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Paul Kiesel
Paul Kiesel
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Foreclosureville

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From 2000-2006, Lincoln, California was the fastest growing suburb in the U.S. In seven years the town’s population went from 11,000 to 40,000 residents. The town’s motto: a small community with big ideas. The town has a main two-lane highway, a parallel railroad, a feed mill and a famous clay-products factory known as Gladding, McBean. Now, when you drive through the rolling foothills of the town, it’s difficult to notice any scenic beauty as the rolling foothills are filled with rooftops, an ocean of tile rooftops. And in front of these homes with the ubiquitous tile roofs are “open house” signs that fill the streets of homes like domino pieces waiting to be pushed, waiting to crash. Except they’re not crashing. People, mainly young families, have come in to Lincoln to play the foreclosure domino game.

This once burgeoning town has sunk to the lowest pits of the foreclosure crisis, making it the foreclosure capital in the U.S. (with Riverside, California closely behind). Homes are selling for almost half of their 2005 value once in foreclosure. Overall, this doesn’t sound like a promising housing market or one that’s ready to bounce back any time soon. But according to an article on MSN.com, it would like you to believe that the foreclosed homes in Lincoln are “the best deal on the bargain rack” (an implicit approval of current market conditions). The article doesn’t paint a grim picture of Lincoln, rather, it relates how many young families, mostly under the age of 30, are picking up these foreclosed homes in a frenzy. Granted, it’s good that these younger families are able to afford to buy a home and begin to establish themselves, but at what cost?

It’s unfortunate that the mainstream media, in an effort to present less pessimistic news for a more optimistic approach, at least economically, glosses over or completely ignores the negative repercussions this town will face, and the havoc that was wrought on the families who used to occupy the “bargain priced from the bargain rack” foreclosed homes. It’s as if any lesson that should have been learned is swept under the rug, while MSN reveals a contradictory real-estate philosophy towards the end of the their article on Lincoln, CA, “Lessons from ‘Foreclosureville’.”

The free market still works. To find the bottom of a market — either yours or one you plan to buy into, track the lowest foreclosure sales. Have a real-estate professional help you examine the statistics. The bidding war on the Lincoln foreclosure speaks volumes about the real market price. (realestate.msn.com, 5/12/08)

Except the real market price is not the foreclosure price, it’s a price that’s exaggeratedly low. And even if bidding on foreclosed property brings the price up slightly, instead of showing people how to get a steal on homes during the housing tempest (a complicated enough endeavor), the article should be explaining how the market found itself stuck in this position, and all signs have been pointing to and continue to point towards the lenders and originators of loans; many of which that shouldn’t have been made in the first place.