Water company woes affect property values
by Jennifer Krahe

 DESERT HILLS – As their serious water problems persist, customers of Desert Hills Water Company are beginning to contemplate a future of inconsistent water supply, and a question on many minds is: What is this water shortage doing to the value of my property?  

One concerned resident told The Desert Advocate she had purchased a new home just before the problems at Desert Hills Water came to light, having put a substantial amount down on the property. At the same time, she called DHW to arrange water hookup. She thereafter learned about the water shortage and that her property lies within the square mile of 16th to 24th streets and Cloud to Joy Ranch roads experiencing the worst water shortages, but that the time period to rescind her purchase contract had expired.  Now, she says, she has a very difficult decision to make: cancel the purchase contract and lose her earnest‑money deposit or step into a very expensive home with a serious water problem that could potentially become a questionable investment. 

“Once it gets out in the press,” said Woody Woods of Artizan Realty, “everyone and their brother knows about it and the (real estate) value is going to drop for a while.” Woods estimates that properties in Desert Hills have been devalued by approximately 5 percent. Even so, he is confident that “two weeks after it all dies down,” the majority of the Desert Hills market will bounce back. 

Judy Bluhm of Century 21 isn’t as quick to assess property values because, she says, “It’s too soon to tell the impact because it looks like they’re (DHW) on a corrected course. I think it will work itself out, but it has created anxiety. 

“People have always been more comfortable with a water company than private wells,” she continued, “but now that Desert Hills Water has had these problems, it has led people to wonder what the heck is going on.” 

Woods says it won’t be the prices that are the problem–it will be interested buyers coming to the area to look at what’s available, and  “Desert Hills has been pretty slow with real estate for the past six months,” he added.

“We’ve had two water companies go broke out here,” Woods said, referring to Sabrosa Water Company and Wranglers Roost. “This is just another nail in our coffin,” he laughed. “Not a big disaster. We’ll get over it.”

However, those residents within the area of 16th‑24th streets/Cloud‑Joy Ranch roads might not be as lucky as the rest of Desert Hills, according to Woods. “Their home values are going to drop a lot,” he predicted. But Woods did provide somewhat of a silver lining when he recalled a recent sale. “I disclosed the water shortage to a young couple and they didn’t care,” he said. “They still bought.”

The Arizona Department of Real Estate requires Realtors to disclose in writing any piece of information “that may affect the consideration to be paid or received in any transaction.” In other words, if a Realtor is selling a home and they know there is a water problem, they must notify all prospective buyers.

“We’ve got it so that people are actually getting a copy of the Arizona Corporation Commission report,” Bluhm explained, “so people can do their due diligence.”             

The stipulations placed on Realtors, however, are not exactly binding when it comes to sale‑by‑owner homes. “That’s why a lot of homes are sell‑by‑owner,” said Woods, “so they can play dumb (when asked about any problems).” But, he warns, playing dumb and not disclosing pertinent information to a buyer can still result in the buyer filing a lawsuit against the seller.

Reach the reporter at jennifer@thedesertadvocate.com.