April 06, 2008

NYT Arizona crash expose: "stuck in the middle of the desert, saddled with spacious new houses that had become not a promise of a future but a burden"


If I were to end the blog today with a story that would wrap things up, this one in the Times today would be it.

Before leaving for Europe, I took a trip down to Maricopa Arizona, 40 miles south of Phoenix, in the Fall of 2005, and couldn't believe what I saw. In the middle of nowhere, and I mean THE MIDDLE OF FREAKING NOWHERE, there were homes going up like weeds in the desert, and there were crowds lined up to get in the doors.

I went into four of the developments - a Pulte, a Centex, a KB Home and I forget the fourth, and the homes were monuments to 2x4 bad construction, painfully terrible architecture and unlivable layouts. And of course, they were located in a place that homes should never have been allowed to be built, and a place that nobody in their right minds would ever buy a home, at any price.

And yet look at all the cars and pickup trucks (damn - lots of illegals here!) filled with bright eyed buyers. Look at all the selling agents all too eager to tell you how appreciation was 'in the bag', how it was a 'great time to buy' because prices were going up next week, and how easy it was to get a mortgage at a great low introductory rate from their lender.

And I decided right there and then to start a blog to warn people about what was happening, and what was to come. I had seen enough.

This one has it all HP'ers. It's long, so grab a cup of coffee, read the whole thing, and then comment. It's too bad the screwed homedebtor in the article didn't read HP or all the other sources that would have and should have scared him away from such a stupid decision. This article sticks out for me - from July 2006, before the sheeple in today's story made his mistake:

"Scott Helsel never figured on being a real estate agent.But Prudential Arizona Properties has been lucrative for him. Especially with home builders in the Maricopa area so desperate they're offering real estate agents double or triple commission rates to bring them clients, knocking prices down by tens of thousands of dollars or tossing in free pools and other upgrades."

So today's expose has the ignorant and now-screwed homedebtor. It's got the pre-foreclosure home renting out at a fraction of the cost of owning, desperate realtors on commission, and sheeple buying badly-located homes they couldn't afford and shouldn't have bought in an area too boring for words. It has the destroyed dreams, the closed businesses, the screwed town, the sea of foreclosures, and the lifetimes of savings lost. And it has the epic real estate collapse in Ponzi-Scheme-Central Phoenix Arizona.

Thank you realtors. Thank you mortgage brokers. Thank you builders. Thank you appraisers. You f*cked people like Daryl Fox for a commission, even as he f*cked himself. And now we all pay the price.

And a message to Congress: DO NOT F*CK WITH THIS MARKET. PRICES NEED TO FALL TO THEIR MARKET PRICE. HOMEDEBTORS THAT SCREWED UP HAVE TO GIVE THE HOMES BACK TO THE BANKS AND START OVER. THE BANKS THEN HAVE TO FAIL. AND THEN WE CAN ALL MOVE ON.

Here's the sad and all-too-familiar story. Post good clips and bites in the comments thread.

Thanks Frank for the link.

57 comments:

Anonymous said...

Keith,

Great post again.

I remember scheduling with a few realtors to see a few properties. When I got there, there so many of us there people coudn't even fit in the damn house. Seriously. I f*cking hated it. I even told some realtors I wanted to see the house ALONE, and it still didnt matter, at least 15 people showed up every time.

I tried making an offer on one of those properties anyway. When I gave the offer to the realtor, she laughed at me and said that this home would problably end up 50k higher than the asking price. She said, "if you cannot match that, you will not get it."

After leaving most of those showings without even walking in the house, I thought that was enough. I had enough.

I remember people saying words like, "this is going to be mines after today". It was like a war. Just to buy a freaking home.

Im kind of glad those pigs are now getting slaughered.

Dny = Danny by the way.

Sixpercenter said...

Barney Frank wants to prop THIS up. Unbelievable!

Anonymous said...

Sounds like New Tampa.

That is our "Exurb" here in Tampa. 45 minutes north of the city, in the middle of no-where. Tons of supply & vaccancy; very hard hit and a lot of home owners in denial.

That article summed up the crap that was built over the last 7 years with the fact that they only put the side walk on one side of the street to save money, built identical houses to streamline and save money.

You have the builders living in insane multimillion dollar houses financed by the fools that rushed to by such garbage product fromt them.

William Behm said...

Keith,

Some great entries in your blog here over the last couple of days. Really good articles and video clips; keep it up!!

Ed said...

Frank/Dodd will make sure the prices double next year.

Anonymous said...

er... Do they have water there?

DOPES said...

WOW!

