denverpost.com
Shuttered homes, blighted blocks
By David Olinger and Aldo Svaldi
Denver Post Staff Writers
Article Last Updated: 12/06/2006 04:17:31 PM MST
Mario Espinoza picks through the remnants of a foreclosed home at 4870 Crown Blvd. in northeast Denver's Montbello neighborhood. The property burned a year ago and has yet to be cleaned up. (Post / Karl Gehring)
The house is vacant, the lawn gone. Bare boards cover a broken front window and all the rear windows. Graffiti scars the house, the fence, the for-sale sign. A car battery and a discarded bottle of brandy litter the front yard.
City Councilman Michael Hancock bends down, gingerly picking up the brandy bottle.
"This is a prime example of the things we started seeing this summer," he said.
He leans over a tattered fence, chatting briefly with the next-door neighbors. "They see people going in and out of the property," he said.
The house, at 5518 Sable St., is one of nearly 1,400 lost to foreclosure during the past three years in the two largest neighborhoods in Hancock's Denver district.
For years, he lived on this street.
"None of these homes is owned by the original owners," he said as he passed his old house. "Everyone's moved out."
In Colorado, the state with the nation's worst foreclosure rate, some neighborhoods have been spared the wave of house auctions. Others have been deeply wounded, and it is not just those losing their homes who get hurt.
In three years through August, 977 homeowners have lost their homes to foreclosures in the Montbello ZIP code and 414 in the adjoining Green Valley Ranch ZIP code, according to Foreclosure.com, a Boca Raton, Fla., company.
A computer-assisted Denver Post analysis, based on Denver Regional Council of Governments household estimates, shows that this area at the northeast edge of Denver suffered the worst home-loss rate in the metro area. Over the three years, more than one in 10 families here lost their homes.
When foreclosures overwhelm a neighborhood, homeowners anxiously watch their own property values decline as lenders unload houses at discounted prices. Many foreclosed homes sit vacant for months. Police get vandalism and vagrancy calls. Church leaders see membership fall while food-bank demands rise. School principals find two or even three families sharing single-family houses.
And community leaders fear something intangible but vital will be lost: neighborhood pride.
Neighbors lose value
Selling a home can be a long and frustrating experience when foreclosed properties nearby go for much less.
In Montbello and Green Valley Ranch, existing-home values are falling as foreclosures spread. Burned-down houses sit abandoned for a year or more. For-sale signs carry notes of desperation. One offers a week-long Caribbean cruise to the buyer of a foreclosed house. "Zero down? Poor credit? First-time buyer? Call for a free two-minute pre-approval," another urges.
From August to October, the median sale price on existing homes in Green Valley Ranch was $185,450, down from $201,000 during the same months a year ago, according to real estate website Trulia.com. In Montbello, median sale prices dropped from $175,385 to $164,950.
By comparison, median home values were up 1.4 percent citywide during the same time span.
During the past five years, home values have stayed almost flat in Green Valley Ranch and dropped 4.2 percent in the Montbello area, according to Trulia .com's data.
In Montbello, Bernadette Ukolowicz waited seven months for one lucky knock at her door.
"Price reduced," the sign on her lawn pleaded. Three times she lowered it. Then she took the sign down. When most house sales in your neighborhood are foreclosure-related, it's hard to compete.
Ukolowicz has lived for 26 years in Montbello and serves as president of a neighborhood association. But after her mother entered a nursing home this year, she felt she did not need and could no longer afford the house they shared.
In seven months, six people looked at her three-bedroom house. Nobody has since September. For-sale signs abound on her street. Three houses on her block have been foreclosed in eight months. A fatal stabbing left a fourth empty.
"The house next door, it's been vacant six months, maybe longer. People across the street, they're trying to sell. Three homes down, it's vacant," Ukolowicz
Graffiti on a Sable Street for-sale sign doesn t help draw in buyers. (Post / Karl Gehring)said. "Anyone trying to sell their home right now in the area is up against all the vacant homes. Why should I buy this house for $175,000 when the bank will sell that one for $130,000?"
Hancock, the councilman representing Montbello and Green Valley Ranch, calls the foreclosure epidemic Denver's most urgent problem.
"People who were once very proud of their blocks now see a decline," he said. "That's a greater threat to the vitality of our city than anything else. Because people will leave.
"Denver can build great monuments, parks, art museums and cultural attractions, but if we don't address the foreclosure rate, we aren't going to be proud of Denver."
Stuck with same value
The neighborhoods with the lowest-price housing are the most likely for foreclosures, keeping prices stagnant.
