See above for a graph of housing prices in the city where I live, Merced, CA. Doug's right; as you can see from the graph, median home price from Q1 2005 to mid 2006 was $300,000 and higher. Now it's down to $150,000. Lots of people were/are paying mortgage payments on a house that has depreciated in value so rapidly that even if they could afford to continue payment, it makes sense just to let it slide into foreclosure and start over.
On Mon, Dec 8, 2008 at 9:15 AM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Dec 8, 2008, at 11:58 AM, Miles Jackson wrote:
>
> I have to echo JC: I don't follow. My house has dropped in value about
>> $40,000 in the past two years. Because it's where I plan to live for many
>> years, I could care less about the market value. In fact, I've seen a bit
>> of a drop in my property taxes, so my escrow payments are actually lower
>> this year. I don't get how this is lowering my willingness to make my
>> mortgage payments.
>>
>
> Because it feels like pouring money down a rathole - why not walk away and
> just rent? Also, no doubt many buyers stretched because they thought they
> were buying an appreciating asset that they could either flip or refinance.
> Now they can do neither, and with the job market sinking, the whole
> situation looks untenable.
>
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