CAN YOU IMAGINE HOW FAR SWANN HAS TO DRIVE TO GET TO A PUBLIC LIBRARY, SO HE CAN GET COMPUTER ACCESS TO ARGUE WITH US???

DOPES!!!

Thrasymachus said...

The people who come off the worst are the developers. Sidewalks on one side? No streetlights? No high school? No parks? If you're going to build something (with the help of the state widening the highway) build it good.

Humans are by nature optimistic. They want and need to beliee the future is going to be better than the past, that things are going to work out the way they hope.

It's the job of bankers to be steely-eyed skeptics- to only lend money to people who don't need it. The new bankruptcy law is the big unknown factor here. In the 90's the philosophy of consumer lenders was to lend freely, and if a certain number of debtors did not pay, well that was made up for by 27% interest rates. Then they got tired of that and decided they would make everybody pay, and got their personalized bankruptcy law.

I would hope Daryl Fox would go Chapter 7, walk away from it all and get a fresh start. He's not that old, and I could tell him from personal experience about financial disappointments and setbacks. But with the new law- I don't know if he can.

I suspect the banks will ultimately regret their new law, when people learn to avoid debt like the plague. I have cash in the bank, no debt and I don't intend to borrow for anything but a house ever and maybe not even for that.

Anonymous said...

A story repeated all over the west. Ever been to northern Nevada? Builders pushed out from Reno with cheap land in little farm towns like Fernley and Fallon. Try selling one of those houses now.

miner_tom said...

I read the whole article. To me, nothing showed the utter lack of concern in a "community" for anything other than that which would encourage immediate appreciation, than the following"

"Amy Haberbosch, Maricopa’s former director of planning, told me that developers believed high schools lowered property values; she said one developer told her he’d rather build a jail on his property than a high school."

This whole region, and countless others like it, was developed, not because it needed to be, but strictly on the basis of housing appreciation. I don't even understand why people complain that there is nothing to do there. The did not come there to live. They came there to flip.

"We came, we bought, we flipped".

Keyser Soze said...

Sixpercenter said...
Barney Frank wants to prop THIS up. Unbelievable!

That ein't all Barney wants to prop up.

Keyser Soze said...

That entire area has a surreal feel about it. Thanks but no thanks.

sandman said...

The story is great. It really sums everything up.

I found it interesting that he claims he is going to stay and not jingle mail. I wonder if that lasts. If it is does, is he representative?

Also, how many cosmetics can you sell there? Is he like the Avon lady?

Afterthought said...

I think it would be helpful to teach people about the role capitalism can play in environmental protection.

Look at these houses! Does that look ecological to you?

Every dollar of debt makes the world a little less livable.

Shakster said...

Amazing.These weren't really predictions coming true when analysts warned of the bust to come.
We were already busted.The Housing bubble was just a huge symptom of our need to prolong the illusion that we were all wealthy.

Paul E. Math said...

I liked how the writer subtly demonized developers.

Didn't congress just pass a $15B bill, $6B of which is tax breaks for these a-hole homebuilders??

maxed said...

What 's happening in Maricopa and outlying areas will soon be happening in Chandler,Gilbert,Mesa and Phoenix.Prices are way over priced at this time.Say goodbye to your equity.

Anonymous said...

Im kind of glad those pigs are now getting slaughered.

Dny = Danny by the way.
-------------------

Danny, If there was ONE feeling, ONE sentiment, that I believe most HPers feel, then it is exactly what you have just described.
I believe its called "schadenfreud" or something like that. Anyways, I just say to them "FU%K all of you ASSHO%es, and thanks for FU%KING yourselves and everyone in this country"

Eml= Emanuel, by the way

Alice said...

If he can't afford to pay his mortgage.... what the F is he doing drinking margaritas out at a bar for. Shouldn't overpriced drinks and eating out be the first thing to go.

When I was poor, it was pasta and frozen vegetables every night. Poor people do not eat out.

AZDavidPhx said...

I drive past the Casa Grande boom town when traveling between Tucson and Phoenix.

I could never figure out why the hell all these people were snatching up houses out there and Maricopa. It makes no sense. There are no jobs out there unless you are a farmer or a real-estate agent apparently.

I like the one moron's strategy: buy 2 houses in Maricopa and flip for a down payment on the house in Scottsdale. Nice magical thinking! I'm gonna go buy two Pintos and flip them for the down payment on that Corvette next!

Anonymous said...

