The Human Toll of America's New Ghost Towns

ghost townsWhen pundits discuss homeownership, they often frame the issue in terms of purchases, lending rates, housing starts and other economic data. For the DailyFinance series "Ghost Towns of the Recession," we took a different tack: rather than rely on the numbers, we looked at some neighborhoods where the dream of owning a home has become a nightmare of foreclosures, underwater mortgages and abandoned houses.

Indeed, real estate agents, builders and banks sell homeownership as a key part of the American dream. This certainly fits into the mythos of Las Vegas, heart of the most foreclosed state in the nation and the subject of one of our articles. In Fear and Loathing in Las Vegas, Hunter S. Thompson's "Savage Journey to the Heart of the American Dream," he follows in the footsteps of millions of pilgrims, from Mormons to mobsters to an endless stream of vacationers in search of a lucky roll of the dice. And Thompson wasn't the end of the line: A little over 10 years after his book came out, he was followed by a torrent of would-be homeowners seeking low-price real estate in a city that quickly became the fastest-growing area in America.

In his book, Thompson's search for the American dream ends at the burned-out husk of a former nightclub, a fitting metaphor for a city that went from the fastest-growing to the most-foreclosed city in America in the space of a year. As our article and its accompanying video document, today more than 80% of Vegas mortgages are underwater, and empty or abandoned home pepper the city.

Sunshine and Stricken Suburbs

Vegas is hardly the only region whose housing sector fed on dreams. In Florida, the third-most foreclosed state, dreams have fed the area's growth ever since Ponce de Leon ventured there in search of the fountain of youth. Our piece from Florida explores a different kind of dream: an uncompleted "Italian resort themed" suburban neighborhood that's now filled with cows. In order to save on taxes in the now-unprofitable real estate venture, the area's developer had the area reclassified as farmland and moved in livestock. As for the people who live there, the swanky neighborhood they signed on for is now a barbed-wire bonanza.

And dreams continue to be deferred across the country. In Modesto, Calif., Todd Lappin documents empty streets, hastily boarded-up windows and stagnant swimming pools in the fourth most foreclosed state. With his images of rusting barbecues, overgrown yards and abandoned homes, Lappin sketches a near-apocalyptic landscape, the scattered leavings of a once-posh suburban development.

Meanwhile, a promising development in Vickery, Ga., has started transforming into a money pit. To the dismay of the area's residents, the bankruptcy of Vickery's developer and rising foreclosures have sent neighborhood fees through the roof, even as property values have tumbled. As the author notes, it's unclear if the bucolic neighborhood will ever recoup its lost property values.

Small-Town Destitution

One doesn't have to travel to a sun-kissed wonderland to find a dream that came crashing down. As David Schepp documents in "The Housing Mess Hits One New York Town Hard," Mount Vernon, a scruffy suburb of New York City has also watched its property values plummet. With a majority African-American and Hispanic populace, the working-class city was heavy targeted by subprime lenders, a factor that helps explain why prices have fallen by 37% across the city and by as much as 72% in some neighborhoods.

In his piece on an abandoned house in his New Jersey neighborhood, DailyFinance's Jon Berr shows how the foreclosure crisis extends far beyond the people who have lost their homes. While trying to deal with an absentee neighbor's overgrown yard, unlocked doors and fallen trees, Berr tumbles into a Kafkaesque nightmare, Garden State-style. With an absentee owner and confusion over which bank holds the mortgage, Berr struggles to untangle the bureaucratic Gordian knot that has enmeshed the abandoned house on his street.

As banks ignore the property, its neighbors remain in limbo, dreading that the house will become a hazard, yet realizing that that may be the only way to get the authorities to handle it.

While foreclosure percentages and lending rates can show the health of the construction industry, they don't convey the hope of homeownership and the horror of watching it fall apart. In our series, DailyFinance strives to show the high human price of foreclosure: its brutal effect on families, communities -- and dreams.

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This will appear to be a very dumb question but someone please clarify this for me. I there are no building of rental property and all these people were foreclosed or abandoned their homes where did they all go? If you live in Vegas and left your home then moved to Tulsa, San Diego or wherever why hasn't the mass migratory exodus affect populations in those cities since homeless rates have increased substantially, it does not measure to the mass migration. Sorry for this question, but I'm just not understanding this.

December 17 2010 at 7:25 AM Report abuse rate up rate down Reply

The Banks Forclose and sell the House for Less? WHY? Better to keep a Family in the House!

