The newer the development, the nicer the homes, the classier the amenities, the more you'll pay. Every house gets garbage pickup twice a week; not all come with fancy granite countertops. Reed had warned me at lunch that given the economic downturn, the mood in Sun City might be grim.

They're feeling a despair right on the heels of what previously had been kind of a wisdom - 'We've been here before, we know how to batten down the hatches. But they did expect their savings to be savings and their investments to be investments and their pensions to be pensions. It went from wisdom to concern and then, in some cases, outright fear. That may be true for retirees in general, but inside the walls that surround places like Sun City the impact of the downturn is muted.

He isn't grim at all. Red-faced and barrel-chested, with a shock of salt-white hair sprinkled with pepper, Burt grew up driving a cotton picker in fields not far from where he now lives. He was a "blood banker" when he still worked, he says, building and managing blood donation centers all around the country. Ten years ago he came home. Burt and his wife bought a duplex condominium in an older section of Sun City. Then came the boom. By , if we can believe Zillow. Burt just grins and shrugs.


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It was only a paper gain; now it's a paper loss from that high. Meaningless, in other words, unless he decides to sell, which he has no intention of doing.

He's happy, his wife's happy. His only regret is that he didn't move to Sun City 10 years earlier. They go out in a bottle. According to the latest MLS data, Sun City, while definitely hurting, is a lot better off than its neighbors. What's killing Maricopa County is foreclosures. Even as home sales rise, cheap, bank-owned properties are flooding the market: Foreclosures during the same month in Sun City? Fewer foreclosures equals greater stability.

It's a pattern that seems to play out nationally. While there's been little research on how retirement markets have fared specifically, experts say that the same profile - minimal foreclosures, less severe price drops - is true of retirement communities across the country for more examples, see our gallery of deals across the nation. Says Bill Ness, founder of the retirement website 55places. There could be a simple explanation for this: Old people aren't as stupid and greedy as young people are. Or maybe they're just not as stupid and greedy as they were when they themselves were younger.

You're not going to buy one you can't pay for. Ask the local realtors about the exotic variable-rate mortgages that suckered so many younger homebuyers into borrowing more than they could ever hope to repay, and they just shake their heads; not in Sun City. Bob Bleasdell, for example. He's a year-old retired obstetrician who lives in Sun City Grand. You gotta get your debt down, get your bills paid, pay for your car.

And then when hard times come, you don't participate. Bleasdell likes it here, enjoys sitting outside in sandals and shorts under a soft blue blanket of sky by a blooming palo verde tree, listening to the quail and the doves, calling out to neighbors as they pass. He plays golf three days a week, with three different foursomes, rotating among four different courses, none of which takes more than five minutes to get to in a golf cart he parks in its own little garage.

Bleasdell says he has no idea what his house is worth today, and furthermore, he doesn't care. His kids might care someday, he allows, but that's neither here nor there. I take my son on fishing trips up to British Columbia. I've done enough for them. If they get anything out of us, it's just a bonus. Don't count on it. Next day I'm driving around the nicest parts of Sun City with realtor Renee Chipules, trying to get a feel for what's out there.

One reason for that we already know: Sun City doesn't have nearly as many foreclosures, which tempt investors and first-time homebuyers with irresistible discounts and are fueling a sharp rebound in sales in some parts of the country. But there's also the ripple effect. No one has to move to a retirement community; when people can't sell their houses back home, they tend to stay put.

Now they're waiting for their homes to sell before plunking down for another. Chipules and other realtors I spoke to think there's a huge, pent-up demand for retirement homes. Once the market recovers nationally, the argument goes, Sun City and other places like it will get a big bump, especially as the coming wave of baby boomers starts to retire.

Chipules shows me three houses - similar sizes about 3, square feet , similar layouts two or three bedrooms, all on one floor , similar amenities marble everywhere, hot tubs, curved-glass showers , all of them situated directly on or within sight of a golf course. But the asking prices are all over the map: Well, for the one in Grand, it could be the fairway view; it truly is spectacular. The one in Corte Bella? Possibly it's overpriced, even fully furnished.

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Not likely, says Brenna: A bargain, Chipules believes. Priced to sell at two-thirds of its peak value in late But the current owner was there long before the big run-up in prices; she's got other houses, and she just wants her equity. Sure enough, after 12 days on the market, she gets an offer at asking price, sale pending. All of this, says Chipules, is evidence of a turbulent and inefficient market.

Housing Bubble 2.0: Homes Most Overvalued Since Great Recession, Mortgage Refinancing Plunges

No one really knows what anything is worth anymore. Some sellers appear to be kidding themselves, even now, though a patient, sober buyer will indeed find bargains, even screamers. Heirs are motivated sellers. In Phoenix, about 16 percent of homes sold were flips. A look at the market in Phoenix, considered a bellwether by industry experts, is a good way to see how things have changed or not. More than 8, homes — or 8.

Before the crash a decade ago, flippers didn't need to do much to make money. Financing was easy to get; people with high credit ratings could use no-income, no-asset loans to buy real estate. The housing bubble was inflating so fast, investors could buy, hold — sometimes renting out the properties to make a bit extra, sometimes renting at a loss, sometimes not even bothering to rent — then sell, over and over again. Lauren Rosin got into flipping in , during the bust. In Phoenix, the crash was disastrous. Homes on average lost 56 percent of their value.

Lenders foreclosed on tens of thousands of families. To Rosin, the wave of foreclosures meant that there were thousands of houses on the market that needed only a face-lift to net her a tidy profit. Ten years into her career flipping houses, Rosin's operation is much more streamlined and professional. But it's harder to make money now, she says. Her profit margins are significantly thinner, typically 10 to 15 percent of the eventual sales price. She has to know exactly which amenities will yield more profit and which to skip, and the fine line between upgrading and going overboard.

New research and data suggest that the practices of house flippers fed the bubble of the early s.

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Much of the blame for the housing crash has fallen on subprime borrowers and people who bought and lived in homes they couldn't afford. But researchers are now coming to understand that a big part of the problem was people with better-than-average credit scores who owned multiple homes — not subprime buyers, but real estate investors, landlords and flippers. Stefania Albanesi, an economist at the University of Pittsburgh, argues that the rise in mortgage defaults during the housing crash was mostly attributable to real estate investors , including flippers.

During the bubble, about two-thirds of home flips nationwide were financed with loans, according Attom. In places like Phoenix and Florida, that number approached 80 percent. The problem with that, Albanesi says, is that real estate investors such as flippers are at greater risk of defaulting on their mortgages than normal homeowners.

Overall, their default probability is much greater.

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Normally, people with above-average credit scores are unlikely to default on their mortgages. But during the crisis, Albanesi's research shows, it was borrowers with good credit scores who had taken out mortgages on additional properties — mostly investors — who defaulted at historically high rates. They have higher interest rates.

And so, other things equal, it's more likely that these borrowers might default.

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Despite the volatility they can bring to a market, flippers can and do bring value. Many homebuyers don't have the energy, resources or know-how to renovate a home that needs it. Flippers can help boost the supply of "move-in ready" homes. Now that the real estate market has stabilized, flippers can't ride the bubble or scoop up foreclosed properties on the cheap. They have to add real value to turn a reliable profit.