Airlines in the Media recently,and given large amounts of publicity. Having to do with Bankruptcies of ATA,Aloha,and Skybus which is plain on it's face,but nowhere near what I expect to be a large story unfolding.
The other 1/2 is the Grounding of the Major Airlines for safety reasons.The FAA has grounded many flights recently of Southwest,and others.
I really think this has alot less to do with safety than economics ,and Wall street.
To hide the losses that the Airlines are taking,the FAA coincidently has grounded flights.The Investors would run like hell if they were to find that these planes were Idle for lack of sales.The fuel is a bs problem for the Airlines .ie; Ag fuel in california is still 2.00/gal.The airlines run on fuel similar to diesel.
The untold story is being surpressed here.
Would you want to fly all that much anymore with all the gustapo BS,and the cramming of Airliners to make a profit?

Anonymous said...

Frank/Dodd will make sure the prices double next year.
----------------------

Dream On!

veritas_faust said...

The cosmetic guy says he wants to pay the bank because its the ethical thing to do.

Yet he sells cosmetics for a living: "Oh GIRLFRIEND, that make you look 10 years younger!"

Yep a lot of ethics in cosmetic sales.

Everybody involved was lying to everyone, what is with this new found honor? Is it supposed to be noble?

If so its not working.

Anonymous said...

my only regret is NOT FINDING THIS BLOG SOONER, lost my job, lost my house and suffered a heart problem, resulting in a quad bypass,,,am now reduced to being a renter at the ripe age of 54,oh yea I lost my life savings too,thank god for family tho they were the only ones I could count on, so 1 word of advice, keep your family close ,they are the only ones that you can depend on...THANKS KEITH FOR THE BLOG MAN!!!1

Frank@Scottsdale-Sucks.com said...

What floored me about the article is that everyone hang's out at Fry's. Fry's! It's just another supermarket, but the town is so horribly boring that Fry's is where everyone goes to be around other people and avoid insanity.

Who the hell moves to a place like that?

Paul E. Math said...

I just did a ziprealty search in Maricopa county - even after reading the article and being a bubble-watcher for a couple years now the results surprised me. Every single home I found was either short sale or reo. Maybe there were some that weren't short sale or reo but I couldn't find them.

I was also shocked by the interior photos of these houses. They all had a picture of a room that is supposed to be the kitchen - just a big square with an 'island' sitting there in the middle. All this space from one counter to the next - for what? Very poor design.

I always had thought there would be a buyer for any home as long as the price was low enough but I'm starting to question that. I just can't imagine there are as many willing owners as there are vacant crap-boxes. Many of these are not worth the property taxes and hoa dues, much less the purchase price.

Anonymous said...

hey, those places at 85,ooo dollars as they were in 2002 seemed to have a real future with their new construction, three bedrooms, 3 bathrooms, pool, and 2 car garages, warm and sunny citrus lots, and developing towns,and non associativness.........

Melker63 said...

In Stockholm/Sweden debt-trapped house/condo-owners are still in an agressively optimistic denial-mode. For every soberly realistic comment on this subject, theres still at least one who argues back. Factor 1:1 I should say. How long ago was this ratio still the reality on this blogg?

Anonymous said...

And yet look at all the cars and pickup trucks (damn - lots of illegals here!)
--------------------------

What's with all the Illegal Mexicans and their Fu*king pick up trucks!

Anonymous said...

Maricopa? One road in/out of town making rush hour a nightmare. You drive 15 miles just to get to the edge of the Phoenix metro area so you can battle rush hour traffic there. Also, almost retail businesses are off the one main drag in town making nights and weekend shopping or dining out a traffic mess.

Solo said...

maxed said:
"What 's happening in Maricopa and outlying areas will soon be happening in Chandler,Gilbert,Mesa and Phoenix.Prices are way over priced at this time.Say goodbye to your equity."
---------------------------------
And don't forget Scottsdale....home of the biggest concentration of overvalued real estate in the state of Arizona coupled with the most scummy obnoxious skells and skanks.

Стивен said...

10456 foreclosures in Phoenix!!! Ten fuckıng thousand foreclosures. Not homes on market. Foreclosures.

Here it is on Yahoo RE: http://tinyurl.com/45t5d8.

Wasn't long ago when we were amazed by 10K homes on the market.

And these numbers are climbing fast every week.

a.creampuff said...

Shades of the workout artiste and Croaker Concourse in Tom Wolf's A Man In Full. I know I mentioned it before, but any HPers who haven't read it and want a good laugh, get to the library (unless you live in Maricopa where they probably don't have a library)
--------------------------------
Buy now - it's a creampuff!

Noodles said...

