Housing Bubble Blow back

The recent recovery was built almost entirely on home building and refinancing. This housing bubble was built on very low interest rates and low or no down payment adjustable rate mortgages. This structural weakness had to inevitably result in a bursting bubble. We have all been watching the foreclosure rates as a sign the bubble is about to burst and we are certainly begin to see that this year with Mortgage Foreclosures Up 72% Nationally. There is an additional problem that is surfacing that is a result in the construction frenzy. The following is from my local county newsletter.

For Washington County's Department of Land Use and Transportation, human safety is job one. In April our Building Official took the rare step of posting six relatively new row homes as unsafe for habitation, due to lateral movement of the buildings that had resulted in severe cracking of the walls and foundation. The three-year-old owner-occupied town homes are in the Quatama neighborhood. Consulting with the Fire Marshal, officials had grave concerns about the safety of the gas and electric lines within the structures as well as the structural integrity of the buildings. They met with the property owners to inform them that monitoring the settling and cracking would not be enough; the stress on the utility lines and the shifting of the structures meant they had to leave to ensure their families safety.

Here in the Portland area the economy was dependent on high technology. When the high tech bubble burst Oregon had the highest unemployment rate in the nation for almost two years. So if you can't find a job what do you do? Become a contractor of course. At the same time the number of building inspectors was reduced because of state and county budget problems. How many of the structures built in the last 4 or 5 years will still be standing in 2, 5 or 10 years. The above is not the first case of inferior construction in this area and I would bet there are potential problems throughout the country.