'I Just Thought Things Would Work Out'

From the Sacramento Bee:

Driving around Sacramento's urban core, you'd never guess there was a housing market slump. New lofts, three-story row houses and condominiums conceived during the housing boom are nearing completion in neighborhoods ringing downtown...At least eight housing developments with about 500 units are either under construction or just completed in the central city. Across the Tower Bridge on the West Sacramento waterfront, another roughly 250 units either have hit the market or soon will.
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For years, city leaders pushed unsuccessfully for more homeownership downtown. But the finances didn't make sense for developers until the housing market boom pushed prices high enough to cover the extra expense of building on small, inner-city lots. When sales prices topped $300 a square foot a few years ago, developers rushed to get into the urban housing business. Projects started in those heady days are now ready to open.

The builders hope that their products -- and locations -- are interesting enough to sell in tough times. "It's a scary market," said developer Mark Friedman, a partner in Loftworks, which is building 32 brownstone-style row houses in midtown at N and 26th streets.

From CNBC (videos here and here):

These days people here are losing money, as Stockton has become infamous as "The Foreclosure Capital."...Over the weekend several foreclosed properties held open houses. We were there. And so were the flippers! After all that's happened, a new wave of speculators has descended, hoping to take advantage of the 10%-15% below market values these homes are selling for. Their plans? Fix 'em up and sell 'em at a profit! To whom, I haven't a clue.
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[T]hen there's the dental assistant, a single mother of three, who doesn't want us to reveal her name, but who has to be out of her repossessed home in 14 days. She has nowhere to go and no creditworthiness to qualify as a renter. What happened? Her $2,000 mortgage payment (which she had to work two jobs to cover) reset after two years, and it shot up to $3,800. I asked her how she thought she could take on the loan, knowing the rate would rise. "I just thought things would work out."...Her three kids want to know why notices keep getting posted on the door.

Should we feel sorry for her? I sure did. Should she be bailed out? Not if it keeps her in a house she can't possibly afford over the long run. That's not fair to the people who did stay within their budgets, people who have seen their home values plummet as their neighbors go into foreclosure.

From the Stockton Record:

The sea of foreclosed homes in San Joaquin County and its flotsam of tall weeds, partying teens and green pools are testing neighbors' patience and code enforcers' limits..."It's a real sticky situation in making sure our code enforcers aren't overworked. It's very difficult for our staff to track down the folks who are taking off," Tracy Spokesman Matt Robinson said. "They're just walking away from their homes."
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One burning question these days is: Why have foreclosures sledgehammered the Stockton metro area more heavily than about any place in the country?
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Locals and many Bay Area people began to get priced out of the market. In order to buy, households often went after low introductory teaser rates on loans for which lenders asked little or no employment/income documentation, said Leslie Appleton-Young, chief economist for the California Association of Realtors. Lenders routinely reported that for the first time, adjustable-rate mortgages and exotic loans were more common than fixed-rate loans.

Meanwhile, investors added to the price spiral by competing for homes, sometimes buying sight unseen via the Internet and looking to "flip" them for tidy profits within a year or two. Real-estate agents and brokers reported that up to 30 percent of home buyers were investors. "And then when prices quit going up, it was like musical chairs, and there was no place to sit down," said John Knight, professor of finance and real estate at UOP's Eberhardt School of Business.