Talk about new ghost towns. When I was a kid, I went to see Calico Ghost town and my little 14 year old mind was blown by the fact that a once vibrant town turned to dust so quickly when the price of silver went down. I just couldn't comprehend how one industry could affect a whole community to that degree -that the whole place would just die. And it's crazy to watch it unfold in real time.

AZwatch said...

OK..can you all share your thoughts on this?

Why does Arizona attract what is arguably the country's biggest collection losers and dead-enders?
What drives these bottom-feeders to the state?
I mean we're talking about hundreds and hundreds of thousands of these type of desperadoes.
And more frightening, is this just a glimpse of a future huge and rapidly growing American underclass
drifting and chasing mythical pot of gold rainbows?

Giles said...

This story is wild!!! I am looking at the Atlanta market this weekend and thinking back on the past few years here... Man am I glad it is nothing like these runaway markets such as Phoenix.

Atlanta suburbs have been hit a bit but nothing like this.

Giles

Anonymous said...

one thing is FOR SURE...

this Bust will turn Arizona into a Democratic Welfare state, just like Kalifornia.

That's a fact.

rememeber that in 4yrs.

mairca izda debol said...

Prices will fall. The only thing Congress is doing is giving taxpayer money to the corporate CEO's before their companies go bankrupt. I sure am glad the Democrat took over Congress in 2006.

mairca izda debol said...


Why does Arizona attract what is arguably the country's biggest collection losers and dead-enders?
What drives these bottom-feeders to the state?


They all come from Clownifornia, so what does that tell you? Besides, who in their right mind would go live in the desert?

Anonymous said...

Why does Arizona attract what is arguably the country's biggest collection losers and dead-enders?
What drives these bottom-feeders to the state?

Hubby and wife lose their jobs in the rust belt and hear that Phoenix has low unemployment so they head west. When they get here they discover that yes there are jobs available, but most are at $7-8 an hour. By then they're broke and can't afford to move back home so they end up staying here. Trust me as someone who has lived in the Phoenix area for 24 years I have seen this many times.

Frank@Scottsdale-Sucks.com said...

Why does Arizona attract what is arguably the country's biggest collection losers and dead-enders? What drives these bottom-feeders to the state? I mean we're talking about hundreds and hundreds of thousands of these type of desperadoes.

It's basically a bunch of people who wanted to be big shots and get respect in real cities, so when they couldn't they moved to Arizona where the cheap living and lack of competition lets anyone look like a big shot. It's also full of hard luck losers from other states who go to the next "boomtown" as their last hope. It's the most uneducated state in the nation so although there aren't many high-paying jobs, it's easy to get whatever's there.

It's loaded and I mean LOADED with all kinds of shysters, fly-by-night con artists, etc., I don't know why - you'd expect to see a higher concentration in Vegas but AZ is worse - maybe it's where they all go to gravitate together.

Finally you get a ton of 2-striker felons and illegals from CA looking to continue criminal lives while avoiding CA's strike 3.

Anonymous said...

>>>Who the hell moves to a place like that?<<<

I worked with some chick that moved to Maricopa. Sold their house in the PHX local burbs and moved to that God forsaken dream world - they were gonna flip and make it big.

I couldn't stand that bitch anyways, and now I'm thinkin' she finally got hers! LMAO! I can picture her and her brat in Fry's trying to maintain her sanity cuz hubby's workin' the family business day & night trying to make that house payment. Although they're the kind that would walk away anyway. Even better - their credit scores will be trash - just like them!

Eric said...

@Kalifornia Hater

Don't knock California too hard. California is a donor state [reference the tax foundation]. If you don't know what that means, it means that it pays more to the rest of the country in the form of federal taxes than it receives back from the federal government. It produces most of the fruits and vegetables in the country, it is the entertainment capital, and has huge centers of technology in Los Angeles and San Francisco.

foreclosureboy said...

the entire state of AZ is a 'reservation'. either for injuns, mexicans, or whites who were pushed outta somewhere nice.

theloknesmonster said...

What stood out in that article was that realtor "Weiss". She reportedly was closing an average of 17 houses per month, but could only afford to rent a place in Scottsdale?

If the average Phoenix area house price during the boom was 250k like they said, how the hell could this woman not have been sitting on a mountain of cash?

Good lord most sensible people could have sold 1 house a month and made a great living @ 6%.

My best friend bought a 2/2 at Rancho Eldorado in Maricopa in early 2002 for 90k, no money down. He sold in late 2004 for 145k. He said he hated living there so much due to the overwhelming feeling of isolation.

That place is a sewer. It reeks of cow shit and desperation. If you bought a house there during the boom, are trying to sell now, and don't walk from that hellhole, you might as well just consider it your coffin.

vp said...

