few years ago.

“So we’re looking at next year seeing the five-year resets from the boom sales,” Patsch said. “A lot of times the people’s properties have gone down in value so much that they can’t refinance out of those adjustable (rate mortgages).”