Today, instead of my LiveJournal, I’ve got a press review. There’s also a very interesting article in *Vedomosti* about the real estate crisis in the United States.
A Year’s Worth of Work AheadHigh-risk mortgage loans, which American banks were handing out left and right just a couple of years ago, have fully lived up to their name. Now banks are selling the homes of insolvent borrowers, sometimes for half the original purchase price. The town of Merced, with a population of 80,000, in Northern California is located not far from the entrance to Yosemite National Park. It is also relatively easy to reach from San Francisco and other communities along the bay of the same name. All this made it hugely popular with real estate investors in the middle of the decade. “When the market was rising, there wasn’t a day when people from somewhere in the Bay Area or Los Angeles didn’t call me wanting to buy property in Merced,” says Lauren Gonella, owner of Coldwell Banker Gonella Realty. According to him, the overwhelming majority of buyers were speculators. At the height of the housing boom, banks readily issued them high-risk mortgage loans (subprime mortgages), often with very low initial rates; and not infrequently they even managed to get such loans on several houses at once. The rate and monthly payment were supposed to rise a few years later—and that was exactly when the crisis hit. “There should be a special place in hell for people like that,” Merced mayor James Marshall says about the speculators. Read more I think that by the time American real estate speculators get to hell, the special place reserved for them will already be occupied by Moscow developers and city hall employees. The sidebar to the article says: 47***9.9 thousand dollars — that was the price in June for a 300 sq. m (about 3,230 sq. ft.) house with four bedrooms in Corona, near Los Angeles. Its last owner bought it in October 2005 for $685,000. An apartment measuring 110 square meters (about 1,184 sq. ft.) in my neighborhood of Maryino (a residential district in Moscow) costs more than $700,000. For all my love for Maryino, it seems to me that in terms of quality of life, it falls short of Corona near Los Angeles. If only our real estate market would crash too, and soon.