"Ellen was calling to tell Weiss that the buyer had approached her privately about cutting Weiss out of the deal. This was not news Weiss was in the mood to hear."

Ha-ha, no 6% for you!

I read the whole thing and looked at a satelite photo of Maricopa on mapquest. That's the American Dream gone wrong. How come a supermarket is the only place you can hang out at and you have to drive 45 minutes to get to anywhere!? It's a place that will drive any sane person into despair.

Maricopa makes Ex-Soviet suburbs look good. They consist of 10-20 story apartment buildings. Cars can be used to commute, but mass transit is provided as well. And of course, there are high schools, small parks, libraries...

And still, some people bought houses (not homes) in Maricopa... with the intent of flipping them to the next loser! Sorry, you're out of losers, sheeple!

mairca izda debol said...

it is the entertainment capital,

That's reason enough to hate it. It won't be a donor state much longer with all of the educated middle-class and corporations leaving while millions of illiterate illegal immigrants replace them.

phil said...

I may become boring, but my solution remains:
All the vacant homes that are not maintained in tip-top shape by their current owners, or are delinquent on taxes, are seized under eminent domain. Sell appliances, doors, windows and anything else that can be recycled and use that money to bring in the Caterpillars. Neighboring owners get first refusal to buy the razed lots. Instead of 1000 homes on ridiculously tiny lots you end up with, say 500 homes in a more attractive environment.
Losers: irresponsible builders, lenders & investors who “sold” them and refuse to upkeep the homes.
Winners: responsible owners who are willing to stick it out and end up with nice backyards. Not to mention their kids.
Cost to the community and the taxpayer: zero. Plus extra jobs for the big cleanup.

A look at Maricopa from the air says it all:
http://preview.tinyurl.com/3jnkdz

PS: In the "loser" department you can add the local Best Buy's and Home Depots, who won't sell many fridges or gutters for a while. But if such a recycling campaign can help some poorer folks in the area to buy a virtually new stove for cash, cheap, as opposed to getting deeper into debt with their credit card, I'm all for it.

Anonymous said...

Eric,

LOL you forgot the San Pornando valley...

Chris said...

I live in Michigan, and I seriously know like 3 people who moved to Phoenix to go to the University of Phoenix, even though it is a crappy joke of an online college that they could have done from their living room.

Anonymous said...

Went out to Maricopa once (never again) because my brother wanted to do some gambling at Harrah's
Ak-Chin...
Whadda dump in the desert!
And you can throw in two (count 'em. TWO) Anthems, Verrado, Surprise, SE Gilbert, the list goes on.
This, of course, is not going to end well.

Hardcorri said...

"Why does Arizona attract what is arguably the country's biggest collection losers and dead-enders? What drives these bottom-feeders to the state? I mean we're talking about hundreds and hundreds of thousands of these type of desperadoes."

Seriously! My husband's father and new wife live not in Maricopa but a little outside Phoenix and everything about that city and state, for that matter, SUCKS! The traffic is absolutely horrible (worse than LA), the people are horrible, the homes are horrible, etc. I swear, after our last trip there we swore we'd never visit again. That article made me feel sad for about a half a second...

OncefriedBeans said...

Messycans. Hee hee. That's a new one.

Frank@Scottsdale-Sucks.com said...

@Kalifornia Hater

Don't knock California too hard.


You can't talk much sense into the California haters. I lived in both Nevada and Arizona and both of those states are nothing but California haters, for no other reason than they're pissed off that they are forced to live in the desert because they can't afford CA.

I was a California hater myself for many years just because living in Arizona brainwashed me to be that way. Finally I pulled my head out of my ass and went to California to see for myself and wound up moving here.

Chris said...

http://tinyurl.com/2ustsa

Looks like my fellow Manitobans know a good deal when they see one... Yikes.

Anonymous said...

I went to maricopa once and could not believe the 200k houses people were buying, well now some small ones are hitting 100K. these people or i should say the banks own alot of maricopa. more coming soon. queen creek is even worst, with houses under 100K now, newer houses too! Prices have much further to fall as i saw 15000 forclosures in maricopa and pinal, and 15000 preforeclosures. plus, the horrible commute, maybe retirees will buy in these areas.

Anonymous said...

After 39 years in an office in a hardware manufacturing company, I took my early retirement package and my pension and moved to Scottsdale to work as a caregiver and part time nanny. There were three things I did not like about Arizona: the traffic, the pollutiion in the valley, and the housing boom. After three years I moved back to my small town in in the Midwest. I am a lot happier now that I am back with my family and friends, and the small town atmosphere.