One House’s Foreclosure Story « The Washington Independent
By now the basic elements of the mortgage crisis is a familiar one: Too many loans were made on too easy terms, lenders used deceptive and predatory practices, greedy investors and irresponsible borrowers ran rampant, home values falsely skyrocketed. But sometimes it’s useful to look closely at the experience of one particular house to get a sense of just how badly things went wrong during the housing bubble. Peter Viles at L.A. Land, his real estate blog for the L.A. Times, does just that. In a post called “L.A. Story: Was $545,000, Now $125,000,” Viles photographs and documents the history of a home now selling for 77 percent below its peak sale price. It’s not the drop in the price that’s the story here. It’s the fact that this house’s sale price doubled between April and June 2005, from $240,00 to $410,000, for no apparent reason, and then went even higher to its peak in April 2006 before eventually being foreclosed on in September of 2007.
That price inflation would be striking enough on its own. But there’s also the house’s features, if you want to call them that, to consider: It’s wedged into a half-lot in a backyard with no parking. A real beauty, too. Not surprisingly, Viles has a few questions. Among them: What caused the price to double in two months? And how did the house ever appraise for a half-million dollars? From Viles:
I called the listing agent, Zita Doyle, who said, “Honestly, I don’t know how anybody could have appraised that house for that amount of money.”
The story of this house is a good way to look at just how bubbly that bubble got, and why we’ve got a long way to go before this is over.