The foreclosure blight

[Vympel]

Link

Depressing article (with video) about the blight of foreclosed, abandoned homes (look like McMansions to me), hundreds and hundreds of them, in one county in CA.

(CBS) MANTECA In the Central Valley community of Manteca, police have a new job: patrolling hundreds of foreclosed houses left empty and abandoned. They are half million dollar houses, often bought with nothing down, turned into suburban blight.

To get a firsthand look, CBS News correspondent John Blackstone rode along on patrol with Manteca Police officer Rex Osborn, who explained, "you make one right-hand turn and immediately this is what we see - dead grass, bushes are dying, trees are dying. The next thing you know you have squatters in the house..."

As California house prices soared, cities in San Joaquin County attracted buyers priced out of the San Francisco Bay Area. Developers built more than 30,000 new homes in the last six years. But with the spike in adjustable mortgage rates the flood of buyers turned into a flood of defaults - 11,000 in the county in the past 18 months.

Not long ago an overgrown area with a murky pool that Blackstone toured was someone's backyard paradise, but now foreclosure has taken it all away. There and at hundreds of other properties across the county, even the swimming pool has become a hazard - a source of mosquitoes and West Nile Virus.

County workers who used to patrol swamps and streams now do their work in neglected back yards.

But for neighbors the problem that really bites is fast-falling house prices.

Just-retired Corky Hine retired wanted to sell for $400,000. Now his home is worth $339,000 and his real-estate agent still can't get anybody to look.

"I already dropped it $60,000 (from the original appraisal price,)" Hine said. "She said 'There's like 500 homes for sale within a two-mile radius of mine, and 150 of them are in foreclosure within a mile or something.'"

In one subdivision, in a single block there are three houses with the tell-tale brown grass.

The sad story of one home is in the papers taped to the door. One notice of foreclosure reads: "$7,400 behind in payments." The house will be sold at auction at the county courthouse.

It opened for $464,885.15.

That's way below the $620,000 the house sold for two years ago. Still the auctioneer has a lonely job.

"There's nobody here," Blackstone said.

The auctioneer, Ted Longley, chuckled: "Must not be any money involved in the equity area. I don't know."

"You can’t give these houses away," Osborn said.

And neighborhoods are left with the wounds of a mortgage meltdown: the houses nobody wants.

[The Spartan]

There's actually 2 in my neighborhood that have foreclosure signs out front and this is one where the homes are less than $200K.

[PeZook]

Say hello to the outcome of stupidity, people.

It's stupid on part of homeowners, because they didn't bother to read the agreement on adjustable-rate mortgages.

It's stupid on the side of the banks, because all they got now are dilapidated properties and tons of money lost.

It's stupid on the side of sub-prime lender companies because, well...the very idea of sub-prime lending as a business plan is fucking retarded, unless you're the Mafia and can enslave people who can't pay...or something.

The credit housing rush was a disaster waiting to happen from the get-go. Now the US just needs a wave of personal bankrupcies from runaway credit card bills and stupid loans to top it off. Like cherry on whipped cream...for people who hate the western world and want it do die, of course.

[Natorgator]

Hopefully this will bring house prices that are more in line with income. Prices have been outpacing income so much that it simply can't continue.

[Stravo]

Hopefully this will bring house prices that are more in line with income. Prices have been outpacing income so much that it simply can't continue.

Looks like this is the 2000's equivalent of the internet bubble of the mid90's. Housing prices much like the worth of the internet has simply defied reason and now that's finally popped.

Of course here in NYC the housing market is still white hot thanks to the shitty dollar, foreign buyers and the fact that this is still considered one of the prime places to live in the country.

[CaptainChewbacca]

Of course, part of the problem is that its MANTECA. For folks who want all the charm of Stockton without 'big city living'. Were these homes for dot-com commuters to Silicon Valley?

[mr friendly guy]

God, that McMansion looked great.

Now I can only wonder whether that will happen over here. Although I will say one thing. If you are looking to buy a house, and you have saved a good amount, wouldn't it be a good time to buy with these houses going cheap.

[Death from the Sea]

Hopefully this will bring house prices that are more in line with income. Prices have been outpacing income so much that it simply can't continue.

true, here the housing market is way outta control, houses are going for 100k more over what you would have paid a few years ago for the same house

[Admiral Valdemar]

This isn't even the beginning, this is just the start of the first phase. It will get a lot worse.

The UK has hit the peak now and we're looking at a collapse, as are several European nations. There's a good BBC article on predicting a stock market crash this autumn, I'll have to see if I can find it again.

Needless to say, the idea of buying things you can't fucking afford is not common sense to most people.

[Ma Deuce]

The bubble hasn't burst yet in Canada, though it's only a matter of time. My family's house went for $295K when we bought it 5 years ago, but now it's probably worth around $450K. But then, we're living in a desirable exurban "bedroom community" near Toronto. Our old house was in a stagnant, isolated bumfuck town; We bought it for $90K in 1989, and were only able to get $107K for it 13 years later, despite numerous renovations.

