(Merced, California) Life has changed in ways big and small in this central California county, which is still trapped in the wreckage of a housing boom that went bust five years ago.
The median home price, $116,000, is down 68% from its peak in 2006. Three of five homeowners with a mortgage here owe more on their loans than their houses are worth, compared with about one in five nationally.
Socked by a sharp loss of property and sales tax revenue, Merced County and its cities have slashed budgets, workers and services. The grass is being mowed less often in city parks. A senior center is open fewer hours.
My wife and I own a home and live in Los Banos, and yes, we too are under water with our mortgage, but our monthly payments are lower than most. We’re retired with a very good income, and we’re doing well, compared to others here.
Los Banos’ developer fees are so high that companies say they can’t afford to locate here, and that’s why the billboards are still there; proclaiming that companies are coming to town, but haven’t yet. As long as those fees remain so high, companies will continue to go elsewhere……taking their above-minimum wage jobs with them. The pressure is on our city council to work with the county to cut those fees in half for at least a six months trial period in order to be able to show companies that they can afford to do business here.
To top this off, Governor Jerry Brown proposes to raise our taxes across the board, while making still further cuts all over the state. We’re all going to have to give up something, but what will happen when there’s nothing left to give?
He hasn’t answered that question to anyone’s satisfaction, and I don’t think he ever will.
I’ve never understood this terminology of mortgages that are “under water” or whatever, meaning there is more left to pay on the mortgage than the house is worth on the open market. That term makes no sense to me because that’s true of any loan on anything basically. If you buy a car new and drive it off the car lot, by the time you get home, your car loan is “under water” because by the sheer fact that the car is now “pre-owned” (even if for only an hour) it has depreciated in value. I don’t understand why houses are the golden goose that is suppose to lay a golden egg when anything else you buy on a loan doesn’t, regardless of how well you maintain it.
Well, ‘under water’ or not, a good many of us retireds in this town who bought brand-new homes eight to ten years ago aren’t much concerned about our home values because we’re not going to sell, because we’ve decided to stay put. Others, though, are the ones who’ve been hurt the most, and that’s because many of them bought homes that they knew they couldn’t afford [i]in the first place.[/i] Combine that with the scarcity of well-paying jobs and career opportunity in this area, and the picture is pretty bleak. It’s going to get worse before it gets better. The coming of high-speed rail to this part of the state is going to create [i]some[/i] jobs, and we want to make sure that our people get their share of them.