THE MESS is the product of The Story, the fable that waterfront living beyond winter’s reach exerts such a powerful pull that it justifies almost any price for housing. The Story propelled the orgy of borrowing, investing and flipping that dominated life here and in other places where January doesn’t include a snow blower.
The Story lost its magic amid the realization that speculators had simply been selling to other speculators, making the real estate market look like a Ponzi scheme. The ensuing crash was breathtaking. By the winter of 2007, median housing prices in
Somewhere on that long, steep downhill path, what was once portrayed here as a momentary if wrenching setback seeped into the community’s bones, embedding lowered expectations and fear.
The first time I visited in 2007, James W. Browder, the
“One elementary school principal noticed parents going into schools with kids in the morning and sitting down in the cafeteria with them,” Mr. Browder said. “Then they noticed parents eating breakfast off kids’ plates. And then they noticed parents taking scraps home.”
At the end of 2007, the pace was already grim here, with foreclosures running at 1,100 a month, a more than fivefold increase from early that year, according to RealtyTrac, a real estate research firm. By late 2008, the pace had quickened again, to about 2,000 a month.
By the fall of 2009, foreclosures had fallen to about 1,400 a month, prompting hopes that the worst was over. But real estate agents and mortgage brokers wary of optimism are focusing on a new term that has entered the housing lexicon: ghost inventory. Banks appear to be sitting on thousands of homes caught in limbo, neither foreclosing nor receiving any payments.
“We’re not in a recession,” says Bobby Mahan, an amiable broker here, describing conditions in the area. “We’re in a depression.”
The Pellegrinos moved out in July 2008, Charlene explains. A bathroom pipe had burst, and mold had grown on the walls. She and her mother couldn’t afford repairs.
The strangest thing was how the bank implored them to stay, she says. Even after it became clear that they were not going to pay their mortgage, the bank figured that it would be better having them there to deter scavengers who would strip out the cabinets, the wiring, the toilets.
“They wanted us to stay on indefinitely,” Charlene says. “It was weird.”
When the Pellegrinos left, they found an upside to the bust: the seemingly limitless array of affordable rentals.
After walking away from their house and its $1,500 monthly mortgage payments, they rented a nearby four-bedroom home for $950 a month. Now Charlene, earning $2,400 a month as a home health worker, has designs on moving to a better place still, for $700 a month.
By the end of that year, Mr. Jarrett hadn’t closed a deal in months. He was falling behind on the mortgages for all four of his properties and had dropped his health insurance.
“Here we are, two years later, and there’s no end to this,” he says, leaning into a booth at the University Grill, a steak-and-lobster place he used to enjoy regularly during the boom years. “I make a mean Hamburger Helper now.”
Deals have shrunk to almost nothing. Three of his four homes have been lost to foreclosure. He remains in the place on the water in
The house is mostly empty, owing to impromptu yard sales he conducts to keep food on the table. The piano, the sofa, the coffee table, the dining room table and chairs: all gone. His living and dining rooms are devoid, save for one piece of art he cannot bear to surrender: a statuette of Don Quixote.
“You know, dream the impossible dream,” he says. “It’s just one of those little remnants to keep dreaming, because if you don’t dream, you don’t get anything.”
His wife left in July 2008, he says, taking their daughter back to