In a Denver Tech Center office, foreclosure prevention consultant Dottie Melton has been studying house sales in Montbello, a racially diverse neighborhood where young couples and working-class families could buy a home within the city limits.
What she sees alarms her.
Melton negotiates "short sales" - sales that avoid foreclosures by getting lenders to buy houses for less than borrowers owe. In Montbello, she calculates that 70 percent of pending house sales and 68 percent of all sales in the past six months were either short sales or foreclosures.
"Where's the homeowners in this? They're not there," she said. "You have a home on the market, and you're going to compete with 70 percent of the sales?"
Across Colorado, neighborhoods with lower-priced homes have been hit hardest by foreclosures - condos, townhouses, single-family houses under $200,000. The same is true in Denver. In neighborhoods with the lowest median house prices, thousands of families have lost their homes in the past three years while affluent neighborhoods were largely unaffected.
Melton sees a spreading belt of foreclosures, however, that is now reaching middle-class neighborhoods in Arapahoe and Jefferson counties where homes were overvalued and buyers borrowed 100 percent of the purchase price.
"It's on its way. It's in my backyard," she said.
Once a week, Councilman Hancock climbs into his gray Nissan Maxima for what he calls a "recon drive" in his district.
"The lawns are the first thing I noticed," he said on a recent drive through Montbello. On streets where lawns had been meticulously maintained, weeds grew in dry dirt. "Boarded-up windows here and there. Constituents complaining: 'Our neighborhood's going down the drain. What's going on? Why can't the city do something?' Unfortunately, the city can't do a lot."
On Crystal Way, a newer section "where a lot of folks find themselves in trouble," he counted seven for-sale signs around one loop.
On Crown Boulevard, he drove past the wreckage of two houses that burned in 2005, one now in foreclosure.
"If you don't think that impacts the neighbors...who's going to buy a house on a block like that?" he asked.
Last week, as two men gathered scrap metal from the burned house and loaded it into a pickup, next-door neighbor Linda Phillips stood on the sidewalk and applauded this hint of progress.
"You think you live in a nice neighborhood, and you have to tell people, 'I live next to the house that's burned up,"' she said. "Everyone knows right where that is."
In some ways, Montbello and Green Valley Ranch are dissimilar.
Montbello is an older, established neighborhood. Its home prices are slightly lower, and large apartment buildings complement its single-family houses and townhouses.
Green Valley Ranch, to the east, is still under construction. Its current developer, Oakwood Homes, envisions a community stretching from Denver into Aurora that ultimately could hold 20,000 homes.
Yet these neighborhoods share troubling foreclosure rates and stagnant house prices that trap many homeowners who try to sell.
In October alone, 65 more homes were foreclosed in the neighborhoods.
Seventy percent of the foreclosed loans were approved in 2004, 2005 or this year. Nearly half refinanced previous home loans. And while the foreclosure process takes about 4 1/2 months in Colorado, half of those homes already appear vacant. At one, a real estate flier offers a seven- day Caribbean cruise to anyone who buys it.
Losing the down payment
One couple's home in Green Valley Ranch hasn't sold, and they could be out the $24,000 they put down to buy it.
One of the new foreclosure notices came to Anthony Neely and his wife, Thelma, who thought they were making all the right moves when they bought a two-story home in Green Valley Ranch in 2003.
They put $24,000 toward the $277,000 purchase price of their home on Ceylon Street, thinking they had a cushion to sell if they ever got in a bind or needed to move.
But their home isn't selling in a deflated market. Come December, the couple could lose every penny they've invested in it.
"We paid a high price, and we got a bad loan," said a dejected Neely. "We saved a long time to get that down payment."
Neely, a 44-year-old local truck driver, lost his job and hasn't found one that provides the weekends and evenings off he needs to take care of his special-needs child, he said.
Making matters worse, the couple's adjustable-rate mortgage has started escalating. Payments have risen from $1,100 a month to more than $2,000, beyond what his wife's salary as a registered nurse can cover, Neely said.
The home had only six showings in four months on the market, including a lowball offer of $210,000.
"Even the bank is not going to take that," he said. "We are between a rock and a hard place."
Another October foreclosure notice came to Dee and David Holland.
A year ago, they escaped a mobile home park in Aurora where evening barbecues had given way to drug deals and sporadic gunfire. With a thousand-dollar down payment, they moved into a brand-new $167,000 home on a quiet street in Green Valley Ranch.
