While the past year showed a decrease and somewhat stabilization in California home foreclosures, the future does not look so promising. In 2004, foreclosures were substantially lower due to an overheated market. The overall total average of California loans ending up in foreclosures was a national low at only 0.24 percent, making this year produce the lowest rate for the state since 1980. Top economic advisors are sending the warning that judging from history; this same over heated market may cause a production squeeze and a rise in mortgage defaults. Recent reports show that fewer and fewer amounts of Californians can afford the median price home in their state, eighteen percent to be exact. According to foreclosures.com, this has led to a decrease in overall sales. This decrease however, has not caused prices to lower for potential home owners.
According to a recent survey released by the Public Policy Institute of California, a large number of California residents believe that the high cost of housing could drive them away from the state. Could the future higher projections of foreclosures and this be linked? With a high twenty eight percent of Californians saying that the housing costs in their areas are too high, how could there not be a link. The residents who already own property can not maintain a stable financial status with the rising home values in the current economy and the potential buyers can not even afford to get in the door. This has led many residents saying they will either have to move to other parts of California or leave the state all together, just to afford property. Forty nine percent of residents believe that the rising home values are bad for them where forty one percent believe it’s a good thing. The survey also states that a whopping seventy seven prevent are concerned that the cost of housing will prevent their children from buying homes in their parts of the state.
While Experts agree that house prices are not likely to collapse, they are probably going to stay flat for several years, as it has in past cycles. Foreclosures are expected to hit home owners who bought late in the cycle the most, because most likely they bought on variable rate loans thinking they could sell the property if the debt was unmanageable. This has already begun to result in less consumer spending; unlike before when investors poured more and more money into property thinking the values would continue to rise. Most home owners however, who bought early into the current market cycle, should be able to wait the flat rates out until they begin to rise again. All of this concern has also caused sales volume to drop in many parts of the state. The most noticeable decrease in 2004 was Orange County, where sales went down by twenty seven percent. Sales fell nineteen percent in Ventura County while volume sales only decreased a little fewer than eight percent in Los Angeles County. Falling sales volume often ends up causing falling prices, so hopefully more Californians will begin to see market trends that allow them home ownership opportunities in the near future.
Now could be the time to get into a home now that prices have went down for the California housing market. Thanks to the housing bubble and mortgage crisis you get land your family into a foreclosed home.
TIP: If you are behind on your California Mortgage payments and want to avoid foreclosure we recommend you read through our coverage of home equity loans and alternatives to foreclosure.
What are the fees and points associated with home loans? | Arm Loan Tips | What are the advantages of your best mortgage company? | What is a Heloc? | Se habla espanol | Auto Loan Advice | What is Credit Scoring? | Refinance in California | California Home Equity