Twice bitten: One town's foreclosure nightmare
One town's second go around with a foreclosure crisis finds it more prepared. Here's how Lancaster, Calif., where nearly every city block is affected, is coping with the current mess.
By Melinda Fulmer, MSN Real Estate
Real-estate agent Dan Marion thought he had ridden out his hometown's last great foreclosure crisis more than 15 years ago. That was the early 1990s, when aerospace jobs were fleeing in Lancaster, Calif., and the local economy was crumbling.
Now, just over 15 years later, the high desert town known for its cheap and spacious real estate is reeling again, with the second-highest foreclosure rate this year of any ZIP code in the United States.
Lancaster had 3,543 total filings between January and August 2008, the most recent data available from RealtyTrac. That is second only to Stockton, Calif. And if you include Lancaster's immediate neighbor to the west, third-ranked Palmdale, it has the highest concentration of foreclosure activity in one small area. (RealtyTrac is an MSN Real Estate partner.)
"(The foreclosures) started coming fast and furious towards the middle of 2007," says Marion, of Troth Realtors GMAC Real Estate. Now, with foreclosures up 71% year-over-year in the U.S., almost every block in Lancaster has at least two vacant bank-owned properties with a for-sale shingle out front.
A town in crisis
This time around, it wasn't a dwindling economy that brought crisis to this dusty town next to Edwards Air Force Base. It was a volatile combination of subprime lending, ignorance and greed.
Builders put up homes they shouldn't have in this commuter town an hour outside Los Angeles, says economist Edward Leamer, director of the UCLA Anderson Forecast. Then they relied on subprime loans to get lower-income buyers to stretch to afford them.
"Now we have a larger number of homes that are not likely to find owners," Leamer says.
Locals also point to the large number of naïve, new house-rich homeowners who began using their home as a cash register, taking out lines of credit to buy RVs, three-wheel bikes and other expensive toys, before watching rates and gas prices tick up. "The attitude was 'I want it now,' " says Elizabeth Brubaker, director of the city's housing and neighborhood revitalization agency. "People got greedy."
Of the 4,063 homes listed as active on the Greater Antelope Valley's Multiple Listing Service in late October, 74% are owned by banks or are short sales.
And unlike other parts of the country, this crisis has touched just about every part of this town, from cracker-box starter homes to custom estates in gated communities.
On almost every street in Lancaster, you can find houses with brown lawns, lockboxes and tumbleweeds rolling in the backyard.
In front of one house in a nice middle-class community on the coveted west end of town, a forlorn-looking burgundy recliner sits next to the curb, abandoned hastily during a move-out. In this newer neighborhood of stucco homes that are 3,000 square feet and larger, foreclosures or short sales account for almost half the houses on some streets.
It's quite an enticement for teenagers looking for a place to hang out and drink or do drugs, Marion says. And it's also a draw for vandals looking to steal hardware, appliances or even the outside air conditioning unit. "I've had houses where everything was taken from the inside right down to the flooring," Marion says.
Continued
http://realestate.msn.com/buying/Art...6612>1=35000
By Melinda Fulmer, MSN Real Estate
Real-estate agent Dan Marion thought he had ridden out his hometown's last great foreclosure crisis more than 15 years ago. That was the early 1990s, when aerospace jobs were fleeing in Lancaster, Calif., and the local economy was crumbling.
Now, just over 15 years later, the high desert town known for its cheap and spacious real estate is reeling again, with the second-highest foreclosure rate this year of any ZIP code in the United States.
Lancaster had 3,543 total filings between January and August 2008, the most recent data available from RealtyTrac. That is second only to Stockton, Calif. And if you include Lancaster's immediate neighbor to the west, third-ranked Palmdale, it has the highest concentration of foreclosure activity in one small area. (RealtyTrac is an MSN Real Estate partner.)
"(The foreclosures) started coming fast and furious towards the middle of 2007," says Marion, of Troth Realtors GMAC Real Estate. Now, with foreclosures up 71% year-over-year in the U.S., almost every block in Lancaster has at least two vacant bank-owned properties with a for-sale shingle out front.
A town in crisis
This time around, it wasn't a dwindling economy that brought crisis to this dusty town next to Edwards Air Force Base. It was a volatile combination of subprime lending, ignorance and greed.
Builders put up homes they shouldn't have in this commuter town an hour outside Los Angeles, says economist Edward Leamer, director of the UCLA Anderson Forecast. Then they relied on subprime loans to get lower-income buyers to stretch to afford them.
"Now we have a larger number of homes that are not likely to find owners," Leamer says.
Locals also point to the large number of naïve, new house-rich homeowners who began using their home as a cash register, taking out lines of credit to buy RVs, three-wheel bikes and other expensive toys, before watching rates and gas prices tick up. "The attitude was 'I want it now,' " says Elizabeth Brubaker, director of the city's housing and neighborhood revitalization agency. "People got greedy."
Of the 4,063 homes listed as active on the Greater Antelope Valley's Multiple Listing Service in late October, 74% are owned by banks or are short sales.
And unlike other parts of the country, this crisis has touched just about every part of this town, from cracker-box starter homes to custom estates in gated communities.
On almost every street in Lancaster, you can find houses with brown lawns, lockboxes and tumbleweeds rolling in the backyard.
In front of one house in a nice middle-class community on the coveted west end of town, a forlorn-looking burgundy recliner sits next to the curb, abandoned hastily during a move-out. In this newer neighborhood of stucco homes that are 3,000 square feet and larger, foreclosures or short sales account for almost half the houses on some streets.
It's quite an enticement for teenagers looking for a place to hang out and drink or do drugs, Marion says. And it's also a draw for vandals looking to steal hardware, appliances or even the outside air conditioning unit. "I've had houses where everything was taken from the inside right down to the flooring," Marion says.
Continued
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