Now, Dee is battling lung cancer as she loses her home. She has moved her bed to the kitchen because she breathes from an oxygen machine and can no longer get up and down the stairs. Her waitress days are over.
David suffers from high blood pressure but continues to work a 5 p.m. to 1 a.m. shift, baking bread for King Soopers.
He hunched on a living room couch, head in hands, wondering why they bought the first home they saw, wishing their mortgage payments were $900 a month, not $1,300.
"Really, I think we were kind of pushed. We weren't ready," he said. "We really didn't think."
When the Hollands realized they couldn't keep up with the mortgage payments, they responded to an offer from a Colorado Springs investor promising to buy their house in 10 days. Four months later they still own it, and their debts keep piling up.
"It's just sad. I sat here crying the other day. It's finally catching up to me. We have no place to go and no money," Dee said.
"A great time to buy"
A Green Valley Ranch developer offers buyers free advice on credit problems and homeownership.
Oakwood Homes chairman Patrick Hamill said his company offers a free program to help buyers with credit problems and educate them about the responsibilities of home ownership.
He noted that most foreclosures have clustered in an older area of Green Valley Ranch, not the new Oakwood Homes developments.
Aside from that area, Green Valley Ranch's foreclosure rate "is not out of whack by any stretch of the imagination," he said.
Hamill said he has seen little, if any, decline in new-house prices at Green Valley Ranch, but "it's a great time to buy a home. There's been no better time in the last 20 years."
But those who already own homes are worried.
"People are getting stuffed into houses that are beyond their means," said Melvin Morford, a postal worker who lives in Green Valley Ranch and delivers mail in Montbello.
He learned the appraised value of his own home had dropped when he tried to refinance it - and blames the array of vacant homes and foreclosure sales.
"My house would have sold for $220,000 a year and a half ago. I'd be lucky to get $185,000 now," he said.
Foreclosures hurt those losing their homes and their neighbors most. But when hundreds of foreclosures surge through a neighborhood, the ripples reach from church pews to classroom doors.
At the United Church of Montbello food bank, "we've served record numbers over the last year and a half, and the number keeps increasing," said the Rev. James Fouther. More than 500 Montbello and Green Valley Ranch residents now show up regularly for food.
"I suspect it has a lot to do with the foreclosure rate," he said. "The overall pain factor is much higher here in Montbello because of the foreclosure rate. There are fewer people to participate in community events, not as stable a base of families."
He also notices the effect on Sundays.
"We have seen not just a drop in members, but also we get a higher number of church shoppers, if you will, the ones who come for a week or two. Or a month or two. When I go to call on them as pastor, the house is empty."
At Green Valley Elementary, school principal Deborah Johnson-Graham said, "We've noticed a higher than average mobility rate over the last three or four years, probably due to the foreclosures. That's changed the student population significantly.
"Groups of families have banded together to help save the home - two, sometimes even three, families," Johnson- Graham said, which caused some classes to bulge with children. She also saw the numbers of children qualifying for free or reduced-price lunches jump from 30 percent to 57 percent of the school in two years.
The foreclosures bring calls to city inspectors, who tack trash and weed violation notices on empty houses, and to police, who evict squatters.
"It's a crisis to the neighbors if you're living on a block with four houses in foreclosure," said Lisa Fair, a police commander in Montbello. "It invites broken windows. It invites graffiti. Trespassing, where an individual is living in this vacant house."
Dean Brown, a 38-year Montbello resident, sees an influx of immigrants and the popularity of 100-percent loans as two factors driving up the foreclosure rate in his community.
He points to a house across his backyard. One door won't close. The window screens are gone.
"You've had some unscrupulous real estate agents banking on immigrants," he said. "That's a one-family home. There's two or more families living there."
On a nearby street, Alejandro Teran also worries about the number of empty houses and their effect on his property value. But he blames a Colorado crackdown on illegal immigrants that prompted some families to cash out their home equity and others to flee to safer states.
"Seven years ago, all those people moved from California to here" because of a new anti- immigrant law, he said. Now they're leaving, to "Seattle, New Mexico, Texas."
Councilman Hancock, who moved from Montbello to Green Valley Ranch, said immigrant families dominate the housing market in his old neighborhood. But he doesn't blame them for its foreclosures, and he's not sure what a city official can do to make a difference.
He would like to see community-based groups offer loan counseling services for people planning to buy or refinance a home. He hopes Colorado legislators will hold those who sell bad loans more accountable.
"The immigration issue is a symptom of a problem," he said. "The problem is a predatory lending environment." |
