The nation’s housing bulls received some good news yesterday if you’re willing to stretch your imagination just a tad.
According to the Case-Shiller Home Price Index, home prices rose modestly, up by 0.3% in January compared to December in its 20 city index.
But the news wasn’t all good since the index measures a three month average and includes the brief spike in prices that occurred in November due to the expiring federal tax credits.
That leads some-including me-to believe that sugar induced bounce is now over as home prices remain stuck on average at 2003 levels.
In fact, on a yearly basis the home prices were actually down 0.7% when compared to the same month last year. So the truth is the report was something of a mixed bag.
Meanwhile, the aftermath of the housing bubble continues to take its toll on communities across the nation.
In that regard, consider the story about this “gated ghetto” in California where home prices have fallen by a whopping 62%.
From the LA Times by Alana Semuels entitled: From bucolic bliss to ‘gated ghetto’
“The gated community in Hemet doesn’t seem like the best place for Eddie and Maria Lopez to raise their family anymore.
Vandals knocked out the streetlight in front of the Lopezes’ five-bedroom home and then took advantage of the darkness to try to steal a van. Cars are parked four deep in the driveway next door, where a handful of men rent rooms. And up and down their block of handsome single-family homes are padlocked doors, orange “no trespassing signs” and broken front windows.
It wasn’t what the Lopezes pictured when they agreed to pay $440,000 for their 5,000-square-foot house in 2006.
The 427-home Willowalk tract, built by developer D.R. Horton, featured eight distinct “villages” within its block walls. Along with spacious homes, Willowalk boasted four lakes, a community pool and clubhouse. Fanciful street names such as Pink Savory Way and Bee Balm Road added to the bucolic image.
Young families seemed to occupy every house, throwing block parties and holiday get-togethers, and distributing a newsletter about the neighborhood, Eddie Lopez recalled.
“We loved how everything was family-oriented — all our kids would run around together,” said Lopez, a 41-year-old construction supervisor and father of seven. “Now everybody’s gone.”
Vacant homes are sprinkled throughout Willowalk, betrayed by foot-high grass. Others are rented, including some to families that use government Section 8 vouchers to live in homes with granite countertops and vaulted ceilings.
When the development opened in 2006, buyers were drawn to the area by advertising describing it as a “gated lakeshore community.” Now, many in Hemet call Willowalk the “gated ghetto,” said John Occhi, a local real estate agent.
There are dozens of places like Willowalk, and they are turning into America’s newest slums, says Christopher Leinberger, a visiting fellow at the Brookings Institution. With home values at a fraction of their peak, he said, it no longer makes sense to live so far from the commercial centers where jobs are concentrated.
“We built too much of the wrong product in the wrong locations,” Leinberger said.”
The sad part is that every single bit of this mess could have been avoided. The regulators were asleep at the wheel when the banks took 50 years of mortgage guidelines and threw them away.
Believe me when I tell you that this was no boating accident.
Related Articles:
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The 2010 Housing Market “Shadow Inventory”
Underwater Homes Trap Borrowers into Higher Rates
Zandi on Housing: “I think we are going see to another leg down”
FHA Defaults: Many More on the Horizon
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