MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
We're going to look now at the economy and politics. Concerns about the precarious state of the economy has emerged as a key campaign issue. In a moment, we'll hear how the presidential candidates say they will fix it. First, we going to hear about the cloudy economic picture in Southern California, especially in the housing market.
My co-host, Melissa Block, is in California, and she's been traveling around the area known as the Inland Empire.
MELISSA BLOCK, host:
Janice Rutherford is on the prowl in her Toyota Forerunner, looking for signs of trouble.
Ms. JANICE RUTHERFORD (Councilwoman, Fontana, California): You notice that the lawn isn't kept anymore; the rest of the garden is overgrown.
BLOCK: Here in Fontana, a brown lawn stands out like a bruise, a clear marker that a house has gone into foreclosure.
Ms. RUTHERFORD: Clearly, you don't want to live next door to that. And that's why when the people move out of the house next door to me, I'll water the lawn, my husband will probably mow it because I don't want to see that every day, and these people shouldn't have to look at it every day.
BLOCK: Janice Rutherford's neighbor has lost their house to foreclosure. She figures they paid about $250,000. By the time the bank repossessed the home, the neighbors owed more than twice that. They had borrowed repeatedly against its inflated value. You hear about people using their houses out here like ATM machines.
Ms. RUTHERFORD: Some of the houses in this neighborhood have even had signs like plywood spray-painted by the owners, you know, "Please help," "For sale by owner," "Going into foreclosure," "I'll take any offer."
BLOCK: Janice Rutherford is a city councilwoman in Fontana. That's in San Bernardino County, about 50 miles east of Los Angeles. Fontana has been booming. It's a thick sprawl of closely-packed subdivisions. People who couldn't afford a home in L.A. or San Diego could buy one here.
Ms. RUTHERFORD: There's two more for-sale signs just down the block here.
BLOCK: As housing values tumbled and subprime mortgages ballooned, Fontana became one of the many epicenters of foreclosures in Southern California. In San Bernardino County last year, more than 7,700 homeowners lost their homes to foreclosure. That's a 719 percent increase in just one year.
Ms. RUTHERFORD: I feel bad that people got themselves in over their heads. People in these houses borrowed against the future, spent money they didn't have. Our government does the same thing, so it's no surprise that people think, hey, this is the way to do it.
BLOCK: And with housing tanks, everyone feels the pain.
Mr. STEVE BELANEY(ph) (Sales Manager, Honda, Fontana): (Unintelligible). Free gas mileage? We got 36 mile for you.
BLOCK: But nothing's selling well these days at the Rock Honda dealership in Fontana. Sales last year were off at least 20 percent.
Sales manager Steve Belaney has been in the business for 35 years. He's never seen it this bad.
Mr. BELANEY: If somebody has a house that's in foreclosure, they're not really thinking about buying a car. And if they are, I mean, they're going to be moved from the house into the car. It would be a one-bedroom Accord. (Unintelligible)?
BLOCK: A one-bedroom Accord?
Mr. BELANEY: Yes.
BLOCK: Do you think this might get worse before it gets better?
Mr. BELANEY: I don't see a light at the end of the tunnel at all.
BLOCK: And there weren't many rays of light in an economic forecasting conference yesterday in Riverside, California. Hundreds of people in the building industry gathered to hear this forecast: recessionary forces gaining momentum, unemployment projected higher. How bad is the housing slump? Ask Marty Stout. He's chief operations officer for Mayer Roofing.
Mr. MARTY STOUT (Chief Operations Officer, Mayer Roofing): At the peak of our business in '05, we had 850 roofers working for us. And right now, we have about 200.
BLOCK: Wow. How hard was it for you to lay all those people off?
Mr. STOUT: Oh, that's never easy. You know, people just look at you with a dead stare and how am I going to pay my rent and how am I going to feed my family and you reassure them that there's jobs out there, and everyone that we have talked to that was working for us has found a good job.
BLOCK: Up on a well-tended hillside development in Moreno Valley in Riverside County, I went to visit Betty Larkins in her beige stucco home.
Ms. BETTY LARKINS (Resident, Moreno Valley, California): It was in August when I learned that I was not supposed to live here, but the repo guy mentioned that, "Oh, I'm going to see if I can let you stay. I'm going to hold up on the eviction," that's what he said. So I said, "Oh, you can do that?"
BLOCK: Betty Larkins fell victim to what she calls a ridiculous refi. Her mortgage payments soared from $1,700 to $3,000 a month. And with just her Social Security and pension income, she couldn't keep up. She fended off foreclosure for a while, but now, her house is sold at auction. She has to be out by next Wednesday.
Betty Larkins says she recognizes her own story when she reads about foreclosures in the paper.
Ms. LARKINS: I say, "Gosh, here's another one of me. Gosh, what's happening with the world?" You know, all of it is not necessary, that's my thought.
BLOCK: After the movers come next week, Betty Larkins says she'll stay with a friend for a while then she'll rent an apartment nearby. You do hear this in California's Inland Empire that people expect the foreclosure rate in 2008 to spike again with a batch of adjustable mortgages due to reset at higher rates.
NORRIS: That's my co-host Melissa Block in Riverside, California.