Coming To Grips With The Rate Of California Foreclosures In The New Decade

Coming to grips with rate of California foreclosures in California will be necessary

for owners and investors of real estate in the state if it's going to be able to emerge from the current recession and budget ills plaguing California. There are a number of different reasons for how California got to where it is today and there are no easy solutions, it needs to be said.

Many people in the real estate world and a number of economists think that the problem that arose with CA foreclosures is traceable all the way back to the mid-1970s. At that time, a popular uprising over the increases in property taxes led to the passage of Proposition 13, which was an attempt to rein in what many people thought were unfair annual property tax increases.

Whether or not Prop 13 was helpful or harmful to the overall health of the Golden State is a matter for conjecture an argument on both sides. What's clear at the present time, though, is that the Golden State has a real problem with increasing rate of foreclosures. Many people hope that state leadership can come up with solutions that address the issues and which are long-lasting.

As in any other part of the country, municipalities and states all tend to look at property taxes and revenue collection as the best method for increasing public services, many of which are very popular though ultimately unaffordable during bad economic times. California is a national leader in the extension of such services and its attitude about the services eventually spread to the rest of the country.

The crash in the financial markets in late 2008 was the inevitable result of a number of pie-in-the-sky assumptions made when it came to real estate and homes. California found this out as soon as a steady stream of buyers for properties started to dry up, and a swelling housing inventory often went unsold. Add in that many people were losing their jobs in the recession and the problems really began to snowball.

It was natural that the rate of California foreclosures would begin to increase greatly over its once-manageable levels and municipalities in the Golden State along with the state itself began to stare at a large number of foreclosed properties. Properties unsold, vacated and foreclosed there was little, if any, hope of increasing revenues to manage still-enacted public service programs.

There also seems to be an acceptance on the part of many current home owners in the Golden State that foreclosure is no big deal and that it should be looked upon as a reasonable fiscal alternative to staying in a home many of these owners can no longer afford. That is more a question for moralists, though the problem is in the here-and-now, in the state needs to deal with it, also in the here-and-now.

California, though, is a resilient and strong state and there have been indications lately that the rate in CA foreclosures could be stabilizing or even starting to drop, at least in the short term. Whether that stabilization lasts for any length of time is a question worthy of examination. It probably depends on how California deals with its current budget woes if it does so effectively, investment may rush back in sooner than most think.

by: Sam Settleman

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