Ray Kest, a business professor at Hodges University in Fort Myers FL who follows the local economy, said banks and other lenders are unable to process the increasing numbers of people who arenâ€™t making their payments. “I understand theyâ€™re backed up so far, itâ€™s a tidal wave coming.”
That wave is nowhere near creating, as millions of ARM resets come due this year, which means sharply higher mortgage payments for those whose home is no doubt dropping in value too. Many will walk away from the house, either voluntarily or involuntarily.
So, what happens to communities like Fort Meyers when huge numbers of foreclosures tanks their real estate market and economy? Blocks and blocks of mostly vacant homes and a city government no longer able to provide basic services because the tax base evaporated are some obvious results. This will trigger a further exodus of residents and businesses, making things even worse.
I genuinely think we will be seeing dead towns as a result of the real estate collapse. What happens when large numbers of people lose their homes? Where do they go? Will we have any real safety nets for them to bounce off of?