Folks in Erie, Pa., are used to feeling the effects of national trends a year or two after they hit the rest of the country. But a glance at the main headline in today's Erie Times-News shows that the effects of the current national housing market crash are being felt here, as well.

With the exception of 2005, when housing foreclosures dipped by 27 over the previous years, foreclosures have increased steadily in Erie County since 2000. The total hit 636 last year, and the Sheriff's Office, which handles foreclosures, already has 658 scheduled through the month of October of this year. Some county officials are predicting this region will surpass 700 foreclosures by year's end.

So, why are so many people losing their homes? The usual reason are given for many foreclosures: divorce and job losses rank high on the list. But it's not just the poor who are being affected. Many people who live in very nice homes are losing them, officials told Times-News reporter George Miller, because an increase in adjustable-rate mortgages is preventing families from making the payments.

How does this happen? Well, in many cases, individuals or couples are buying above their means. I know, I know. I sound like a grandfather. But I was amazed recently when a couple that earns about $100,000 per year -- considerably less after taxes -- was seriously considering purchasing a home priced at $300,000.

Well, they must have a huge downpayment, I assumed. But I was wrong. They planned to put $10,000 down and finance the rest. They even thought about taking out a 50-year mortgage, but that was before the mortgage company they were dealing with grew shaky.

I think in some ways I must be a cheapskate, because I can't imagine taking on that much debt. Let me amend that: my wife and I will assume significant debt as we educate our three sons. But at least that was built into the plan.

The thought of carrying so much debt on a home, with an adjustable rate mortgage, is frightening. What would happen if, God forbid, one of us had a serious illness, and we were forced to refinance? Would there be enough equity in the home? Probably not, which is why many people in Erie are losing their homes.

This region has suffered significant job losses over the past decade, yet, if you drive around leafy suburban neighborhoods, you see dozens of large, expensive homes under construction.

The report in today's newspaper is a sobering story about the economy in Erie. It remains solid in many respects, yet the desire for bigger, better houses is ruining many families. Times-News reporters will look more closely in the weeks ahead at economic issues that affect so many of us.

Stay tuned. And forget about those plans for a dream home until you get on better financial footing.

-- Kevin Cuneo

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