Drive through a neighborhood in any area of the Tucson region and it isn’t difficult to find a handful of empty homes.

Though the residential real estate market has begun to show signs of hitting bottom — and possible signs of improvement including declining inventory, increased sales volumes and a median price that’s holding steady — there are still thousands of foreclosed homes out there.

“What we are seeing is people give up hope as they try doing a loan modification,” said Long Realty Senior Associate Broker Rebecca Patsch. “They’ll leave their house and then the lender will file for a trustee sale, which typically the trustee sale will happen 90 days after the filing. But what we’re seeing is lenders are not completing the foreclosure for six months to a year after the filing. So that’s why a lot of these houses are just sitting there with no one in them and they’re not listed for sale; the lender hasn’t foreclosed. The lender is just holding them on their books.”

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Lenders such as Wells Fargo, Patsch added, have too many foreclosures to process nationally and would rather shift their losses around rather than report them all at once.

Tucson ranks among top metro areas for foreclosures, according to a report released July 29 by RealtyTrac. For the first half of 2009, Tucson ranks 40th, with more than 7,000 properties, or 1.67 percent, having foreclosure filings. Other areas in Arizona above the 1.19 percent national average for foreclosures were Phoenix-Mesa-Scottsdale (ranked No. 9) and Prescott (No. 27). No. 1 in the country is Las Vegas.

Before the housing crunch, the foreclosure market was relatively small, with speculators or families out for a deal quickly snatching up the defaulted properties. Once values fell and credit became scarce, new home sales slowed and homeowners began defaulting on their mortgages, which lead to the excess in inventory. Now, the most affordable homes are in the foreclosed market.

“There weren’t any foreclosures out there to speak of so, yes, the foreclosure market is a phenomenon of the last year and a half,” said John Strobeck, with Bright Futures Business Consultants. He tracks Tucson area foreclosure sales compared to regular sales on newly-constructed homes, which recently came in at 28 percent. A few years ago that figure was one percent. 

More foreclosures are on the horizon thanks to the risky mortgages types that were taken out when home sales shot upward a few years ago.

“So we’re looking at next year seeing the five-year resets from the boom sales,” Patsch said. “A lot of times the people’s properties have gone down in value so much that they can’t refinance out of those adjustable (rate mortgages).”

Houses vacated by foreclosure or other reasons can be in various states ranging from a neatly trimmed lawn with a real estate agents sign out front to one that is dilapidated and vandalized. It is up to the owner, whether it be individual or bank to maintain these properties.

At a certain point, keeping an eye on the empty homes becomes less an issue of aesthetics and more one of public safety.

“We get complaints that range from just mess or general storage of materials and items in the yard to structures that are vacant, dilapidated and pose a danger,” said Pima County Development Services Director Carmine DeBonis.

As of last week, the county had 329 open violations from zoning and building safety. Of this amount, 21 were in the foreclosure process.

“We’ve traditionally seen increases annually from years to years in the types and number of enforcement cases,” DeBonis said. “I can’t say if anything is directly attributable to the current mortgage crisis or the foreclosure circumstances. We have typically seen an increase in activity and I think that that’s a function of the public becoming more informed and information becoming more readily accessible.”

Unmaintained pools are another concern especially during the mosquito breeding season. Residents can call the Pima County Health Department if they notice a suspect body of standing water.

“Of the 308 complaints, 144 mentioned the house was vacant (from January through July),” said Pima County Consumer Health Program Manager Sharon Browning.

While the health department is subject to legal restrictions about what they can do to control mosquito breeding at foreclosed houses, they do employ a larvicide to treat pool water when property owners give their consent.

Vacant housing isn’t just limited to people who can no longer afford payments. Homeowners who must move because of a job offer or a military transfer may find themselves with a house that can’t easily be sold.

“If they’re (down) 20 percent of the value in what they owe verses what they can sell their house for, they’re really between a rock and a hard place,” Patsch said.

Contact reporter Nicholas Smith at nsmith@azbiz.com or (520) 295-4238.