Walking through a bank foreclosed house is an exercise in duality. On one hand, you are searching for a diamond in the rough. On the other hand, you are acutely aware of the tragedy of the real estate market in the United States. Along for the ride with my parent’s search to buy a new home of their liking and of sufficient value has proven difficult and fruitless so far. Years passed from the sub-prime mortgage crisis, the housing market in East Tennessee is still a buyer’s market, but that does not have the same meaning it once did.
Upon the first step inside one stately manor, the overpowering whiff of staleness hits hard. There is usually a smell left behind in the foreclosed homes I have been inside. Some foreclosed houses are snatched up quickly, buyer’s getting out with a deal on the low. Others however, wallow on the market for many many months. Walking around the first floor, you try to get a sense of the house restored to a former pristine glory, but the signs of tragedy are more of concern to the eye and mind. It is like trying to spit shine an old cracked pair of leather shoes, whose former veneer seems tarnished by its current state; the character and memories seem distant and woe begotten. Beside the kitchen sink are letters from the bank, addressed to house’s former owner/s. Unopened; perhaps the notification too grim to warrant the worry. On the kitchen counters, remnants of a fast food meal and a huge jug of radioactive green Hawaiian punch lay strewn about. Even though the bank now owns the house, it surely seems like there is a current inhabitant. Past the kitchen, trying to evaluate the quality of the cabinets and counter-top, the living room is a great size, with a sturdy fireplace. But your eyes stray to what I distinctly recognize as a mess of Pop-Tart crumbs on the floor; most likely spilled from their unwrapping. The dining room is large, a definite necessity and welcome asset. Back in the foyer, I continue upstairs ahead of the realtor and prospective buyers.
After crossing the landing, I peer into a bedroom and see an inflatable mattress. On the floor there are two rolls of toilet paper and over in the corner of another bedroom some toy construction trucks and cowboy boots. In the other corner of the room stands a block table with various shapes. The owners are still living here, with baby, as evidenced by a box of Pampers I remembered seeing in the kitchen. To the left of the landing, there is a picture frame with one of the spouse’s parents and relatives, peering out through oval cut outs. Not one bit of me is left pursuing aspects of the house itself. My mind is fully fixated on the plight of the family squatting in their former house unbeknownst to the bank. Where have they put all their other belongings? Do they leave in the morning and come back at night? Do they still have a key? How do they get into the house at all? If they stay during the day, how do they escape quickly when their house is being shown? What was the situation that forced them to foreclose; taking out too expensive a mortgage and going under, losing a source of income, medical bills? Going room to room, you can start to understand just how helpless many feel after losing their jobs and then their house. I hope they have an ample support line, but evidence does not point to that since they have to stay there at least during the night. One ray of light was their attempt at giving their child some opportunities to learn and grow, even while they have to go through such a nightmare. The last part of the tour was to examine the walk-out basement. There was a lone piece of furniture sitting on the carpeted floor, a Thomas the Tank Engine wooden train set table. It’s an equally uplifting and tragic thought that the parents still put their child’s future first even though their own hangs in the balance of a humble bricked suburban abode. That was the end of the showing, and it
Developments close to Knoxville are spread out far and wide through the land that was once farmland and tree filled ridges. When the times were good developers had optimistic plans of sub-divisions with hundreds of homes. The best of them filled up quickly. The middling sort is where the problems begin and these same problems stretch all across the country. As the boom cycle quickly dismantled, developers were left in a bind. Parts of sub-divisions had to be put off until cash flow permitted them to restart building.
From a set benchmark of 100 in 1890, real home prices skyrocketed all the way from below 110 in 1997 to a peak of over 200 in July of 2006. This boom cycle detrimentally changed the public sentiment about the true value of homes. There is no law suggesting that home values will appreciate over time. If you had bought a house in 1890, adjusted for inflation, you would have a 10% return on that investment if you sold your house in 1997. Post-WWII house values have been extremely prone to stability. The benchmark was 110 in 1947, and 110 in 1997. That is an extremely long time for price stability. This is the overall picture, one of which most people are ignorant. There are of course pockets where buying a home can give a great return on investment, but those opportunities are for the fortunate. And there are other pockets experiencing massive foreclosure rates now as well. The fact of the matter is that homes have long been good stores of value. You can use them as a residence and not have to incur rent costs if you resell at the right time. They have not historically been monstrously appreciating investments that we saw over the millennial boom cycle.
The lay of the land is still completely upturned and trending towards another crisis. Home values are still falling; near 5% from last year. Mainstream media rosy outlooks and outlandish “expert” projections of 10-15% equity growth in 2012 are optimistically dangerous. Banks and mortgage servicers have made every underhand and inimical attempt to forestall foreclosures and line their avaricious pockets, and pull the wool over the American public as to the insolvency problems they face. Republicans stir up media hogwash to pin most of the blame on GSEs Fannie and Freddie Mac while the bulk of private blame goes unheard by most. On the ground homeowners, are still in their houses not paying mortgage payments, mortgage fraud is rampant and uncontrolled by the government, and the groundwork of the housing crisis has a false floor. The framework behind the facade shows signs of declining housing prices for a long time to come. There has been no real way to track the number of foreclosures or homeowners straddling the line between default and refinancing. The system is built on an inherent opacity to make sure such disclosure is never seen by the prying eyes, and will certainly never reach the whole public. It really is just a waiting game to see when the house of cards will be blown down.