The LA Times is excellent today on the dismal state of housing in California, the ground zero—one of them, anyway—of the housing bust.
The paper reports that more people lost homes in the state last year than in the previous nine years combined. More than 236,000 were foreclosed on and the number of defaults was 404,000.
And it’s getting worse:
The wave of foreclosures, which began in early 2007, was initially triggered by falling home values and resets on adjustable-rate loans. But lenders and industry analysts say the trend is now being exacerbated by rising unemployment, which has shot up to 9.3% in California.
It’s refreshing to see a story that doesn’t do the ol’ “blame the borrowers” schtick:
“The people who are defaulting now are not really people who recklessly got into loans they never could have afforded,” said Evan Wagner, the communications director for IndyMac Federal Bank, a big mortgage lender that, having collapsed last year, is being bought by private investors. “These are people who have lost their jobs or who have had their hours cut back at work.”
Wagner said that up to 80% of the borrowers seeking an easing of their loan terms are doing so because of the loss of a job or income.
Borrowers with good credit defaulted at a rate 4.5 times that of 2007. And the LAT says there’s a lot more pain to come:
An analysis by investment bank Credit Suisse suggests that foreclosures will start to taper off this year because the number of subprime loans resetting to higher interest rates has peaked. But there is another potential time bomb: Resets on prime loans will peak at more than $40 billion in mid-2010.
And this is amazing:
The median price for a home in Southern California was $278,000 in December, down from $415,000 in January 2008.
In addition, most of the homes being sold now are foreclosures.
This is a good roundup by the LAT.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.