I bought my first home at the end of 1995. It was a 1950’s starter home, built in the big growth period that identified so much of the California Baby Boom generation. It was a familiar sort of home and neighborhood, since my early days were spent in such homes when they were new. It was a fixer, and I paid a little less then $90,000. Even then that was a steal. My neighbor, in back of me had paid $115,000, for his; a couple of years prior.
I have spent time in the past with the Quicken investment calculator, trying to decide the worth of the house. I figured at my neighbor’s price, with an annual yield of 5.5% and inflation rate of 3.5% my house might be worth around $146,000. Or course, that’s if the house goes up in value and assumes I have any idea what actual yields and inflation might be; which I don’t.
We all know our home is really a consumption, rather than an investment. Even so we like to imagine, when and if, we sell, it won’t hurt. So today I am bleeding for my neighbors, who had to spend as much as $349,000, even a year and one half ago just to get into my inexpensive neighborhood. Those neighbors are gone. Many are living hooked up in old rv’s next to their ex-neighbors.
Not because they were greedy, but because they had to try. Taking into account the mortgage interest tax deduction, it was not cheaper to rent. There is a toll to remaining in the Golden State. The cost, in my neighborhood, and according to Best Places, was 145% of the national average. The cost was directly tied to the price of land, and fueled the cost of housing. If Proposition 13 had been repealed, more money for services and less inflation in property values would have occurred. How can it be right for anyone like me to only have to pay $1002 this year? Even if I am a senior?
For $1002, the city maintains my sewer, and yes, they come within a half hour of calling. The city trims the large city trees in our neighborhood – one of the reasons I bought. The city has fire and police and a volunteer spirit. The city tries to provide some social services. I pay for water, but they maintain the system.
Of course Prop 13 isn’t the only reason we got to this place, there are others. But lest you think California’s problems don’t affect you, I remind you that this state has (Had)? the seventh largest economy in the world. It currently has the highest unemployment. What ails California will impact the world for some time.
Eventually, we had to get to this. What are we going to do about it? Hillary’s HOLC? Now McCain’s? :
Home foreclosures hit record high in California
By William Heisel
10:11 AM PDT, October 23, 2008
A record number of homes were lost to foreclosure in California over the last three months, up 228% from last year to a high of 79,511 homes. MDA DataQuick reported that more homes were taken back by lenders in the three months ended Sept. 30 than at any time since the company started tracking foreclosures in 1992.
In the previous three months, which also set a record, 63,316 homes were lost to foreclosure. That’s a huge swing from an all-time low just two years ago of 637 in the second quarter of 2005.
Nationally, RealtyTrac Inc. reported that the number of homes being repossessed was up 126% over the last three months, totaling 250,091 homes from July to September. The five states with the most foreclosures were California, Florida, Michigan, Arizona and Texas.
At the same time, California saw a sharp decline in activity from banks taking the first steps toward foreclosure. The number of default notices that lenders send to homeowners fell last quarter for the first time in three years, down 22.5% from last quarter but up 29.9% from the same period last year.
Housing experts say that change is the direct result of a new state law that forces lenders to make repeated attempts to contact a homeowner before foreclosing on the home.
“If that procedural change hadn’t kicked in during early September, indications are that third-quarter default filings would have been about the same as the record number filed in this year’s second quarter,” DataQuick said in a press release.
Housing experts continue to predict that foreclosures will rise for the rest of 2008 and into 2009 before hitting their peak.
“It will get worse,” said Jeff Lazerson, the president of Mortgage Grader, an online mortgage clearinghouse. “It’s going to be driven by unemployment and underemployment, and we’re seeing those numbers go up. I think we won’t see a peak until at least next year.”
Heisel is a Times staff writer.
william.heisel@latimes.com
http://www.latimes.com/business/la-fi-foreclose24-2008oct24,0,1349817.story
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