California’s economy and how California foreclosures affect it as well as the broader nationwide economy should be studied, if only to figure out the existing recession and what touched it off. This is important because anything that takes place in California eventually makes its way east, as was demonstrated when California real estate helped to touch off a collapse in real estate markets around the country.
The seeds of the current recession seem to have been planted in two places; California and Wall Street. Whether one could have happened without the other is a discussion for other far more highly trained people such as economists and the like. What’s obvious, though, is that California was at least the fabled canary in a coal mine that nobody paid attention to when it finally fell to the ground.
It seems that for a least a few years before Wall Street took its deepest dive in late 2008, the Golden State had been serving as the fire alarm that many people playing in its real estate markets continue to disregard. This isn’t to blame everything on California, though, because Arizona and Florida also began sounding alarms and their own markets sometime after California first did. All were ignored, of course.
It would seem that real estate values had been declining for well over three years prior to the final 2008 descent from which home values in California and elsewhere are only now just finally starting to recover from. Make no mistake, though; this “recovery” is very minor, very fragile and very much in danger of collapsing at the slightest panic in the markets and especially in California.
It might, therefore, be said that CA foreclosures should have continued to serve as warning signs because six of the top 10 cities in terms of the rates of foreclosure are sitting in California. Arizona, Florida and California, in fact, make up 44% of all foreclosures across the country nowadays. These should have been clarion calls that shouldn’t have been disregarded, economists now say.
Combine all of this and mix it together with the fact that California has been having trouble for a decade or more in getting a handle on stabilizing its housing markets (some experts maintain, as well, that the state’s famous Proposition 13 exacerbated the situation) and it’s easy to see how CA foreclosures begin to affect much of the rest of the country. This rate tends to put a scare into investors just about everywhere, for a fact.
The reason why much of this is so and why many investors are so jumpy is that they aren’t exactly positive that the economy and housing markets have completely bottomed out in many parts of the country. Therefore, they are a bit hesitant to get back into these markets without at least a chance of getting out what they plan on putting into the market over the short and long run. Markets stay depressed when this is the case, for a fact.
Because of all this, it’s fairly certain that California foreclosures affect California economic activity. Not only that, but they tend to also spill over into the broader economy to at least a small extent. When rates in California begin, at last, to decline and then stabilize it might be that investment around the country will finally increase as people jump back into the housing market in a significant manner.
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