Why So Many Short Sales
The rapid run up of prices in the early 2000's was not sustainable. Wall Street made loans that were, simply put, stupid. Stated income, poorly run credit checks, elimination of rules protecting housing lending practices for decades, all turned out to be a very bad idea. The American public was forced to bail out the dukes and duchesses of banking. The economy and housing nose-dived.
People who, through no fault of their own, bought at the peak of the market, suddenly found themselves underwater on value to the tune of hundreds of thousands of dollars. While there were many who abused the system, using their home like an ATM machine, there were many more who were victims of rapidly declining values. Imagine the fate of those who bought, thinking they were safe, then to be transferred to Hoboken. Forced to sell, they either used life savings to pay for negative equity, let the home foreclose or sold it short (short sale).
Add those suffering medical emergency or family calamity (divorce). They too were victims of Wall Street greed. Those who didn't play the housing game, smugly proclaiming that people should know better, were also hurt. Retirement programs, money market funds and stocks all fell, putting even the conservative in bad shape.
In general terms, any house purchased after 2002, even those with large downs, were in trouble. In areas like Riverside and San Bernardino County, where housing tracts sprang like mushrooms, few were UNaffected. They bought into the American dream only to find that American lending greed "done them wrong".
