Merced County Number One, and its not a good thing!

In rankings released November 29th, 2007 by the US Council of Mayors, Merced was ranked number one for foreclosures. Ouch! We need to be number one, but not for that reason. I thought that the UC was supposed to be the answer for the economic disparity found in this town. What's going on...

The reason for this is simple... too many people were given bad loans with terms that sounded fine at the time, but are now coming back to haunt these innocent borrowers. These ARMS (Adjustable Rate Mortgages) were perfect during the time of low rates after September 11, 2001, but now we are facing a whole bunch of rate resets that will increase payments and cause lots of foreclosures because people can't afford to pay for their extra interest.

All of this is leading to a very good buyers market, with lots of choices and cheap prices, if they had money. The problem with getting money is in the wake of all these foreclosures, banks are closing the doors to potential loan recipients and only allowing those with the best credit ratings to get loans.

So how does this help our community. It doesn't. It makes matters worse. We're looking at more outside investors coming in and buying up houses for quarters on the dollar of what these properties were worth last year. People are being put out on the street or being forced to pay outrageous rental rates in a city that shouldn't be that expensive to live in. Face it peeps, we don't even have the amenities of living in Fresno, such as GAP, Old Navy, Tahoe Joes, Chevy's, and Trader Joes, to name a few. Merced's median gross rent in 2005 was approximately $751.00, while Fresno's is $728.00.

Why is this?

I'll tell you a little tale of a little University with big plans. *(Editors Note: Tim Shady does support the UC by the way) Many outside investors came in after the announcement of UC Merced and invested in Merced property, thinking that they could make money later. This led to increased and inflated property values which caused less buyers to be able to afford houses, forcing them to rent. Many were brave and decided to buy their own house after 9-11 with creative financing by the banks only to now be facing renting again, which will undoubtedly cause the price of rentals to go up yet again.

These events have caused the "Perfect Storm" and we are all in the middle of it. Actually, Merced is the center of the universe when it comes to Forclosures, So if you are about to lose your home, talk to a credit counselor first. A lot of times, they can help you.

Tim_Shady