New York, L.A., and Dallas are among the cities expected to be hardest hit next year. (Allen: short sale, foreclosures)

[usc619]

Cities to take foreclosures hit Report: Foreclosures to hit metro areas - Yahoo! News (broken link)

[robin2226]

I don't understand, why Dallas has a lot of foreclosure ?
I can understand that LA and NYC can have a lot of foreclosure because the housing price is very high. However, the housing price in Dallas is very reasonable then why Dallas has a lot of foreclosure.
Does Dallas has the same problem as LA and NYC had ?? The "flippers"

[SickOfTheSunbelt]

Originally Posted by robin2226

I don't understand, why Dallas has a lot of foreclosure ?

Because Dallas is overrun with "$25K millionaires" who's sole purpose in life is to acquire material possessions that they cannot possibly afford.

[lh_newbie]

Doesn't matter the price of a home... what matters is people always want more. In fact, with Dallas having such high energy costs and average home size being so large, it's not surprising that we'll have higher foreclosure rates. People that were stretching to get into their homes are getting hit with ARM adjustments and huge heating/cooling bills to condition their 4K sq ft homes. Double whammy.

Ever hear the saying, "expenses will rise to meet income"?

Brian

[galore]

Originally Posted by lh_newbie

People that were stretching to get into their homes are getting hit with ARM adjustments and huge heating/cooling bills to condition their 4K sq ft homes. Double whammy.

Ever hear the saying, "expenses will rise to meet income"?

Brian

Exactly. I had a "good" 6.3% fixed prime mortgage, $160k on a $300k home like you described and with a 6-figure income it was not possible to save much besides 401k. No kids, BTW.
The taxes and utilities were just killer. With a car payment, kids, furniture purchase etc. I can easily imagine people getting over their head with debt.

[rb4browns]

Originally Posted by robin2226

I don't understand, why Dallas has a lot of foreclosure ?
I can understand that LA and NYC can have a lot of foreclosure because the housing price is very high. However, the housing price in Dallas is very reasonable then why Dallas has a lot of foreclosure.
Does Dallas has the same problem as LA and NYC had ?? The "flippers"

I moved here to Dallas from L.A. The foreclosure problem in L.A. has nothing to do with "flippers." It's irresponsible people who wanted to live beyond their means and got themselves in to trouble with shady and risk ARMs. It makes me mad that the government is gonna bail these people out with tax money at the expense of those of us who are making responsible decisions to save until we can actually afford a regular mortgage. It's sad when people lose their homes but growns ups are responsible for their choices, not other taxpayers.

[kt2le]

It's due to people buying houses they couldn't afford and financed with mortgages nobody should have approved in the first place. There's a whole bunch of people out there that live for today without any regard for the future. Guess what? The future's here and, for some, it isn't pretty!

I feel sorry for those who end up in a foreclosure situation because of some unforeseen situation beyond their control (job loss, divorce, whatever) but I have little sympathy for those who are ignorant of reality when buying a home. It's a cliche but if something sounds too good to be true - it usually is!

[KantLockeMeIn]

The problem is that we've got a few generations of people who were brought up thinking that debt is a tool. Credit card companies fund in school programs to teach kids about credit cards, which is somewhat like the lion inviting the gazelle over for dinner. We hype people up about their credit score, making them believe that life will cease to exist if you don't borrow money and have enough types of debt.

So when people do actually *need* debt, they don't have a firm grasp on their finances. They'll finance for 3% down on an adjustable rate, then go buy some car they don't really need and finance 25k for that, then take a home equity loan to take a vacation to Hawaii. Eventually their lives become so wrapped up in making payments to everyone that they can't crawl out. Then instead of taking ownership of the problem and selling their car(s) and having a big garage sale, and getting that weekend job, they call it quits and short sale the home or go into foreclosure.

On another thread on this forum people were discussing how unrealistic it would be to save 20% down on a home. Now this is here in the DFW area... where someone could get a 3 bedroom home for like $125k. Somehow saving 25k is a huge hurdle, but comitting to a $500 a month car payment isn't. But that's the mentality that's driving this market... borrow borrow borrow.

And just some food for thought.... I read an article today about a family of 7 that lives on a household income of 35k. They managed to pay off their home in 9 years and live with no debt. If it's possible for them to do it, it's possible for many more people to do it... it's just a matter of most people wanting to do it.

But back to the OP's question... I think another big reason is that many of the people who came here due to a job relocation moved to places like Allen or Frisco where they're building like crazy. You buy into a home for $200k and then you get transferred 6 months later. The home builders didn't slow down their building until recently, so you'd have your home on the market with brand new homes selling for what you paid, or less... with more upgrades on the homes. So in order to sell, you'll need to price it way below the market... and some people don't have the equity to do so. So they hold on until foreclosure. Once the home is sold at a bargain basement price it affects everyone else in that neighborhood due to comp sales... so it can be a domino effect.

[Lakewooder]

On target, two!

I was selling RE here in the 1980s and it took us what 10-15 years to recover from that. And that was when people were getting more convential mortgages with much higher interest rates. Of course the 80s flash had a lot of people doing dumb things like leasing Mercedes - then the bottom fell out.

Of course the government bailed out the S&Ls but not individuals (although bankruptcy was much easier). We lost our three gigantic banks downtown - something which is still a deleterious void.

I know I sound like a broken record but I am so happy I learned the value of a dollar from Depression-raised parents and the old money types in my area.

[usc619]

I just hope it dosen't get too bad.