Wednesday, June 11, 2008
Meanwhile, according to Mr. Mortgage, the mortgage crisis in California continues to worsen, with an increasing amount of foreclosed loans and number of notices of default. California, with Sacramento in the forefront, is experiencing a historically unprecedented degree of wealth destruction. It is consistent with the social consequences of the housing bubble that I described in July 2007.
If you want to buy a home in Sacramento, Calif., the banks have a deal for you.
The Sacramento Association of Realtors says that a whopping 65.5% of 1,654 homes sold by Realtors in May were bank-owned, foreclosed, homes. The median sales price in Sacramento County and the City of West Sacramento May was $230,250, down 34.2% from a year ago.
Except that I didn't anticipate that people would also have trouble affording the cost of gas to drive to work, and the price of food to feed their families. Is an entire way of life unraveling before our eyes? Consider this excerpt from this frightening article, The Next Slum?, published by The Atlantic in March:
Meanwhile, Obama and McCain travel the country, invoking the same weary neoliberal nostrums that we've heard for the last 30 years. Neither has displayed any willingness to abandon the notion that the financial institutions that created this disaster will cure it without government intervention.
Strange days are upon the residents of many a suburban cul-de-sac. Once-tidy yards have become overgrown, as the houses they front have gone vacant. Signs of physical and social disorder are spreading.
At Windy Ridge, a recently built starter-home development seven miles northwest of Charlotte, North Carolina, 81 of the community’s 132 small, vinyl-sided houses were in foreclosure as of late last year. Vandals have kicked in doors and stripped the copper wire from vacant houses; drug users and homeless people have furtively moved in. In December, after a stray bullet blasted through her son’s bedroom and into her own, Laurie Talbot, who’d moved to Windy Ridge from New York in 2005, told The Charlotte Observer, “I thought I’d bought a home in Pleasantville. I never imagined in my wildest dreams that stuff like this would happen.”
In the Franklin Reserve neighborhood of Elk Grove, California, south of Sacramento, the houses are nicer than those at Windy Ridge—many once sold for well over $500,000—but the phenomenon is the same. At the height of the boom, 10,000 new homes were built there in just four years. Now many are empty; renters of dubious character occupy others. Graffiti, broken windows, and other markers of decay have multiplied. Susan McDonald, president of the local residents’ association and an executive at a local bank, told the Associated Press, “There’s been gang activity. Things have really been changing, the last few years.”
In the first half of last year, residential burglaries rose by 35 percent and robberies by 58 percent in suburban Lee County, Florida, where one in four houses stands empty. Charlotte’s crime rates have stayed flat overall in recent years—but from 2003 to 2006, in the 10 suburbs of the city that have experienced the highest foreclosure rates, crime rose 33 percent. Civic organizations in some suburbs have begun to mow the lawns around empty houses to keep up the appearance of stability. Police departments are mapping foreclosures in an effort to identify emerging criminal hot spots.