For those who think that home foreclosures in the Valley of the Sun are restricted to areas like the West Side or Queen Creek, think again. Recent figures from the Independent show that four affluent zip codes in north Scottsdale have 542 foreclosures. A lot of the people in those areas have been strung out for a long time without much cash flow. They have enjoyed the high life of credit card debt and buying cars that they couldn’t really afford.
I have seen young families with 3,500 square foot homes in places like Grayhawk and DC Ranch where the 30 year old husband is the only income producer while his cute wife tends to their 2.4 kids and goes to the gym and pool every day to keep her waist at 19". Their driveway usually has a large late model SUV and maybe a BMW Roadster for mom with a license plate that reads "My Toy."
My first thought has always been, "How can they afford it?" Unfortunately for them, with the current state of the economy, they can’t. Expensive gas, loss of jobs, maxed out credit cards, failed loans, the crash of the housing market, and other factors have taken their toll. For example, there is a 2,296 square foot home in Grayhawk that was built in 1996 and was previously valued at $529,900. It was put at auction recently with a starting bid of $239,000. Grayhawk and DC Ranch alone have 88 foreclosures listed and even super wealthy Troon has 24. Many of the foreclosed loans are between $500,000 and $1,000,000.
As a side effect of foreclosures, many homes in affluent neighborhoods are being left in disrepair with lawns not being mowed or weeds taking over properties. Homeowner associations are also suffering losses from monthly fees not being paid by the lenders who have taken over properties.
It’s a downward spiral everywhere and shows no real sign of improving soon. It’s time for many of the pseudo-rich to tighten their belts, ditch the toys, swallow their pride, and realize that driving a used Kia and living in an apartment in Mesa may be better than walking and living in an Amana refrigerator box. At least for now.