by Calculated Risk on 6/03/2008 04:11:00 PM

From Peter Tong at the LA Times: Foreclosures lead a town's downturn

It wasn't long ago that Andy Krotik was selling houses to out-of-town investors who would sometimes buy two at a time.

Now, Krotik spends his days warily entering abandoned houses, checking for angry holdouts or startled squatters. He wants to make sure the properties are empty and secure so he can sell them for the banks that have repossessed them.

"We're experiencing a tsunami of bank-owned properties," said Krotik, who has been selling real estate in this Central Valley town since 1989.

Few places in California flew as high in the real estate boom and crashed as hard as Merced.

For some of these fairly isolated communities, it will probably take years to absorb all the excess inventory built during the boom.

The lead in this story reminds me of commercials on TV (circa 2005) urging homeowners to take equity out of their homes and "build an empire". I can just imagine these equity rich homeowners as "out-of-town investors", driving to Yosemite, and stopping at Merced to buy "two at a time". Ouch.