How will the Golden State deal with California foreclosures at present and in the future? This question is much easier to ask than to answer, of course, especially when it comes to such a diverse state like California. It's been rocked by the recession as well as structural issues with its real estate markets, for sure, and any forecasting will need to take a look back to see how it all began in the first place.
Foreclosures in California, much like foreclosures elsewhere, occur when owners of property or real estate can no longer make the payments on their property or real estate. As with much of the rest of the country, many people bought into California homes with the expectation that they'd soon make a profit from the sale of those homes, and they were right for quite some time.
Soon enough, the effects of the recession put a stop to such speculation and it did so out in California well before the same phenomenon broke out around the rest of the country. Now, many who invested in homes with very low interest rate or low payment mortgages that would readjusted in the future are sitting on properties they can't sell and that they now can't afford.
Equally as unfortunate is the fact that many people began to look at homes as investment instruments rather than places they would live in for quite some time. They bought into properties that usually were increasing greatly in price within just a year so they bought much more of it than they really couldn't afford, expecting they'd be able to get into and out of the market with a nice profit.
They fail to take into account that every boom is eventually followed by a bust and that the trick would be in timing the market. However, the bust happened quite suddenly and many people sitting in the real estate market or living in a home they thought they'd be up to sell for profit were caught out. The rate of CA foreclosures, though, this time is also partly due to the willingness of people to go straight to foreclosure, which is a new phenomenon.
There are also structural issues with the way California housing markets are set up and also with how the state is unable to adequately bank money for a rainy day when it comes to stabilizing its markets, some of which is due to Proposition 13, the anti-property tax law. Without adequate mechanisms, it was inevitable that the rate of CA foreclosures would go up, and it most certainly did.
The first thing that the state probably should try to do is stabilize the foreclosure rate and prevent it from increasing any further, and the federal government has been helping in that regards with a number of innovative programs that might help. Getting the word out to many California property owners, though, has been tough as has been getting them to forestall or put off foreclosure as a first, rather than last, resort.
CA foreclosures and the rate at which they've increased is a natural consequence of a wildly exuberant economic cycle that eventually had to move into a bust period. Add in that California as a state is restricted in what it can do in terms of property taxes on homes and land in California and it's easy to see that the state will really need to put together a comprehensive package to deal with the issue.
Foreclosures in California, much like foreclosures elsewhere, occur when owners of property or real estate can no longer make the payments on their property or real estate. As with much of the rest of the country, many people bought into California homes with the expectation that they'd soon make a profit from the sale of those homes, and they were right for quite some time.
Soon enough, the effects of the recession put a stop to such speculation and it did so out in California well before the same phenomenon broke out around the rest of the country. Now, many who invested in homes with very low interest rate or low payment mortgages that would readjusted in the future are sitting on properties they can't sell and that they now can't afford.
Equally as unfortunate is the fact that many people began to look at homes as investment instruments rather than places they would live in for quite some time. They bought into properties that usually were increasing greatly in price within just a year so they bought much more of it than they really couldn't afford, expecting they'd be able to get into and out of the market with a nice profit.
They fail to take into account that every boom is eventually followed by a bust and that the trick would be in timing the market. However, the bust happened quite suddenly and many people sitting in the real estate market or living in a home they thought they'd be up to sell for profit were caught out. The rate of CA foreclosures, though, this time is also partly due to the willingness of people to go straight to foreclosure, which is a new phenomenon.
There are also structural issues with the way California housing markets are set up and also with how the state is unable to adequately bank money for a rainy day when it comes to stabilizing its markets, some of which is due to Proposition 13, the anti-property tax law. Without adequate mechanisms, it was inevitable that the rate of CA foreclosures would go up, and it most certainly did.
The first thing that the state probably should try to do is stabilize the foreclosure rate and prevent it from increasing any further, and the federal government has been helping in that regards with a number of innovative programs that might help. Getting the word out to many California property owners, though, has been tough as has been getting them to forestall or put off foreclosure as a first, rather than last, resort.
CA foreclosures and the rate at which they've increased is a natural consequence of a wildly exuberant economic cycle that eventually had to move into a bust period. Add in that California as a state is restricted in what it can do in terms of property taxes on homes and land in California and it's easy to see that the state will really need to put together a comprehensive package to deal with the issue.
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