Can the Mortgage Crisis Swallow a Town?

[w¡n9Nµ7 §£@¥€r 123]

Tammi and Charles Eggleston never took out a risky mortgage, never borrowed more than they could afford and never missed a monthly payment on their neat, three-bedroom colonial in the Cleveland suburbs. But that hasn’t prevented them from getting caught in the undertow of the subprime mortgage mess now submerging this town.

Over the last 18 months, the Egglestons have watched one house after another on their street, Gardenview Drive, end up foreclosed and vacant. Although lawns are still tidy and empty homes are not boarded up and stripped as they are in inner-city Cleveland, the Egglestons say Maple Heights no longer feels safe after dark. Nor do they have the confidence they had when they moved in a decade ago that this is the ideal place to raise their 6-year-old twin girls, Sydney and Shelby. So, in May 2006, they put their home on the market in order to move closer to Mrs. Eggleston’s parents in another middle-class Cleveland suburb, Richmond Heights.

They have had no takers. Although they lowered the asking price to $99,000 from $109,000, no one has even come to look at it in more than six weeks. “My heart panics every time I drive down the street and I see another for-sale sign,” says Mrs. Eggleston, pointing past the placards in front of her porch to others that dot surrounding yards like lawn furniture. “Some people on the street couldn’t pay, so they just left. The competition to sell is just ridiculous.”

It is a scene being repeated in cities and towns across America...

...

Why has the impact of the subprime meltdown been so much more severe in communities like Maple Heights than in other parts of the country? Mr. Rokakis suggests that it is a combination of Cleveland’s underlying economic problems and a lack of the steadily appreciating housing prices that other areas enjoyed. That shut off a crucial safety valve — in other regions, overwhelmed borrowers could often turn around and sell their homes for at least a slight profit.

In Maple Heights, the situation is now reversed: with so many properties on the market, home values are dropping, and some delinquent mortgage holders owe more than their homes could now fetch in a sale. “The tax base is eroding,” says Mr. Ciaravino, the mayor. He warns that property values may soon have to be reassessed downward, further crimping tax revenue and raising the heat on Maple Heights’ remaining property owners. “This has affected virtually every aspect of community life, like increasing the rate of transient students in the schools,” he says.

All of these factors are reasons the Egglestons want to move, but they are not sure they will be able to do so anytime soon. “We’re torn,” says Mrs. Eggleston, who works as an executive assistant at a Cleveland nonprofit organization. “You can see and feel the change in the neighborhood. We’re really not sure what to do.”

Mr. Ciaravino is torn, too. He understands the Egglestons’ fears but needs middle-class families like them to stay if Maple Heights is to have a decent future. “We’re not giving up the fight here,” he says, with a trace of weariness in his voice. “It’s frustrating because this could have been avoided. We as a nation are capable of much better than this.”

http://www.nytimes.com/2007/09/02/business...agewanted=print

[Ban Hammer 14,569]

given the heavy hand the tax appraisers had while trying to justify my house being worth x amount while comparing it to other houses closer to town, with more property/improvements/cleared land i do look forward to a countywide appraisal down.

[GaryC 7]

This is good news for me. I am soon in the market for a house and this means the prices will come down for a short time and then go back up. Instant equity!!! :dance:

[w¡n9Nµ7 §£@¥€r 123]

... this means the prices will come down for a short time and then go back up.

Just curious: where did you get the "for a short time" part from? This article or somewhere else?

[Fandango 1,440]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

[Ban Hammer 14,569]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

[w¡n9Nµ7 §£@¥€r 123]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

I think that depends on local market conditions. People were saying that in early summer here in central joisey but prices have gone down all summer. Anyone who bought in my town in March has already lost value.

[Fandango 1,440]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

really????

I think that depends on local market conditions. People were saying that in early summer here in central joisey but prices have gone down all summer. Anyone who bought in my town in March has already lost value.

Short sales and foreclosures are really going to affect the market for quite some time to come, imo.....

[w¡n9Nµ7 §£@¥€r 123]

Short sales and foreclosures are really going to affect the market for quite some time to come, imo.....

And with Bush's plan to forgive federal income tax on the amt of mortgage debt forgiven by the bank, there will be a lot more shorts...

[Fandango 1,440]

Short sales and foreclosures are really going to affect the market for quite some time to come, imo.....

And with Bush's plan to forgive federal income tax on the amt of mortgage debt forgiven by the bank, there will be a lot more shorts...

Well it's not really up to the HO if the lender will accept a short sale though.......

[GaryC 7]

... this means the prices will come down for a short time and then go back up.

Just curious: where did you get the "for a short time" part from? This article or somewhere else?

The stock market is already coming back. I am in the process of buying a home and I talked to our banker at length about the "mortgage crisis". He said that most banks are not effected at all with the sub-prime melt down. They only do regular mortgages. Once the speculators pay the price for their bad decisions the rest of the market will come back. I have "less than perfect" credit and I qualify for a regular mortgage. To be honest the ones that are loosing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

[w¡n9Nµ7 §£@¥€r 123]

... this means the prices will come down for a short time and then go back up.

Just curious: where did you get the "for a short time" part from? This article or somewhere else?

The stock market is already coming back. I am in the process of buying a home and I talked to our banker at length about the "mortgage crisis". He said that most banks are not effected at all with the sub-prime melt down. They only do regular mortgages. Once the speculators pay the price for their bad decisions the rest of the market will come back. I have "less than perfect" credit and I qualify for a regular mortgage. To be honest the ones that are loosing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

I see. So once speculators pay the price for their bad decisions, the rest of the market will come back? Any idea how long that might take?

Just trying to understand. I'm not challenging your beliefs. The last RE downturn in the NY/NJ area lasted a decade, thus my skepticism.

[ChristinaM 0]

To be honest the ones that are losing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

Agreed.

[w¡n9Nµ7 §£@¥€r 123]

To be honest the ones that are losing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

Agreed.

There's one more class of people losing out. People who live in close proximity to people who had no business buying.

[GaryC 7]

... this means the prices will come down for a short time and then go back up.

Just curious: where did you get the "for a short time" part from? This article or somewhere else?

The stock market is already coming back. I am in the process of buying a home and I talked to our banker at length about the "mortgage crisis". He said that most banks are not effected at all with the sub-prime melt down. They only do regular mortgages. Once the speculators pay the price for their bad decisions the rest of the market will come back. I have "less than perfect" credit and I qualify for a regular mortgage. To be honest the ones that are loosing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

I see. So once speculators pay the price for their bad decisions, the rest of the market will come back? Any idea how long that might take?

Just trying to understand. I'm not challenging your beliefs. The last RE downturn in the NY/NJ area lasted a decade, thus my skepticism.

This IMO is a superficial downturn. Just my opinion and based solely on my area and what my local banker said to me. I have no idea what is going on in NJ/NY area. The reason I think it's a short term thing is because the rest of the economy is doing well. Interest rates are not going up, employment is still good and the market is coming back. It isn't like the previous downturns where the rest of the economy led the downturn in the housing market. But that is just MO.