Dr. Housing Bubble 03/16/09

[Crewleader]

California Financial Dreaming: 5 Exhibits Showing Why California will be in a recession until 2011: Revenue Projections, Housing Inventory, Unemployment, Toxic Mortgages, and Consumer Psychology.

It took California only three weeks after passing a $41.6 billion budget deal to fall back into the financial rabbit hole. How much did analyst miss? Try $8 billion. You need to remember that the budget battle started back in fall of 2008 and lingered for months so when the budget passed, it had rosy assumptions from a few months ago. Of course, things since then have deteriorated even further. More and more toxic mortgages in California are imploding and people are walking away from their homes. The California median home price is now off by over 50 percent and much of this occurred in one devastating year. Unemployment now stands at 10.1 percent and nearly 2 million people are out of work in the state. What the $8 billion short fall tells us is people are still too optimistic in their economic projections of our present predicament.

California benefited the most from the housing bubble. Sales on the most expensive homes, mortgage equity withdrawals from these inflated homes spurred sales on other items, and employment directly linked to the debt bubble expanded. So it would follow that the bursting of the housing bubble is hitting the state harder than any other state especially in industries directly related to the housing market. We also had state revenue projections that are directly tied like a scout knot to massive consumption which of course, are contracting as we speak.

In this article, we are going to dig deeper why California is going to have structural problems for years to come. We’ll examine revenue projections, the housing market, rising unemployment, and the change in consumer psychology. Michael Jackson is coming back on tour just in time to see fans moonwalk away from their mortgages.

http://www.doctorhousingbubble.com/california-financial-dreaming-5-exhibits-showing-why-california-will-be-in-a-recession-until-2011-revenue-projections-housing-inventory-unemployment-toxic-mortgages-and-consumer-psychology/

[drhousingbubble]

1. Good to see you Crew.

Times are tough here in California as in many parts of the country. Today may mark a turning point in political fatigue regarding bailouts. Sure, $165 million may seem like a rounding error in the scheme of trillion dollar bailouts but people are just reaching a frustration point since very little is trickling down. The Administration made the right first step in putting up a block to these bonuses. It seems the AG of New York Andrew Cuomo is going after the financial industry hard (i.e., Merrill Lynch, BofA, and now AIG).

I think most people are thinking, “how are we allowing these people to set the terms?”

The Golden Rule: He who has the gold makes the rules.

[Crewleader]

2. Good to see you Doc!

It is great to hear NY Andrew Cuomo is going after them, we need some sense of balance. Just has you say about the thinking of most people, "how are we allowing these people to set the terms?"

The Golden Rule: He who has the gold makes the rules.

Speaking of gold....:hi:

Happy St. Patrick's Day Doc!

May your home be filled with laughter
May your pockets filled with gold
And may you have all the happiness
Your Irish heart can hold.

[dixiegrrrrl]

3. I am not sure I understand a point you make in the HB column...

In this week's column, you state:

( speaking of people losing homes to foreclosure)

"And before thinking this is callous, just realize that many of these people went with zero down or very little down so they technically will lose nothing except their credit scores."

**They also lose the roof over their head, do they not?**


" So what will occur is they can stay in their place until they are evicted or move, and then they will become renters. "

** If people are umemployed , can't pay mortgages, how can they become renters???**

Are not at least some of the home losses due to lost jobs?