RC CitizenView

Here is a 10 year chart of home prices in the 91737 zip code of Rancho Cucamonga:

91737 ——– Rancho Cucamonga ——– San Bernardino ——– CA ——– USA ——–

Compare the city, county, state and country rates of price appreciation. Is there any surprise that the epicenter of the mortgage defaults is here in San Bernardino County?

Home builders were add supply to the market with products priced at the inflated prices. The income levels of the home buyers did not support the debt maintenance for these products. The builders knew the demographics of the buying pool, and so did the lenders. The growth caused by this building and sale of homes facilitated by easy credit standards was hard to forgo. This bubble had a lot in common with the “Dot-Com” bubble, where perceived values could only go up. Some fools either lent or borrowed money that will lose out in the adjustment period, and should not be bailed out with our tax dollars. Many people benefited from eased credit standards and will able to remain in the homes they were able to buy.

A Power Point Presentation illustrates the the process that led to the current mess. Caution the language is a little crass.

The banking industry has been complaining that the mortgage industry should have been regulated more like the banks. The regulation they are subject did not keep them out of the woods. The correction will come and like any adjustment, people learn not to repeat the mistake. Behaviors will change as a result and the adjustment period will be mitigated by some government action, paid for with inflation, shared by all.