Homeownership

This week, the Economist’s cover story, "The trouble with the housing market," details the downward-spiraling "subprime" mortgage market and its potential effects on the U.S. economy. The collapsing market certainly poses problems to Wall Street traders and taxpayers in general, but what about the physical toll it's taking on our cities? Abandoned, foreclosed homes now increasingly dot the nation's inner ring suburbs, helping spread neighborhood decline out from inner cities, while developers build more homes farther into the urban periphery.

Scrambling to grab that elusive “American Dream” of homeownership, millions plunged into the subprime mortgage market to build wealth through appreciation (if not speculation). Pundits cheered as the ownership rate crept up, lauding the pluck of aspirational minority and immigrant families.

There’s a reason it is called subprime, though. Lenders offered a smorgasborg of loan “products,” but the bottom line was that they are all very costly for the borrower – often entailing adjustable-rate surprises in the 30 percent or higher range.