Jump at the Pump Leaves Consumers Flinching
(Wall Street Journal) — This Miami exurb flourished in the housing boom but has fallen hard during the bust, with one of the highest foreclosure rates in the nation for the past two years. Rising gasoline prices are making a bad situation even worse. Home buyers priced out of the red-hot Miami market in the middle of the last decade flocked to places like Homestead, putting up with a longer commute in return for less expensive housing. Mortgages were easy to get and often began with low rates that would later rise. Homestead’s population, now about 50,000, rose dramatically during this time as thousands of homes were built and sold.
That all started crashing down in 2007. The first wave of foreclosures started when interest rates on adjustable-rate subprime mortgages jumped and lifted payments beyond what many could afford. With prices collapsing, foreclosures picked up momentum as borrowers who found themselves underwater—owing more on their homes than the homes were worth—started walking away. Higher gas prices are now hitting hard around Homestead, where many residents drive some 30 miles to work in Miami, adding to homeowners’ strain. So while the foreclosure problem is starting to abate in many cities, the problem in places like Homestead could grow.