Home prices in the United States declined in 2007 for the first time since the depression years of the 1930s. VOA's Barry Wood recently visited North Port, Florida, a Gulf Coast city deeply impacted by a housing boom turned to bust.
Across America home foreclosures have reached a three-decade high, as problem borrowers have been unable to meet their mortgage payments. Treasury Secretary Henry Paulson recently unveiled a government program to address the problem. "We are working aggressively and quickly, utilizing the available tools and creating new ones, to help financially responsible but struggling homeowners," he said.
Under the program, several hundred thousand distressed borrowers may be eligible to have their mortgage interest rates held steady for five years.
Here in North Port, Florida, a boom town with a large Ukrainian community, more help may be needed. Too many homes were built. Many home prices doubled from 2000 to 2005, but they have now come down by as much as 30 percent. Sarasota Herald-Tribune reporter Stephen Frater says the air quickly came out of a speculative bubble. "There are hundreds of unfinished houses," he noted. "There are thousands of vacant lots. There is no city center. There are infrastructure issues."
Unfinished homes discourage prospective buyers and push prices lower. Homeowner Harry Bourne, who lives next to one of the unfinished homes, says the market is dead and he cannot sell. "If I wanted to sell it, it would require me to lose, you know, about [$10,000-$15,000]. So, at this moment I'm willing to stay and stick it out," he said.
Harry Bourne is lucky. He has a steady job and is making his mortgage payments.
Jimmy Claydon, facing foreclosure, says the crisis is getting worse. "People owe more than the property is worth," he explained. "So they're unable to sell the properties. So they have to stay, or they have to go into foreclosure."
With prices still declining, the distress level in North Port is rising. Reporter Stephen Frater says it is likely to be many months before property prices level off. "I think North Port inventory levels are so high, and some of the structural and infrastructure are so massive, that I think they have quite a bit further to go before they hit bottom," said Frater.
The wave of foreclosures continues with public auctions becoming increasingly common. Analysts say that America's housing slump is likely to last until 2009.