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Housing Desert Leads Biggest U.S. Homeownership Drop Since 1930s

Friday, 07 October 2011 10:12 AM

Stephanie Santiago moved to a newly built development in Buckeye, Arizona, in 2008, and waited for other families to arrive with playmates for her 8-year-old daughter. Three years later, she’s still waiting.

“There are a lot of empty neighborhoods,” said Santiago, 30, pointing past the five large stucco houses on her block, which are surrounded by cotton fields and vacant desert lots. “They started to build and walked away.”

Maricopa County, which added one of every 40 housing units built between 2000 and 2010 in the U.S., had the biggest drop in homeownership among large counties, falling to 64.5 percent of residents from 67.5 percent, the U.S. Census Bureau said yesterday. That was almost three times the national decline in homeownership, which fell 1.1 percentage points to 65.1 percent in the sharpest decrease since the 1930s, the census said.

The Phoenix suburb of Buckeye reflects two other census figures. The nation added almost 16 million homes, a 13.6 percent increase from 2000, as the number of vacant residences rose to 15 million, a gain of almost 44 percent.

Buckeye’s population grew to 50,876 last year from 6,537 in 2000. The Maricopa County town increased the number of houses to 18,207, an almost eightfold jump from 2,344 in 2000. Vacancies also surged, to 3,783, a 20-fold increase from 186 in 2000.

“What you saw in Phoenix and the like were local economies that were built around home construction,” Stuart Gabriel, director of the Ziman Center for Real Estate at the University of California, Los Angeles, said in a telephone interview. “So when the housing boom stopped, everything imploded.”

Housing Collapse

The implosion led to mass foreclosures in Maricopa County. There were 558 real-estate seizures by mortgage banks in the county in 2006, according to data compiled by RealtyTrac Inc., an Irvine, California-based real estate data company. The number climbed to 48,072 last year, an 86-fold increase.

Seven of the nation’s more than 3,100 counties accounted for 10 percent of the new housing units. Among leading counties, Maricopa was first, with 389,000 new homes during the decade, followed by Harris in Texas, which added 301,000, and Clark in Nevada, which increased its count by 281,000. In California, Riverside County added 216,000 new homes and Los Angeles gained 174,000, while in Texas, Tarrant County increased by 149,000 units and Bexar County added 141,000 homes.

The number of U.S. residences increased by 15.8 million to 131.7 million at the end of the decade, a 13.6 percent growth rate. Almost 90 percent of the gain occurred between 2000 and 2007. There were almost 2.1 million housing starts in 2005. Last year, there were about 587,000, Census figures show.

Vacancies Surge

Vacant homes grew rose to about 11.4 percent of all housing units, up from 10.4 million in 2000.

In Arizona, cheap land drove people to less-expensive homes in rural communities such as Buckeye, about 40 miles southwest of Phoenix, and Queen Creek, about 40 miles to the southeast, according to Tom Rizen, 58, of RAN Realty and Property Management in Mesa, Arizona. The town added 7,276 homes, a more than sixfold increase during the decade to 8,557 from 1,281.

“You could get a new home, of a nice size, for a decent price,” Rizen said. “The prices kept going up and builders kept going further out. The inventory was built, the specs were built, and then the bottom fell out of the market.”

Jay Butler, a professor emeritus of finance at the W.P. Carey School of Business at Arizona State University, said part of the boom was driven by builders, “always convinced the future is green and glorious.”

“In order for the market to recover, you have to make up for the mistakes and fill up the empty homes and build the houses in these empty subdivisions,” Butler said. “Since you built an inventory for demand that really didn’t exist, it takes time.”

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Stephanie Santiago moved to a newly built development in Buckeye, Arizona, in 2008, and waited for other families to arrive with playmates for her 8-year-old daughter. Three years later, she s still waiting. There are a lot of empty neighborhoods, said Santiago, 30,...
Friday, 07 October 2011 10:12 AM
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