December 16 2010 at 7:50 AM Report abuse rate up rate down Reply

I can only wonder why banks keep foreclosing, only to have properties fall apart and ruin neighborhoods. Why is there such insistence on 1930's bank tactics- foreclosure "mills" are not the answer- clearly. Renegotiation of notes and forebearance, helps both the lender and borrower.Banks being paid something and homes occupied is obviously much preferred over the continueing mess we are in and continue to perpetuate. We are all going thru an economic recalibration- from home values, wages, property taxes, the cost of services, etc. Going mercenary on hard working Americans- by lawyers and their clients- lenders - is not the way to go.

December 15 2010 at 7:12 PM Report abuse rate up rate down Reply

I guess when they say lingering, that means foreclosures have had huge numbers, and continues to grow. One almost would think that they mean there are still a few forclosures out there, but nothing to worry about. Truth be told, banks are engaged in every trick they can think of to keep from eating the huge loses on the forclosed properties. For many banks, once they have to eat those loans, down the tubes they go. Thankfully, obama and democrats guaranteed those loans with tax payer money last year, in that Christmas Eve deal. Woe be it to those in the stock markets once the banks start falling like dominoes. Same can be said of nation states defaulting on their responsibilities too. Another thing keeping the markets adjusting to where they probably should be, is the fact that creating book keeping, once called fraud, is now perfectly fine. That is where the bank uses property, either going into forclosure, or already there, and calculates the property as an asset on the banks bottom line. They do this by pretending the loan will be paid over the time of the term, and like magic, its 200% - 300% profit on the money lent, instead of a 50% or more loss. But that is the beauty of liberalism.

December 15 2010 at 12:01 PM Report abuse rate up rate down Reply

We have to decide what to save.triage is the only way.Banks must write off 40% of all mortgage debt and re-calculate payments. They can carry the write-odd as a loan deferment and accept 10c on the dollar at time of sale.Some areas will be "ghost towns" like in the 19th century.This is a huge problem and perhaps not fixable based on a nation of salesclerks,government workers and the USa being a retail outlet for china. we also have to better understand what the Private equity,Hedge fund industries bring to the table.They appear tp be predators destroying and then consuming their victims. The money going to fewer that 10,000 people at the expense of millions.I believe they are an extortion racket with enough money to rig the game and destroy at will

December 15 2010 at 10:21 AM Report abuse rate up rate down Reply

80 percent of the mortgages are underwater? I suggest that the percentage is higher than that. Every mortgage initiated, within the last ten or fifteen years, that did not include a massive down payment, is seriously upsidedown. The natural tendency for people to focus on monthly payments, allowed mortgage brokers, appraisers, and home builders to sell homes that were dramatically overpriced. If you don't plan on moving and are happy with the payment, as we are, it really doesn't matter if you're upsidedown. If you put yourself into a position where you need to borrow $200,000 against an $80,000 property, well, you're probably screwed. I'm sorry to report this, but homes that, even today, sell for $100,000 are really only worth about $35,000. This same relative pricing is valid for homes of any price. They didn't get 100K for the house because that's what it's worth; they got it because that's how much they could charge and still keep the payment within your range by using creative financing. And, of course, paying off the appraiser.

December 14 2010 at 10:36 PM Report abuse rate up rate down Reply

Ain't it funny how people spent money they didn't have to buy things they didn't need to impress people they didn't like? From top of this mess to the bottom, greed ruled-nobody paid any attention to the basics we were all taught as a child and common sense went out the window because..."this time it'll be different...." Yea, right..and monkeys fly out my butt, too.

December 14 2010 at 10:10 PM Report abuse +3 rate up rate down Reply

The social impact with regards to what has happened in the real estate mess cannot be measured in dollars. People who hsve gone into foreclosure sometimes never come back. Some just give up. Others go on like nothing has happened at all. It depends on the person.

December 14 2010 at 9:51 PM Report abuse -1 rate up rate down Reply
Alan Wilson

Why is "homeownership" one word?

December 14 2010 at 11:54 AM Report abuse -2 rate up rate down Reply

Blaming only Barney Frank and congress ignores many of the guilty parties in this mess. Bill Clinton pushed through banking reform, George Bush stared off into space while the economy collapsed, Wall Street could fill 2 federal prisons with the guilty and we the American people who bought into the notion that a house is an investment rather than a place to live.
Constantly pointing the finger at eveyone else is a waste of time. For a lesson in history read the congressional hearings about Pearl Harbor. This country has a long history of ignoring looming dangers.
Cutting taxes while we were fighting 2 wars, giving the wealthiest people in America tax breaks while the deficit soars, wasteful spending, one of these days the bill will come due. I am afraid it is not to far away.

December 14 2010 at 11:28 AM Report abuse +8 rate up rate down Reply
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