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"Strange And Sad And Worrying"

John Blackstone is a CBS News correspondent based in San Francisco.

(AP)
What I witnessed on the steps of the County Courthouse in Stockton, California struck me as strange and sad and worrying…particularly if you think the worst is over in America's mortgage meltdown.

An agent for lenders stood on the courthouse steps, his hands full of official documents. He was preparing to auction several houses with mortgages in default. He's there almost every day at 10 AM. On this day, at least, he had a lonely job: there was nobody there but me…and I wasn't there to buy.

Still, the agent read aloud what he was legally required to read and declared the bidding open. The first house up had an opening bid set at $465,000. Less than two years earlier a buyer had paid $620,000 for the same house. But now, even with a $155,000 discount, nobody was interested.

Houses that nobody wants are now all too common in recently built subdivisions in California's central valley. These are upscale developments, often built just within the last four years. Houses that sold briskly as recently as a year ago for $400,000 to $600,000 now sit empty and abandoned. And there are lots of them.

In one subdivision I drove through in Stockton, four houses in a row were all in foreclosure. The houses are easy to find. Often the lawns have turned brown. Plants in the garden have died. Mail is piled up at the door. There may still be a "For Sale" sign on the lawn but it may be broken or blown over and nobody has done anything about it. The lender that now owns the house seems to have given up on selling it anytime soon.

That's bad news for all the neighbors. Not only do the foreclosed houses look bad, they drive down property prices for everyone nearby and often those are people who bought within the last couple of years when real estate prices in California were near their peak. They now face the painful realization that their homes are probably worth less than they paid for them.

If they can keep up their mortgage payments and the market turns around in the near future it may all turn out fine. But on a block with two or three houses with the brown lawns of foreclosure, it's hard to be optimistic that the real estate boom is going to return anytime soon.

That feeling is reinforced back at the County Courthouse. There about 40 new notices of default are filed there everyday. It seems likely there will be a lot more auctions on the courthouse steps where nobody shows up to buy.
  • John Blackstone

    From his base in San Francisco, CBS News correspondent John Blackstone covers breaking stories throughout the West. That often means he is on the scene of wildfires, earthquakes, floods, hurricanes and rumbling volcanoes. He also reports on the high-tech industry in Silicon Valley and on social and economic trends that frequently begin in the West.