Jobs are the answer to foreclosures in county

The September and October foreclosure statistics from Sedgwick County Appraiser Mike Borchard are grim, a 10-year high that analysts say is indicative of a worsening job situation in Wichita.

Borchard's figures show 368 active commercial and residential foreclosures in the county in September and October.

And since January 2008, Borchard shows more than 3,300 foreclosures in the county — figures that analysts say will grow until the aviation industry and the economy stabilize.

"Jobs," said Gary Schmitt, who oversees commercial and residential lending for Wichita's Intrust Bank.

"It's hard to make payments when you don't have a job. Until we get the jobs back, it's going to take a long time to get this thing straight."

Wichita economist Jeremy Hill, who heads the Center for Economic Development and Business Research at Wichita State University, agreed.

"The unemployment numbers out today (Friday) are still high," Hill said. "We have the looming issue with Hawker leaving. This issue will definitely go into 2011.

"People are strapped for cash. Some are on unemployment insurance. It's just logical that creates more opportunities for foreclosures."

Of Borchard's September/October numbers, 224 are in Wichita. The other hard-hit area is Bentley, with 119 in a city trying to dig out of the failure of the Castle Estates subdivision.

The 224 active residential foreclosures in Wichita are about on pace with Schmitt's estimate for 2010 residential foreclosures — 2,485.

Those are by far the worst foreclosure numbers of the past 10 years, Schmitt said — three times the 835 recorded in 2000 and almost twice the 1,409 recorded in 2002, a year after the 9/11 terrorist attacks slowed the aviation industry.

"Unemployment at 10 percent instead of 4," Schmitt said. "It's putting economic pressures on families that end in a divorce or financial catastrophe."

The foreclosures haven't put a downward pressure on Wichita home prices — yet, Schmitt said.

"It hasn't moved a whole lot yet," he said. "There are, though, a number of homes coming on the market for economic and jobs reasons that you can get at a reasonable price. Big discounts, though, are few and far between."

Castle Estates in Bentley is one of several Kansas housing projects developed by Wichita builder Tim Malone, who has sustained millions of dollars in foreclosures over the past two years.

Malone also had a project in Junction City that was hit hard when projections that Fort Riley's population would jump failed to materialize as quickly as hoped.

The problem is $1.4 million borrowed by the city to extend water and sewer lines to Castle Estates, with only about $100,000 retired, Armstrong said.

Bentley has incurred about $240,000 in expenses from the stalled development, which has eaten up $120,000 in the city's cash reserves and caused the police department's $50,000 budget to be cut in half.

Bentley Mayor Shelley Armstrong said that the city is still waiting to see if the investors who bought the properties — Heartland Properties — will pay the property taxes on the development.

The foreclosure solution, Hill said, won't be found in the profitability of Wichita's aviation companies.

"It's an employment effect," he said. "They can be as profitable as they want, but until we sell planes and hire people, nothing will change."

This story was originally published November 7, 2010 at 1:00 AM with the headline "Jobs are the answer to foreclosures in county."