subject: Coming To Grips With California Foreclosures And Their Impact On California [print this page] How to understand California foreclosures and their affect on the Golden State is really quite simple, for the most part. The market for homes in terms of finding ready, willing and able buyers out in California has dried up and will continue to be dry until home prices have reached a state of equilibrium at some point in the future. Until then, foreclosures are going to continue to be a fact of life, unfortunately.
A lot of experts in real estate look back and say that the long decline in home values that have now led to the high rate of CA foreclosures might have begun as far back as 2005 or 2006. The recession across the country probably began in late 2007, but the boom in real estate continued to give false hope for some time afterwards.
However, by late 2008, the bloom was off the rose and housing bubble popped with a loud noise. The Golden State's property and home inventories started declining sharply in terms of average home price and kept that decline going for longer than in many other parts of the country. Add in that California was staring at serious budget issues and it's easy to see how increases in CA foreclosures began to occur.
Many of these problems also explain why so many California property owners are finding themselves sitting in properties that cost more than they're really worth. They'd like to get rid of these properties if they could, but they can't because what they owe is more than what the market value is. The recession began to cause these drops, though it shouldn't really have come as a surprise, actually.
These days, a great many property owners are considering going to what used to be considered a very last resort just a decade or so ago, and that's foreclosure or walking away immediately rather than to continue to sink money into a home that won't return its value for some time to come. This might be because many of these people never looked at home ownership as anything more than an investment vehicle.
What this means is that a significant number of home buyers looked at the property they were purchasing more as a vehicle that would be expected to return a nice profit and in a short amount of time. Because of that, many may have entered into home loans that were initially-attractive but which would take on much sterner terms in from one to three years time.
It was bad luck for many of these homeowners that the markets began to tank just as they were getting into them. As a result, they owe more than the home could fetch in the newly-adjusted markets and they may even have suffered a loss of employment due to the concurrent recession, which was actually strengthened by this housing bubble bursting as it did.
As with any economic cycle over time, it's a sure bet that the rate of CA foreclosures will eventually begin to decline, though it's a very uncertain bet just when that's going to be. A few markets in California are showing a little improvement in median home values and looked to have finally touched bottom. California, resilient as ever, will eventually bounce back, every economist says.
