More Icebergs

By way of Gary North

Mortgage Crisis Triggers Walk Aways
Desperate Decisions Mark a Shift in Home Ownership Attitudes

By Mary Kane

o understand why the next phase of the nation’s housing crisis might mean financially troubled owners just give up and walk away from their homes, look no further than the winding roads and carefully tended lawns of the Piedmont subdivision in the once-booming exurbs of Washington.

Here, in Virginia farmland 40 miles south of the nation’s capital, builders in the last decade carved out development after development – hundreds of homes in gated communities that sold in a snap. At Piedmont, people camped out in line to get a contract, buying into plans for 2,000 spacious, traditional-style brick homes with decorative lamp posts on every lawn. The prices – at $600,000 and up – might seem high in softer markets elsewhere in the country. But in this expensive area, they felt affordable to people willing to trade a long and trying commute for a much larger home, adjacent golf course and community pool. Helped, of course, by interest-only loans, little or no down payments, and adjustable-rate mortgages.

Housing prices haven’t just dropped – they’ve tanked, falling by as much as $200,000 to $250,000. But Piedmont’s amenities don’t mean as much to many of its homeowners these days. Housing prices haven’t just dropped – they’ve tanked, falling by as much as $200,000 to $250,000. By one estimate, some 80 percent of new listings here are either foreclosures or short sales, in which owners give their houses back to the bank at a fire-sale price...Read more>>