Tim Steller's opinion: Tucson's latest real estate run-up claims victims

Editors note: This column has been updated with further information on the sale of the Wilson family's home.

Greg and Lisa Wilson raised their two boys at the house on North Ruston Avenue.

Kids hung out there after school in those relaxed childhood years.

In more recent times, Greg would head out from that block with his neighbor to go golfing.

For 33 years, it was a home for the Wilsons. It isn’t anymore.

Tucson is once again in dizzy days of upward spiraling real estate prices. The median sale price of existing homes rose by 15% from February 2020 to February 2021, according to R.L. Brown Reports.

It’s a flush period for people who have property to sell or can take part in sales. Money is rushing into the market in the pockets of migrants from other parts of the country, flippers and investors. Buyers end up offering $10,000, $20,000, even $50,000 more than the asking price. Some are even waiving the inspection.

The last time this happened, back in 2004-2006, it ended with a crash. Experts say that’s unlikely to happen this time, because there aren’t so many financially unqualified buyers as in the previous run-up, and because interest rates are so low, among other reasons.

But even if there’s no crash, there will be victims. There already have been.

Most of them are normal Tucsonans priced out of buying a house in their hometown. That’s an especially hard situation now, because rents are also soaring. If you can’t afford to buy, that doesn’t mean you can afford to rent.

Others are like Greg and Lisa Wilson. Their 1958 home, a modest 1,545 square feet, became another financial opportunity in the rush to profit off the surging market. That led to tragedy and further, avoidable victimization.

It’s all because a home loses its meaning as a family place and transforms into a profit vehicle in boom times.

A neighborhood dad

Greg Wilson was a sort of father figure to kids growing up in the neighborhood known as Thunderbird Heights/Wilmot Desert Estates.

It turns out a soccer-playing friend of mine, Don Tocci, also lives on North Ruston Avenue, across from the Wilsons’ place.

Tocci told me his younger son spent more time at the Wilsons’ home than at his own home. Greg Wilson coached baseball, flag football and basketball teams.

After the kids were grown up, the two neighbors golfed together three times a week.

Nobody outside the family would have known that the Wilsons weren’t the actual owners of the home where they lived. Greg Wilson’s parents were, but it didn’t matter — till this year.

With real estate prices soaring, and Greg’s mother widowed and growing old, things changed quickly in January.

A family member who Greg is estranged from had power of attorney for Greg’s mother. That month he sold the house quickly for a very cheap price. A company that flips houses in Tucson, First Federal LLC, bought it for $140,000.

That’s not only below market value but below the full cash value established by the County Assessor’s Office, $169,838. Zillow’s rough “Zestimate,” an automated valuation based on sales in the area, puts the value of the home at $245,436 right now. The real value is probably somewhere in between.

After the initial publication of this column, relatives of Wilson contacted the Star and said he had not been blameless in losing the house. He had not paid rent on the house regularly for the decades the family lived there and had opportunities to buy it before the sale in January, they said. 

Sellers market

Those who “flip” homes used to be a little-known subculture within residential real estate — they bought houses cheap, fixed them up, then sold them for a nice profit. I remember well how I and much of the public awakened to the existence of flippers in the last run-up. The TV show “Flip This House” started in 2005, and others have followed, even as the market crashed and rose again.

In times like these, flippers are a force.

Real estate experts say Tucson is experiencing an extreme sellers market, with tons of demand and little supply. Among the reasons is high demand from investors, some of them institutions; shortages and increasing costs of materials to build new homes; and the conversion of single-family homes to long-term and short-term rentals.

The fast-rising prices make it a flipper’s market. One of Tucson’s most prolific flippers, Kyle Mokhtarian of KMS Enterprises, explained what’s going on.

“It’s a stronger market than it’s ever been since we’ve been in the business,” Mokhtarian said. “It’s mostly a function of the limited supply of homes.”

Often investors, known as wholesalers, contact homeowners — you may have received the calls or seen the mailers offering to buy your home. They are especially on the lookout for homeowners in a financial crunch.

“It’s become a big business just trying to find distressed sellers,” Mokhtarian said.

The wholesalers then sell the properties to flippers like KMS Enterprises, who do their thing.

Between Tucson’s low home supply, the relatively low prices and the number of outdated older homes, Mokhtarian said, “The reality is Tucson is a very good place to do house flipping.”

Pima County Assessor’s Office data shows the number of homes likely flipped in 2020 alone. Between Jan. 1 and Dec. 31 of last year, 891 homes in Pima County were sold twice, suggesting they were flipped.

That, of course, doesn’t include houses that may have been flipped in 2020 after the flipper made the original purchase in 2019, or other transactions that bridged 2020 and 2021.

