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California Leads U.s. In Defaults, Price Drop, Slowing Growth

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Some have said that California is close to the UK in its economy, if so then here is a taste of the next 12 months ...

California Leads U.S. in Defaults, Price Drop, Slowing Growth

A few snippetts

The state had the most foreclosure filings in the U.S. last year and the biggest fourth-quarter decline in prices, according to RealtyTrac Inc., an Irvine, California-based seller of data on defaults, and the Office of Federal Housing Enterprise Oversight in Washington.

``The depth and magnitude of what's happening in the real estate market is really, really grim,'' said Russell Fehr, Sacramento's finance director, in an interview.

California, the most populous U.S. state and accounting for almost one-seventh of gross domestic product, will lose $25 billion in personal income by the end of 2008 and property values will fall by $630.7 billion, according to forecasts from economist Jerry Nickelsburg at the University of California, Los Angeles, and the U.S. Conference of Mayors.

The number of houses and condominiums sold in California plummeted 30 percent in January from a year earlier to 313,580, and the median price for an existing home dropped 22 percent to $430,370, according to the California Association of Realtors. The time it would take to deplete the supply of homes on the market at the current sales rate more than doubled to almost 17 months in January from a year earlier.
California had 481,392 foreclosure filings on properties last year, the most of any state, said Daren Blomquist, a spokesman for RealtyTrac. Stockton's metropolitan area had the second-highest U.S. foreclosure rate and Riverside-San Bernardino, Sacramento and Bakersfield ranked fourth, fifth and seventh, respectively.

In Sacramento, half of the city's current home sales involve bank-owned property, helping explain why the increase in property tax revenue will slow to 2 percent in fiscal 2008-2009 and may fall in 2010 and 2011, said Fehr, the finance director.

The real estate slump has taken its toll, with more than 31,000 jobs eliminated last year in the subprime mortgage industry by California-based companies, including 12,000 positions at Countrywide Financial Corp. in Los Angeles, 3,200 at New Century Financial Corp. in Irvine, and 2,600 at ACC Capital Holdings in Orange, according to Chicago-based outplacement firm Challenger Gray & Christmas.

The subprime collapse has spilled over to financial services, where employment fell 6.7 percent in January to 881,800 workers from its December 2005 peak of 945,200.

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  • 294 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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