NY Times: In Central Valley (CA), the Ruins of the Housing Bust

[marmar]

In Central Valley, the Ruins of the Housing Bust

By DAVID STREITFELD
Published: August 23, 2008


MERCED, Calif. - ELLIE WOOTEN, the likable mayor of this likable Central Valley city, is on her way to the office when her cellphone rings. A constituent wants her mortgage payments reduced, and is hoping that the mayor has some clout with her lender.

Although Merced 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. ............(more)

The complete piece is at: http://www.nytimes.com/2008/08/24/business/24house.html?src=linkedin

[Bravo Zulu]

1. They are very stupid people!

In the midst of all the wreckage caused by the real estate boom and bust, some think that they have found a way forward: build more houses, thousands and thousands of them.

[AlCzervik]

2. city coucils and developers have screwed many of us in the central valley

and of course we've had the chance to vote them out. Anyhow most of the developers imo gave kick backs to all kinds of city officials and the building began, things have turned bad and the same developers slink out of town in the middle of the night leaving neighborhoods unfinished and the city holding the bag.

There is a lot of blame to go around.

[depakid]

3. Lack of responsible land use planning has plagued Caliornia for years

Now the chickens are coming to roost in hordes. Thing will really get interesting in some of these towns once gas prices rise back up to $6m $8 and $10 per gallon.

[Duke Newcombe]

4. Some perspective, from a former resident...

This town recently (last five to seven years) won the tenth University of California campus. That, as well as the general "goldrush" mentality in California real estate superheated the local market--you couldn't swing a dead cat without hitting a real estate developer or a realtor in that town. Unprecedented growth in population was happening. If you were a local, if you didn't buy Real Soon Now, prevailing wisdom was you wouldn't be able to afford to live in your hometown anymore.

What goes up, must come down. And if it went up fast and high, it came down fast and hard. There were overly excited people, and heavy speculation regarding land and hoursing values due to the UC and business doing unusually well there. Nothing stupid, as much as it was short sighted.

Hope this clears things up.

Duke

[Grinchie]

5. They Never Considered How Much It Costs To

Convert an urban subdivision back into farmland.