This story puts a human face on the national financial crisis. We're pretty sheltered from the effects here in Houston, so it's worth a watch/read. http://kcet.org/socal/2008/09/foreclosure-alley.html <embed class='castfire_player' id='cf_5f02a' name='cf_5f02a' width='564' height='348' src='http://p.castfire.com/fcieq/video/26078/26078_2008-09-25-215549.flv' type='application/x-shockwave-flash' allowFullScreen='true'></embed> For the past few years, the Inland Empire in Riverside County has been one of the fastest growing counties in the state - home to a major housing boom. But now the Inland Empire is pretty much the poster child for the foreclosure crisis. In the newer developments, house after house sits vacant - either up for auction, for sale by a bank or going for what’s called a “short sale” which is when the owner owes more than the house is worth. SoCal Connected tracked down some surreal sights associated with the crisis - a company that specializes in removing whatever people leave behind in their foreclosed homes. The process is called a “trashout” - a term the company came up with because it perfectly describes what happens. Everything that’s left is dumped in a trailer and taken to the landfill. Then there’s the guy who started a business to spray-paint dead lawns. That’s right. He paints brown lawns green. We also tag along with a couple of code enforcement officers who are spending more and more of their time having to drain slimy, abandoned pools. Finally, we meet a typical couple who bought their first home, thinking it was a great investment and tax write-off. Now the place is worth only half of what they paid for it and their neighborhood has almost as many vacant homes as occupied ones. One of the code enforcement guys sums up the problem in a single sentence - “You know you’re in trouble when the lawns are brown and the pools are green!”
I find it nauseating. This country has now felt the effects of it's personal overdoses of greed and wealth... and living beyond it's means. The culprits, the aggressive bait and switch ARM loan lenders will escape hardly touched. slightly off topic- Anyone find it eerie that this reporter just smiles through the opening lines? "700 families lose there homes every day" That's not something to smile about. She must be a real estate investor buying up tax liens or something.
it is a terrible thing what some people are going through. It's also terrible that individuals can't think for themselves and get into deals they don't fully understand. Were they a victim of crooked salesmanship? more than likely, but they are also a victim of their own greed and incompetence
Part of this is on the lenders, part of it on the buyers. Lots of buying opportunity once the housing market bottoms out... California has had this coming for YEARS.... DD
Well this happened in Houston around 1983-88. Some folks had the bad luck to buy here when the market was up. I guess in the abstract everyone knew it could not keep going up in California. It went up for so many years that it is hard to hold it against the little guys who got in at the end. Those that kept cashing out and living beyond their means generate less sympathy. Same with the speculators who bought mutliple houses.
I found it slightly ironic the reporter bemoaning that people had lots of time to leave, so really didn't have to leave all their stuff behind....while at the same time the guys hired by the bank trashed everything...because they were in such a rush?? I should hire up some shipping containers and get stock for a chain of used goods stores. Are Californians too lazy to loot? (sorry for being flippant -- but appart from the personal tragedy the people went through -- I couldn't help shaking my head at the tremendous waste of putting all that stuff in landfills. Consumer society indeed.
I can't believe that people even at the end of their rope there can't find a way to get more of their stuff out of the house. I know it's callous, but that's not a bad job for those guys. They just put stuff in bags or bins and drive it to a dump and they get to keep whatever they want. In one day you could furnish your own place it seems.
As a business guy, if my house dropped that much in value, I would buy another at the lesser price and let this one go to foreclosure. Take a small 7 year hit on my credit ........ it is just good business. DD
When my dad bought a house in Irvine, CA around 98, it was worth around $480,000 after some improvements. 4 years later, it shot up to 850k. At its peak (~06), it could've fetched around 1.2 million. I went to UC Riverside for college around 2000-2005. I stayed with a parents friend for my sophomore year. They had bought a house in 2000 five miles from campus for around 180k. The value of that shot up to 350k in 2002. So the year after, I rented a house some friends. The rent market was full of speculators in their second homes banking on rent payments to pay off the 2nd mortgage. (This habit is what makes jingle mail devastating to banks) It was ridiculous. People had bought into the "Rich dad, poor dad" phenomenon of dumping their savings on eternally-rising real estate while not reading up on fundamentals as simple as a price to rent ratio. Since SoCal housing was booming to ridiculous proportions, many were banking on a hellish 1 hour commute from Riverside to downtown. You had families who were barely making up payments even though they banked around 80k/year. With that pressure on them and the lure of easy credit, the conditions were ripe to liquidate their home equity. And now that's all in the dump, no ebay or craigslist. Assets that still have value but can't be realized.
I am in the process of buying a foreclosure here in San Diego and it is amazing how many there are. It's also amazing how hard it is to buy one when you are trying to use an FHA loan (which is the loan that 85% of people have now). I've bid on probably 25 homes and I finally got an acceptance from the bank and it may fall through because an appliance is borken and a $30 breaker needs to be replaced. Under FHA rules the seller is supposed to fix these things but banks are unwilling to fix anything, hence the reason they don't like to accept FHA buyers. If the government wants to help the housing situation, they should change the FHA rules to make it something that is reasonable. But yeah, my bro in law is $200,000 upside down on his house, and there really is no good business decision other than to walk away.