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You've seen the statistics, you've seen the diaries on rising foreclosures come and go for three years. I hope you weren't just thinking that foreclosures were bad for resale prices and lenders, because it's actually much worse.

The front page story here in Charlotte, NC today offered some fine work by Liz Chandler and Ted Mellnik. It's all superb:

New suburbs in fast decay: Foreclosures lead to vacancies and crime

[There are] more than 50 neighborhoods [in Mecklenburg County] with elevated foreclosure rates of 15 percent to 61 percent. Virtually all of them are new starter-home subdivisions.

...

"Pay attention to this," Charlotte-Mecklenburg Police Chief Darrel Stephens told his commanders ... as they examined a map of Charlotte's highest foreclosure areas..."If these are not hot spots already, they will be."

...

"Within five years we're reaching the need for revitalization strategies that used to take a neighborhood 25 years to reach," says planning director Debra Campbell.

...

It's happening everywhere, it's hitting hard, and it's hitting now.

10,000-plus foreclosures since 2003. Of these, 3,200 were starter homes

Uh-huh. Thought that might get your attention.

Here's the interactive graphic and a summary:

The number of foreclosures in Mecklenburg County has spiked since 2003. That's due largely to increasing foreclosures in neighborhoods of new starter homes, shown on the map in red.

The Observer defines starter homes as homes built in the last decade, with a county appraised value of less than $150,000. There have been more than 3,200 starter-home foreclosures since 2003.

The more than 10,00[0] squares on this map represent Mecklenburg single-family home foreclosures from 2003 through early 2007. While starter-home foreclosures account for only a fraction of the total, the increase in starter-home foreclosures accounts for most of the increase in the total number of Mecklenburg foreclosures during that period.

Oh, joy. I have three foreclosures in my neighborhood

One of them is the house across the street from me. Officially, it's owned by, let's see...someone in Riverside, California. Nice. Absentee landlord since September 2006.

Up the street we have, hmm...this is good news. After three years the Bank of New York sold the house five up from mine to new owners. Sweet.

And, for the hat trick. At the far end of my street, a foreclosure property was assumed by the Department of Veterans Affairs - which owns other properties in my neighborhood too, thanks - and sold later on.

These are the historical examples.

And I know of two other properties in the development that are not on the Observer website but currently, right now, in trouble.

As for the anecdotes of rental properties becoming more crime prone, I cannot help but notice my renter neighbors across the street. Before anyone's hackles are raised, they have impeccable WASP credentials. Before anyone's class war sensitivities are annoyed, the husband probably makes more money than I am in danger of seeing working for Duke Energy. But they do rent, they do not take much, well, ownership of the property and their kids are, bless their hearts, home-schooled because they are known discipline cases. Only problem is the home-schooling mother has poorly-managed manic depression and appears unlikely to be competent to teach them.

In my observation the kids spend most of their time hanging out in the garage with friends of the oldest son, with a neverending stream of cars coming down the street to visit. The neighbors on either side are retirees, I think veterans in one case, and African-American families. They wonder, as do I, what the neighborhood is coming to.

On the other hand, the county keeps upping the assessed value of the homes, compliments of a deeply devalued dollar. In case anyone is keeping score, the reassessed value does not keep up with devaluation of the dollar against the Euro, but it is enough to get rid of this first-time homeowner's PMI insurance when we refinanced in July...as opposed to just now, but hey it was a good idea at the time, and it's a good idea now, and we pay a whopping $72 a month more in payments now for everlasting piece of mind.

Except for the possibility that our sort-of starter home neighborhood might be one of those future hot spots that Chief Stephens was talking about up above.

In the interest of full disclosure: No, we did not have a subprime mortgage, but we did have an ARM until four months ago. Yes, the home value went up during the reappraisal, a lot. Yes, the value of comparable homes in the neighborhood has dropped five percent in two months due to the subprime lending meltdown. I anticipate it will get far, far worse.

As it stands, we can eat, hmm, about a 30% paper loss from the assessed value and all I will do is grumble about it. But when I read stories like this one above, I do fidget. Because I have seen the signs with my own eyes, and to learn it's not just me, not just my neighborhood, not just my neck of the woods but the entire nation that is dealing with this, well ,that's unsettling.

