The foreclosure ‘blob’ and why a bailout won’t work
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Worthwhile reading: ‘Why a Housing Bailout Won’t Help,’ an interesting piece from the Wall Street Journal’s Holman Jenkins Jr.
Most of you have read the anti-bailout argument in many forms and forums. What makes this piece interesting is Holman’s snapshot analysis of the underlying mortgage mess as a relatively simple, regional problem: too many people made bad bets on the future of residential real estate in remote southwestern suburbs. Think Palmdale, Inland Empire, newer parts of Sacramento, San Diego, Phoenix and Vegas. Put these areas together on a map and you have what Jenkins calls ‘a single, nearly contiguous blob reaching from Sacramento to the environs of Las Vegas and Phoenix.’
His analysis neatly summarizes a trend I’ve written about here: bad bets on the future of far-flung suburbs. Holman calls these ‘communities that now appear to have little future.’ Ouch.
What’s wrong out there? Jenkins: ‘Many of these homebuyers are underwater not just because they bought more house than their incomes could support, and not just because prices are falling. They were also betting on commute patterns and demographic expectations that are proving invalid.
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat tip: EP, via e-mail.
Photo Credit: Associated Press