The Los Angeles Times (Peter Y. Hong, Price Drop Gives Home Sales Lift, May 20, 2009, at p. B1) confirms the suspicions that we have been harboring for some times. Yes, there are mass foreclosures. But they are in distressed areas that are low down on the socio-economic scale, such as the Inland Empire, and similar places where in recent years developers put up a bunch of downscale homes and were able to sell them to socio-economically downscale buyers who ordinarily would not qualify for financing, but who could do so during the insane time when bankers were throwing money at any would-be home buyer, including would-be buyers with an IQ of less than their body temperature. We mean no undue disrespect to those folks — they were often flim-flammed by outlandish projections of future profits, but reality is what it is, and the best of intentions cannot erase it. Those are the people with average or below-average incomes, who nonetheless bought houses for high six-figure prices, without a prayer of being able to maintain monthly mortgage payments on loans of that size, thus setting themselves up for the inevitable crash when the housing bubble popped.
What the L.A. Times reports is that apart from these unfortunate folks, the ballyhooed crash in home prices is not really happening across the board — at least not uniformly and not yet. Oh sure, there have been some declines in selling prces, but nothing as dramatic as the headlines suggest. Thus, upscale neighborhoods are doing OK, thank you very much, because people who live in them are usually affluent and under no real pressure to sell their homes. They either keep them off the market, or they list them and then hang tough, waiting for a must-have buyer or for the housing market to recover.