Anyone living in California knows that it is the aftermath of an earthquake that reveals its true intensity, not the numbers generated by some graph at a university. An earthquake is really measured in dishes broken, windows smashed or, in the worst cases, houses destroyed.
And so it is that in California, the aftermath of a housing fiasco, is now being felt in lost revenue and painful decisions to slash state budgets—something bound to be repeated in other states as the aftershocks from the mortgage/credit crunch continue unabated.
California governor Arnold Schwarzenegger is now asking state departments to come up with plans for drastic spending cuts on the order of 10 percent and maybe more–this because of the housing market which, in California, is not so much a market as it is a cemetery of dead American dreams.
Education, transportation, health care, among the things to be directly impacted, says the Los Angeles Times.
And, reports the Times, economists are warning of more bad news ahead.
“We are among a handful of states that has a lot of exposure to the housing crash,” the Times quotes one former state economist who says that property, income and sales taxes are all off.
California prides itself on being in the vanguard of many movements–sadly, it is in the vanguard once again. But for once, it would probably prefer to be at the back of the pack on this one.
Related posts:
- How the Housing Crisis is Affecting Lenders and the Economy as a Whole
- CBS News Interviews BiggerPockets Founder Joshua Dorkin About Ongoing Housing Crisis
- Housing Doom has Arrived! Prepare to Protect Yourself instead of being a Victim of the Financial Crisis.
- 2007-A Year Of Declining CA Housing Prices?
- Senate Hearing: The Housing Bubble and its Implications for the Economy
Article Author: Charles FeldmanCharles has written 179 articles for us.
Visit Charles's Website: http://www.thefeldmanblog.com
Charles is currently reporting for KNX Radio in Los Angeles, is the co-author of the book No Time To Think, and can be found commenting about the news on his blog, The Feldman Blog, as well as on The Huffington Post.
Joshua Dorkin
{ 6 comments… read them below or add one }
It has hit everywhere. Some homes in Kansas City are taking 9 months or longer to sell. I have a seller who is leaving a new convertible BMW for the buyer at closing.
Well this is the way I see it, right now is the buyers market, sometimes is the seller’s market. Hopehully one day we will get thrue this.
Chris is right. The market has effected everywhere. In Michigan we are having long waits for people to sell as well. What will it take to turn things around?
Rick Marnon, Howell
It’s unreal. The reason we’re having the crisis is because prices appreciated too fast and part of that was partially artificially created by:
Real Estate Investors – purchased places they weren’t even going to live in, just to sell again for more driving prices up.
Interest Rates were too low. Housing prices went up, but as interest rates went down (especially with arms and interest only loans) The monthly payments were still affordable.
I HOPE IT CRASHES AT KEAST 75% (MORE LIKE 50% IS REALITY) BUT I DO HOPE THE HOME MARKET PRICES ARE DEVISTATED. I CAN’T AFFORD A HOME DUE TO THESE CRAZY PRICES … LET IT BURN. I’LL BUY AFTER THE FIRE. A DEEP CRASH MEANS I CAN AFFORD A HOME FOR ME AND MY KIDS.
Even with prices dropping, the housing market is still struggling. I am surprised that with the extended tax credit for first time home buyers and with the drop in housing prices, that the market is still struggling. I figured that with these conditions, it would be a buyers market. There are great deals out there, sometimes they are just harder to find. Don’t get discouraged by the prices, they will continue to drop and if you are patient, you will find the right house for you. For example, housing prices dropped 1.4 % in the Riverside area.