Homeowners whose homes are losing value as their mortgage resets to much higher levels increasingly feel no need to tough it out. Instead, they just mail the keys back and walk away. This happens enough that it’s called ‘jingle mail.’
There have been so many foreclosures in Cleveland that parts of it now resemble a ghost town. When block after block of residential areas become empty, then businesses in the area suffer too. Tax revenue for the municipality drops, causing budget shortfalls. And so on.
In theory, when home prices drop enough, then speculators will move in, buying at the bottom. But if entire blocks are ravaged and no businesses are nearby, prices will have to drop way down indeed to attract the vultures.
It took parts of the South Bronx decades to come back.
Or will it be like the Anasazi in Temecula?