Housing Dreams Flipped In Upside Down Town Mountain House, Calif. has the nation's highest number of homes per capita where people are upside down on their mortgages. That means these homeowners owe more on their mortgages than their houses are worth.

Housing Dreams Flipped In Upside Down Town

Housing Dreams Flipped In Upside Down Town

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Mountain House, Calif. has the nation's highest number of homes per capita where people are upside down on their mortgages. That means these homeowners owe more on their mortgages than their houses are worth.


This is Day to Day from NPR News. I'm Alex Cohen.


I'm Madeleine Brand. California is number one in foreclosed homes. It has the most in the nation. One community near San Francisco has earned this dubious distinction, the most underwater town in America. That means many homeowners there owe more than there houses are worth. NPR's Richard Gonzales reports.

RICHARD GONZALES: If you ever wondered what a spanking brand new California town might look like, then jump in Jim Lam's(ph) car and let him give you the tour.

Mr. JIM LAMB (Board Member, Mountain House Community Services District Board of Directors): You notice my GPS doesn't have any streets on there right now because this community didn't exist when this was made six years ago. Those streets just weren't here, so.

GONZALES: Welcome to Mountain House, California, just 60 miles east of San Francisco. It's billed as the town of tomorrow, where handsome four and five bedroom homes are surrounded by empty lots and ranch land. Lam was just elected to the community board for this unincorporated town, and he bubbles like a brand new dad.

Mr. LAMB: Mountain House is a planned community that as it's built out, will have 44,000 people, thereabouts, and 14,000 homes. It's going to be up of 12 elementary schools, a high school, a community college.

GONZALES: Mountain House sports state of the art infrastructure, with homes organized in villages to promote a budding sense of community. Unfortunately, what almost everyone has in common is debt. 90 percent of the homeowners here have seen their home values plunge below what they owe on their mortgages. Curtis Norman(ph), an electronic technician, lives on a street named Prosperity. He says he'll have to tighten his belt this holiday season.

Mr. CURTIS NORMAN: You don't have the big Christmases that you really want for the family. You don't take vacations. You don't, you know, buy the expensive gifts, and just, you don't splurge. You have to put your priorities into perspective. Since I'm one income, I have to manage my money down to the T.

GONZALES: Five years ago, Norman paid about $550,000 for his four-bedroom home. But his interest-only loan ballooned to $690,000. Meanwhile, his home is worth only about $430,000. As we speak, Norman is watching a new family move into a comparable home across the street.

Mr. NORMAN: There is a reason you have a lot of people moving in now. They bought a house half the price, and we're still at full price, and they got the same home as we have. So it's just kind of discouraging.

GONZALES: Across the street, Danny De Guzman(ph), an automotive technician, lifts the ramp of his moving truck. He beams at the four-bedroom home he just bought for about $350,000.

Mr. DANNY DE GUZMAN: Why'd I move here? I moved here because the houses are cheap. I wish the prices down here were in the Bay area, but unfortunately, that's never going to happen. So, this is the furthest I'll probably go. Sales in Mountain House are staggering. I mean, it's unbelievable.

GONZALES: Scott Williams sells real estate in Mountain House. He says homes stay on the market for only a week or two.

Mr. SCOTT WILLIAMS (Founder, Scott Williams Group): You know, my wife and I, we purchased a home in Mountain House about at the peak of the market, and we've looked at it as an opportunity, not as a detriment.

GONZALES: So you're underwater, too?

Mr. WILLIAMS: Absolutely. But underwater is relative. I mean, if we wanted to sell our home tomorrow, we could. But do we choose to now, or do we like our home? Yes. Do we like the environment? Yes.

GONZALES: Back in his home, Jim Lamb monitors a public chat room for Mountain House residents. Despite its notoriety as poster child for the mortgage crisis, Mountain House isn't unique, according to Lamb.

Mr. LAMB: But if you were to isolate in any other community just the homes that sold in the last five years, you'd find the same statistic, I think. So to compare Mountain House for another community using just that statistic I think is probably not fair without explaining that every home is brand new.

GONZALES: But that may be cold comfort to some homeowners here. One chat room writer sums it up in two words, pretty scary. Richard Gonzales, NPR News.

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