“KEEP your house” reads the handwritten sign on a chain-link fence some 60 miles east of downtown Los Angeles. It is an advertisement, although it could be the attitude of an overstretched buyer who owes the bank more money than his home is worth. Many people in Moreno Valley have simply walked away from their properties. As abandoned lawns turn brown in the desert climate, the fallout spreads. It is no longer a matter of saving individual houses, but a whole city.
Until recently Moreno Valley was one of the fastest-growing cities in America. It lies in the Inland Empire, a two-county region in southern California that is so called largely because it is difficult to know how else to characterise such a sprawling expanse of detached homes, strip malls and warehouses. Between 1990 and 2007 the Inland Empire’s population grew from 2.6m to 4.1m””the equivalent of adding a city the size of Philadelphia.
As in other regions now suffering from a rash of foreclosures and falling house prices, such as south Florida and Nevada, rapid growth is itself largely to blame. Moreno Valley had the misfortune to swell at a time of lax lending practices. Whole neighbourhoods were built on cheap credit and inflated expectations””palaces for the middle class. Around Camino del Rey, on the city’s southern edge, huge Spanish-style houses with three-car garages sit empty. The city’s population growth appears to have gone into reverse. Moreno Valley’s high schools expected to enrol 9,850 pupils last year. They fell short by 780.
It’s not the end of the dream…these houses are not being bulldozed. Their prices will fall, and when they’ve fallen enough people will buy them again. Hopefully, banks and other lenders will take the time to realistically assess the prospective buyers’ ability to repay the loans, based on sane expectations of appreciation.
The Boomers will see more of this. Selling their property to the children they chose NOT to have. The illegal immigrants offer little solace. Statmann