Bloomberg on Merced, CA. I don't know what the big deal is about one's house being underwater. Heck, when you take out a car loan on a new car you are immediately underwater too, paying off a now-used car at a new car price. Nobody promised that housing prices can only go up. The extent of subprime lending still amazes me though, and the willingness of supposedly prudent fiduciary institutions to buy that crap amazes me too. One quote:
U.S. homeowners lost an estimated $3.3 trillion in house value last year, real estate valuation service Zillow said. In California, the state with the most foreclosure filings, the share of underwater owners will rise to a third of all mortgage holders by the end of the year, according to data provider First American LoanPerformance of Santa Ana, California.
Merced, located about 110 miles southeast of San Francisco in California’s agricultural Central Valley, became a housing boom town in the early part of the decade as buyers with subprime loans sought affordable property within commuting distance of Bay Area job centers, said Jeff Michael of the University of the Pacific’s Eberhardt School of Business in Stockton.
Median home prices in Merced rose from $150,000 in January 2002 to a peak $382,750 in December 2005, according to MDA DataQuick, a San Diego-based property research firm. In December 2008, the median stood at $120,500, down 52 percent from a year earlier, as four out of five resales involved properties that had been foreclosed on in the prior 12 months.
