(Agencies)
Updated: 2007-10-07 10:26

It takes time for a homeowner to get into trouble, but sometimes not all that long.

In the summer of 2006, the Gustafsons fell behind on their mortgage payments. Their interest rate was set to jump. In August, their lender started foreclosure.

Meanwhile, problems began to snowball. High gas prices prompted people to rethink the idea of owning a home on the outskirts. Investors rushed to sell.

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.

Last year, lenders claimed 15, nearly all in the final two months of the year.

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 the Villages, many of the homes where foreclosure is pending are already empty, a sign owners have given up.

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.

But on other streets, the presence of homes without curtains in the windows, with dirt and cobwebs collecting in doorways, is almost eerie.

Even when the market was good, some Villagers were troubled by the large number of investor-owned homes, empty or filled with renters.

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.

"I just figured after a while, the heck with it," he says. A real estate agent scheduled an auction of the home, but found no takers.

On Via del Rancho, Christelle Palmire watched as the home next door was abandoned to foreclosure. It stayed empty, too.

This Halloween, Palmire plans to take her son trick or treating in a friend's subdivision where she knows most doors will be answered.

"You drive around this subdivision and there are 'For Sale' signs everywhere," she says.

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.

But it can be difficult to know when homeowners are in trouble.

"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."

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