California Real Estate Suffering In Housing Bubble Burst
If you live in California, you feel it all the time. No, it's not the heat, the mudslides or the earthquakes. It's the plunging state of California's real estate market. In March of 2008, the average price of homes went down an average of $3000 a week. Some experts in the California real estate industry were giving out warnings about an impending real estate disaster as early as 2005, but not many people in the nation really paid much attention. They are now.
Pivotal State
Southern California, especially, has some of the richest people in the country. Usually, California real estate is a steady barometer about how the national real estate market is doing. Once Southern California started having big problems in real estate, then financial experts realized just how bad the state of the nation was.
Probable Causes
What has led to the current California real estate (and national) crisis? Spending way too much money we didn't have back in the 1990's. Interest rates were too low and large sums of credit was easy to get - even for high risk borrowers. There also was a proliferation of risky mortgage options which many people took because it gave low monthly payments for the first year.
Then the second year hit. Many home owners wound up owing more than they could afford in this or any other lifetime. There are now more foreclosures than at any point in American history (or so it seems). There are also more people who owe a substantial amount of debt (more than $20,000) in the financial system than it can handle.
Buyer's Market
All of this doom and gloom about the current sorry state of the California real estate market hits sellers of homes hardest. They are lucky if they can get half of what they could just three years ago. However, it's good news for a home buyer in California - as long as you wish to live in the home and not immediately try to resell it (called "flipping).
Will It Last?
Nothing lasts forever - and in the case of the California real estate market prices, that's a good thing. The Wheel of Fortune continually turns, so that when you are at the bottom you will inevitably get back to the top one day. It's the waiting that's the hardest part. Because of there are not many buyers getting huge risky loans, they will inevitably get weeded out of the system. Until then, it'll be a painful lesson in the dangers of easy credit for the nation.