[Uraniun235]

This isn't even the beginning, this is just the start of the first phase. It will get a lot worse.

The UK has hit the peak now and we're looking at a collapse, as are several European nations. There's a good BBC article on predicting a stock market crash this autumn, I'll have to see if I can find it again.

Needless to say, the idea of buying things you can't fucking afford is not common sense to most people.

You mean the housing bubble has been going on in Europe too? I had been under the impression that this foolhardy high-risk lending had been mostly an American phenomenon.

[Masami von Weizegger]

Oh ho ho ho ho, no. This is also a western Europe phenomenon. It's beginning to burst here in Ireland too, at long last. Prices are starting to drop as there are now more houses built than people who want to buy them, even by signing their lives away.

[Admiral Valdemar]

You mean the housing bubble has been going on in Europe too? I had been under the impression that this foolhardy high-risk lending had been mostly an American phenomenon.

Typical yank. Always thinking you've invented and perfected something yourselves. Your brand of lending and mortgage assessment idiocy is rife this side of the pond too. If only you knew how crazy the UK housing market is.

I expect the implode-o-meter that has been counting the number of bankrupt mortgage lenders in the US will now get a mirror site ready for the UK and rest of EU.

[aerius]

The bubble hasn't burst yet in Canada, though it's only a matter of time. My family's house went for $295K when we bought it 5 years ago, but now it's probably worth around $450K. But then, we're living in a desirable exurban "bedroom community" near Toronto.

My dad bought his home in Etobicoke about 30 years ago, it's now worth nearly 7 times as much as he paid for it. Adjusting for inflation it's still worth nearly twice the original value.

[Bedlam]

I just bought a house for the first time a few weeks ago, I'm living alone and about half the money to buy it came from my parents, if they hadn't helped I would'nt be able to buy a shed in Edinburgh, I'd be hard pressed to rent a place.

The prices here are still rising but I'm worried I might have bought at the peak of the prices.

[SirNitram]

And of course, the idealogical hacks at the Fed are signalling they'll drop interest rates further. You'd think they'd realize that's what got us in this mess.

[[R_H]]

I wonder what the effect will be on the parts of Europe where renting is more common than owning. For example, here in Switzerland renting is much more common than owning (a ~100m^2 appartment costs say 400K CHF and up) or mortgaging (it seems to be extremely rare here).

[[R_H]]

Ghetto edit:

Appearantly it's very common here in Switzerland, beneficial even to not completely pay off the price of a home. The amount it would cost to rent is tax-deductable.

[salm]

Cool, urban decay. This could be the source for a whole new expostion for comrade Stas Bush.

[phongn]

Appearantly it's very common here in Switzerland, beneficial even to not completely pay off the price of a home. The amount it would cost to rent is tax-deductable.

Interest on home mortgages are deductible here, too, but you aren't netting cash that way.

I wonder what the effect will be on the parts of Europe where renting is more common than owning. For example, here in Switzerland renting is much more common than owning (a ~100m^2 appartment costs say 400K CHF and up) or mortgaging (it seems to be extremely rare here).

Renting is also extremely common in the US, but the money crunch is affecting various other parts of the economy that need capital, for example.

[PainRack]

Same thing been happening in Asia, although it seems that Malaysia and Singapore has been monitoring and attempting to deflate the bubble. China is............... a fucking hot potato.

[Coalition]

And of course, the idealogical hacks at the Fed are signalling they'll drop interest rates further. You'd think they'd realize that's what got us in this mess.

What if they are just delaying the pop until 2008 or 2009? Then, when everything starts crashing, point to the new President as the reason for the problems.

Or am I being paranoid and seeing malice everywhere?

[J]

This isn't even the beginning, this is just the start of the first phase. It will get a lot worse.

You've probably read the latest Financial Round-up from The Oil Drum by now, to say the least, it's full of downright cheery news.

[Admiral Valdemar]

You've probably read the latest Financial Round-up from The Oil Drum by now, to say the least, it's full of downright cheery news.

Yes, quite the jolly piece to read after a hard day's work. Though right now I'm taking a break from financial meltdown and energy crises given the recent news in climate change.

[Ma Deuce]

My dad bought his home in Etobicoke about 30 years ago, it's now worth nearly 7 times as much as he paid for it. Adjusting for inflation it's still worth nearly twice the original value.

Yeah, housing prices in Toronto are totally insane even by comparison to the prices in the 905, which is one reason we decided to move out here rather than into Toronto proper (we were originally looking in north Scarborough).

There is a cul-de-sac about 2 km from where I live that is lined with enormous mansions, some built atop hills (Google satellite map). Most of these would go for between $1-1.5 million out here. I can only imagine what they'd be worth in Toronto.