According to RealtyTrac, Stockton is the foreclosure capital of USA. In a population of 300000, 1 in 27 households is facing foreclosure. Stockton had 8000 foreclosures so far in 2007.
Among the neighborhoods in the area, Weston Ranch; a 15-year old subdivision of modest tract homes has the worst foreclosure rate. In fact, it has 350 homes for sale right now, equivalent to 5 years in inventory.
According to a local broker in Weston Ranch, Geri Taylor:
"Houses are sitting on the market three times as long as in 2006 and the average sale price had dropped by 10 percent…Nobody has a crystal ball, but I don’t expect to see an improvement until 2010."
With foreclosures this bad, what have this community done wrong?
- Many borrowed 100% of their purchase price including their closing costs.
- Adjustable rate mortgages were offered to lot of subprime borrowers.
- Many availed of a teaser rate, but were not able to meet their mortgage commitments when the rates went up.
In their desire to pursue their American dream of owning a home, many people bought houses that they cannot really afford. As Taylor mentioned "Adjustable rate mortgages offered to sub-prime borrowers, hopeful homeowners with shaky credit, lured families into houses with inflated prices."
To avoid this kind of financial crisis, every borrower should aim to be an informed borrower. He should be knowledgeable about the mortgage process and its consequences. Otherwise, he might end up losing more than what he borrowed. With a ruined credit, it will be a lot harder to enter the market again.
Borrowing money to buy a home is a long-term commitment. It is like a marriage that can end up in a costly divorce, when you can no longer commit.
Source: Yahoo News