Homeowners who are significantly underwater with their mortgages should consider walking away from those, according to Brent T. White, an associate professor at the University of Arizona’s James E. Rogers College of Law.

In a paper titled titled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis,” White writes most homeowners do not walk away or strategically default as a result of two emotional forces:

• The desire to avoid the shame and guilt of foreclosure

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• Exaggerated anxiety over foreclosure’s perceived consequences

“It was a puzzle for me,” he said. “If you look at the percentage of people underwater — many by a large amount — there are still few people walking away strategically. I wanted to know why they were staying.”

In his paper White writes: “These emotional constraints are actively cultivated by the government and other social control agents in order to induce homeowners to ignore market and legal norms under which strategic default might not only be a viable option, but also the wisest financial decision. Unlike lenders, individual homeowners have thus generally not acted to minimize their losses and have born a disproportionate share of the burden from the housing collapse.

“It is a double standard in our financial world,” he said. “If a corporation was heavily upside-down on a home they would walk in a New-York-second. But then we expect homeowners to stay and honor a contract.”

With the backing of behavioral economists he argues that underwater homeowners aren’t knowingly making bad financial decisions, they just can’t cognitively grasp that they would be better off if they walked away from their mortgages.

“The financial costs of foreclosure, while not insignificant, are minimal compared to the financial benefit of strategic default – particularly for seriously underwater homeowners,” White wrote. “For many, default is the ‘in the money’ option by any objective measure. Yet most seriously underwater homeowners aren’t walking away - even as they sink deeper into negative equity.”

White quotes a study that estimates only about one-fourth of homeowner defaults are what would be called “strategic,” describing the rest as due to such things as divorce, job losses or other financial calamities that prevent people from meeting payments.

“I don’t advocate that everyone who is underwater on their mortgage should walk away,” White said. “But it is a decision they should look into with an attorney and a financial adviser and make a decision in their own personal interest.”

Off the top 10

Arizona cities are no longer on top 10 lists for numbers of foreclosures, according to third-quarter data from RealtyTrac.

Tucson is now down to No. 42 for foreclosures with 1.04 percent of properties receiving foreclosure notices. The Phoenix-Mesa-Scottsdale metropolitan area is down to No. 12 with 2.43 percent of properties receiving a notice. Prescott was the only Arizona city to see an increase, up 77 percent to 1.44 percent of properties receiving foreclosure notices, enough to put that city at No. 29 on RealtyTrac’s list.

No. 1 on the list is Las Vegas with 5.13 percent of properties receiving foreclosure notices. The national average for foreclosures is 0.73 percent of properties.

Design award winners

Lizard Rock Designs LLC, 1640 E. River Road, received two national awards from the American Institute of Architects for the aging.

One of the projects was Casitas on East Broadway, a 56-unit public housing project between Norris and Plumer avenues adjacent to the historic Sam Hughes neighborhood that was jointly developed by the Tucson Housing Foundation and Catholic Community Services of Southern Arizona. It is a mix of two-story apartment buildings and single-story duplexes organized around four courtyards. The project is designed to be LEED Gold certified.

The second award winning project is Tohono O’odham Assisted Living Elder Homes, a cluster of four 12-bedroom homes adjacent to the Archie Hendricks Skilled Nursing Facility in Sells. The homes are based on a “green house” model of care, adapted to work within the culture of the Tohono O’odham community, emphasizing nature and outdoor living.

Fitness at Skyline

Skyline Country Club, 5200 E. St. Andrews Drive, last week opened its new 6,000 square-foot fitness center called The K Center. It’s a 4,000 square-foot expansion to the previous fitness center.

It includes remodeled men’s and women’s locker rooms and showers, spa treatment rooms, aerobic classrooms, and equipment and spin bikes by Matrix, Nautilus and Expresso.

The K Center was designed by Bruce R. Call Architecture, 2055 N. Kolb Road. The general contractor was Giles Construction, 921 S. Prudence Road.

Home Depot store sold

A subsidiary of Cole Real Estate Investments, Phoenix, purchased the Home Depot at 4302 N. Oracle Road in the Oracle Wetmore Shopping Center. The company bought the store from Weingarten Realty Investors, Houston, for $11.34 million.

Weingarten continues to own the remainder of the shopping center, which it purchased along with several other Tucson centers in early 2007.

Sales and leases

• The American National Red Cross purchased the 60,000 square-foot former KLA-Tencor building at 3740 E. Universal Way for $5.3 million. Tim Glenn and Bill Honsaker of Jones Lang LaSalle and Steve Cohen of Picor Commercial Real Estate Services represented the seller. Robert Davis with Grubb & Ellis represented the buyer.

• Mr. Rooter of Tucson Inc. purchased a 6,368 square-foot facility at 5100-5120 N. La Cholla Blvd. from La Cholla Investments LLC for $500,000. Paul Hooker with Picor Commercial Real Estate Services handled the transaction.

• Justin Nail Spa leased 1,746 square feet at 3300 S. Sixth Ave. in Southgate Shopping Center from Tucson Promenade LLC. David Hammack and Brenna Lacey of Volk Company Commercial Real Estate represented the landlord.

• Southwestern Building Maintenance leased 1,605 square feet at 3933 E. 29th St., Suites 501 and 502, from Presson Midpoint LLC. Rob Glaser and Paul Hooker with Picor Commercial Real Estate Services represented the landlord.

• Somali Bantu Association leased 1,600 square feet at 4500 E. Speedway, Suite 12, in Midway Business Park from Presson Midway LLC. Rob Glaser and Paul Hooker with Picor Commercial Real Estate Services handled the transaction.

• Orange Tree Yogurt leased 1,592 square feet of retail space at Oracle Crossings Shopping Center, at the southwest corner of Oracle and Magee roads, from Weingarten Nostat Inc. Amanda Signori of Bourn Partners LLC represented the landlord. Paul Schloss also of Bourn Partners represented the tenant.

E-mail items for this column to ryohem@azbiz.com. Real Estate and Construction appears weekly.