Although [the community of] Merced [California] has one of the highest foreclosure rates in the country, this borrower isn’t in such dire straits. She’s not even behind on her mortgage. But her oldest daughter is turning 18, which means an end to $500 a month in child support. She just wants a better deal.
The mayor hangs up and shrugs: “It’s a surprise her daughter is turning 18? You’d think she could have planned ahead.”
But hardly anyone in Merced planned very far ahead.
Not the city, which enthusiastically approved the creation of dozens of new neighborhoods without pausing to wonder if it could absorb the growth.
Certainly not the developers. They built 4,397 new homes in those neighborhoods, some costing half a million dollars, without asking who in a city of only 80,000 could afford to buy them all.
Obviously not the speculators turned landlords, who thought that they could get San Francisco rents in a working-class agricultural city ranked by the American Lung Association as having some of the worst air in the nation.
And, sadly, not the local folk who moved up and took on more debt than they could afford. They believed ”” because who was telling them differently? ”” that the good times would be endless.
“Owning a home is the American dream,” says Jamie Schrole, a Merced real estate agent. “Everybody was just trying to live out their dream.”
The belief that this dream could be achieved with no risk, no worry and no money down was at the center of the American romance with real estate in the early years of this decade, and not just in Merced.
I live in Merced. The real estate market here is really ugly. But I think the article was a bit hard on the community. Merced is not falling part. And you do kinda get that impression from reading this.
ICXC
John
Helpful to read your comment, John, since the reporting depicting the situation through an economic/investor lens leaves all the personal, human detail blurry at best. It seems to me the Central Valley is in the early stages of what will be a prolonged and no doubt stressful transition from its role as a ‘breadbasket’ of the US, to become – well, no unified vision about what to become has emerged, has it? Nowhere does this article mention the huge quotas for Hispanic-origin students that are imposed on UC Merced, linked to expansion funding. It’s disappointing the campus is not growing faster and one wonders if funding straitjackets are contributing to this problem. Might healthy growth of the local UC community go a long way to helping create Merced’s future if not too tightly controlled?
The words Kendall has put in bold type express what the problem has been nationwide: no money down, no risk, no worries. Not smart.
Ad Orientem, neither is Los Banos……as I’m sure you know. New business has moved into the city, and more are one the way. There has been a slowdown in home building, which is welcome because there are so many unsold new homes in the area due to overconfidence on the part of developers and financiers.
At last count, there have been 3000 foreclosures here in the city, but as a result of this, would-be first-time home buyers now can afford a home. As a result, areas which formerly were run-down are starting to spring back to life. A new high school is in the first stages of construction, and the new Merced College campus is entering its second year of instruction.
So I guess we can say with confidence that things are indeed improving.
#3 Katherine. I have heard that both groups, buyers and sellers, had faulty planning in this mess! Sub-rate oversized mortages and those that were taken in by the “real estate dream machines” The percentage of failed mortages is quite small, as I believe I read somewhere. Those people got hit from both sides and and the lenders are being hit for dishing out a lot of unsecured loads. I believe that both sides are at fault in this mess.