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“just couldn’t face it”

By purchasing the house on North Ruston Avenue, the operator of First Federal, Angus Maughan, had entered a delicate family situation.

Maughan did not return calls or texts sent over three days last week to ask him about his involvement with the house and the Wilsons. Neither did a business associate, Jeanne Lawlor, who also took part in the interactions.

In short, Greg and Lisa Wilson didn’t want to move out of the house they’d lived in for decades, and after the Jan. 13 sale, Greg sought a loan to buy the house from First Federal. First Federal and Greg Wilson agreed on a $210,000 price, which would have meant a quick $70,000 profit.

At the time, neither son Michael Wilson nor Greg’s wife, Lisa, understood what was going on. Greg Wilson kept them in the dark as he tried to get approved for financing and make the deal work so the couple could stay put.

“I think he kind of strung them along, saying he was getting the loan,” Michael Wilson said.

In reality, Greg Wilson had just one real flaw, Lisa Wilson said: He was bad with money. As a result, his credit wasn’t good enough to secure the loan to buy the house.

When Greg Wilson couldn’t get the loan, the new owners of his family home sought an eviction. A judge made the eviction valid March 21.

The next morning, Lawlor told the Pima County Constable’s Office that Greg was threatening suicide, constable Kristen Randall said. Rather than proceed with the eviction, the constable’s office called the Crisis Response Center.

It was too late — that morning, Lisa Wilson found Greg dead at home, by suicide.

“He just couldn’t face it, that we were losing this house,” Lisa Wilson said. “It’s just so sad. My whole life is here. Our boys grew up here.”

money to be made

Home prices have risen so fast here that a UK-based firm ranked Tucson as the top place in the world for declining affordability from 2016 to 2020. Online Mortgage Advisors compared how much space a person living on the average local annual income could afford in each of those years to make its rankings.

The University of Arizona’s Economic and Business Research Center still ranks Tucson as having the most affordable housing in the region, but that may say more about the persistently expensive region than it does about Tucson.

Working for years at Primavera Foundation, Michele Ream got to know many homeless people whom the Tucson market left behind. Now dedicated to real estate, she likes to represent quirky homebuyers — artists, musicians — and deal in Tucson’s older neighborhoods.

It’s become an impossible time for anyone on the edges of the market, she said.

“You can’t even put in an offer at asking price, because you’ll be outbid. It’s just a free-for-all,” she told me. “Forget having a VA or FHA loan.”

“I was doing 20% over list price,” she said. “You have to be flush with extra money and willing to pay over at this point.”

Anything paid beyond the market value must come in cash, of course, because no bank will finance for more than the property’s value.

Not long ago, Ream said, sellers would often be willing to help out buyers in tricky situations, even maybe selling to a lower bidder if it was someone who needed help. Not anymore. There’s too much money to be made.

“The divide between people who can own homes and people who can’t is getting bigger and bigger and bigger,” she said.

Funeral, eviction

In the aftermath of Greg Wilson’s death, the surviving Wilson family members tried to resolve the problem that Greg had been unable to. They tried to buy the house from First Federal, which owns 16 homes in Pima County now, according to assessor’s records.

It’s a part of doing business for flippers to deal with residents who have nowhere to go, said Randall, whose main job as constable is to carry out evictions. Some firms, like KMS Enterprises, make an effort, she said. That company tries to find an affordable rental for the residents they’re displacing within their own home inventory.

“Sometimes you just have to go slow,” Randall said. “If that’s your business, that’s part of the calculus — a family that might have these issues.”

Michael Wilson, a 30-year-old Tucson attorney, told First Federal he would get approved for a loan to complete a $210,000 sale.

“Initially, for a day or two, they agreed to it,” he said. “I worked with a family friend who’s a mortgage broker. Within a few days, they said they didn’t want to wait that long for me to go through the loan process.”

Then Michael Wilson’s uncle, Lewis Moore, stepped in. Moore, who is Lisa Wilson’s brother, is an attorney in Phoenix. He made a full cash offer at $210,000 on March 31.

The owners never answered, family members said.

“They didn’t want to sell to me or anyone in my family,” Lisa Wilson said. “They said we were harassing them by trying to buy the house for me.”

“We buried him on Tuesday, and by Friday they had a constable after me.”

After rejecting the sale, the Wilsons said, First Federal agreed to let Lisa Wilson stay for the month of April while paying rent. But the new owners called it off, Michael Wilson said. So last week, instead of getting her affairs in order and planning an estate sale, she was hurriedly moving out ahead of the constable.

Randall made the eviction formal on Friday, posting a writ on the empty home as required.