Friday, January 28, 2011

Neighborhoods in Distress

When my sister-in-law moved here last summer, we drove her around to many places looking at homes. This tour included newer developments, those built just before or during the big bubble. These were neighborhoods in much distress; it was obvious all around. These newer homes had all been purchased at very high prices, and many had been bought by unqualified buyers. When the bubble burst, they all were underwater on the money owned on these places, and the marginal buyers were marginal employees, many of whom found themselves out of work due to recession.

In some of these places, "For Sale" signs were rife; many were pathetic attempts. Some were bona-fide listings and some were short sales and bank-owned foreclosure properties. The bona-fide listings of course were priced many tens of thousands of dollars over the distressed sales and had utterly no hope of selling. There were lots of people standing around the neighborhood, none with a pleasant look on their faces. Lots of men needing haircuts and dressed in dirty tee shirts or "wifebeater" undershirts. It was terrible and personally, I would never move into a neighborhood in such distress like that. Petty crime is probably higher than normal. Residents are low on money and have plenty of time on their hands, a recipe for trouble. Stress within the households due to financial difficulties probably generates a higher than normal level of discord with resultant fighting, screaming, etc. Some of these households double or triple up within the same house, increasing density within the neighborhood. It might be hard to find a good neighbor thereabouts; with so many wanting to leave, who knows what kind of residents come next. Lots of renters for a while anyway. Speculators have bought some of these homes on the cheap and they don't care whom they rent to as long as the money comes in. Neighbors don't matter one whit to these absentee owners.

My guess is that it will take years for things to settle down in many of these newer developments that were thrown into turmoil from the housing price collapse and recession. Eventually, prices will stabilize and more permanent owners will settle in and take root. Hopefully.

In some places, these neighborhoods will never be the same. Like in CA, where all the "good people" move out and are replaced by an underclass of deadbeats. These are people who are permanently dependent upon the largesse that politicians there have doled out to perpetuate themselves in office. CA has made itself attractive to freeloaders, so it's no surprise that they make a bee-line for the state.

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