And hearkening back to the article, which mentionss a 2.3% increase in violent crime for every 1% increase in foreclosures:

What happens when foreclosure double over the course of three years, as they did in Charlotte?

What happens if they double next year?

It has been some time since the country dealt with a bona fide crime wave.

Then again, it took a while for the last good thing to be stripped from the middle class -- their homes.

I suspect things will move along quickly now.

Bonus Toy

While you won't get all the details, play around with this free data search to see what's going under in your area.

NOthing drives home how serious this matter is like seeing your street lit up with foreclosure properties.

Want to Know More?

Boston Globe

A report published last week by the Center for Responsible Lending, a Durham, N.C.-based consumer advocate, estimates that 44.5 million US households will see their property values decline a combined $223 billion as foreclosures surge in coming years, particularly in minority communities.

Historically the most affected areas were lower-income and were prone to subprime and predatory lending, irresponsible house flipping, and mortgage fraud, Immergluck said.

However, "the problem now is on a different scale," he said. "It's affecting a lot more suburban, moderate-income places" as more people of different incomes default on riskier loans.

CBSNews - a la The Nation. This one's about foreclosures in gated communities. "Boarded up McMansions" is the money shot.

Most recently, America's gated communities have been blighted by foreclosures. Yes, even people who were able to put together the down payment on a half-million dollar house can be ambushed by Adjustable Rate Mortgages. Newsweek reports that foreclosures are devastating the gated community of Black Mountain Vista in Henderson, Nev., where "yellow patches [now] blot the spartan lawns and phone books lie on front porches, their covers bleached from weeks under the desert sun." Similarly, according to the Orlando Sentinel, "countless homeowners overwhelmed by their mortgages are taking off and leaving behind algae-filled swimming pools and knee-high weeds" in one local gated community.

So, for people who sought, not just prosperity, but perfection, here's another sad end to the American dream, or at least their ethnically cleansed version thereof: boarded-up McMansions, plastic baggies scudding over overgrown lawns, and, in the Orlando case, a foreclosure-induced infestation of snakes. You can turn away the Mexicans, the African-Americans, the teenagers and other suspect groups, but there's no fence high enough to keep out the repo man.

All right, some gated communities are doing better than others, and not all of their residents are racists. The communities that allow owners to rent out their houses, or that offer homes at middle class prices of $250,000 or so, are more likely to contain a mixture of classes and races. The only gated community I have ever visited consisted of dull row houses protected by a slacker guard and a fence, and my host was a writer of liberal inclinations. But all these places suffer from the delusion that security lies behind physical barriers.

Good news if you are a teacher

Agency offering deals on foreclosed homes: Teachers, first responders looking for a house can get one at half the price

The U.S. Department of Housing and Urban Development is posting pictures on its Web site of houses it will sell for half the listed price.

Charlotte-Mecklenburg Schools teachers received an e-mail advertising eight houses listed between $33,000 and $187,000 that they could buy for $16,500 to $93,500.

The effort, already in place in cities such as Denver, Chicago and Houston, is a response to Mecklenburg County's growing foreclose rate, the highest in the state.

Federal officials contacted Charlotte leaders in May about joining the Good Neighbor Next Door program after the number of foreclosures in the county jumped to 7,162 last year from 4,414 in 2002, a 62 percent increase.

From the Conference of Mayors

An escalating mortgage crisis will push another 1.4 million U.S. homes into foreclosure and drive nationwide property values lower by 7 percent next year, according to a report released on Tuesday by a group representing city mayors.

...

"Not that long ago economists said housing was the backbone of our economy," Trenton, New Jersey Mayor Douglas Palmer said..."Today the foreclosure crisis has the potential to break the back of our economy.."

The Global Insight report forecast U.S. homeowners would see property values fall by $1.2 trillion in 2008, with almost half of those overall losses coming in California.

...

The report said the weakening U.S. property market would have knocked some $676 billion from home values, but another $519 billion in losses could be tied directly to the financial problems facing borrowers unable to meet escalating monthly mortgage payments.

The Conference of Mayors Report (pdf file) - It's good stuff.

Originally posted to cskendrick on Sun Dec 09, 2007 at 05:09 PM PST.

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