Understanding How California Foreclosures Have An Impact On All Economic Activity

California’s economy and how California foreclosures affect it as well as the broader nationwide economy should be studied, if only to figure out the existing recession and what touched it off. This is important because anything that takes place in California eventually makes its way east, as was demonstrated when California real estate helped to touch off a collapse in real estate markets around the country.

The seeds of the current recession seem to have been planted in two places; California and Wall Street. Whether one could have happened without the other is a discussion for other far more highly trained people such as economists and the like. What’s obvious, though, is that California was at least the fabled canary in a coal mine that nobody paid attention to when it finally fell to the ground.

It seems that for a least a few years before Wall Street took its deepest dive in late 2008, the Golden State had been serving as the fire alarm that many people playing in its real estate markets continue to disregard. This isn’t to blame everything on California, though, because Arizona and Florida also began sounding alarms and their own markets sometime after California first did. All were ignored, of course.

It would seem that real estate values had been declining for well over three years prior to the final 2008 descent from which home values in California and elsewhere are only now just finally starting to recover from. Make no mistake, though; this “recovery” is very minor, very fragile and very much in danger of collapsing at the slightest panic in the markets and especially in California.

CA foreclosures, then, might be looked at as another sort of warning sign because there are at least six California cities in the top 10 cities across the country in terms of their own rates of foreclosure. In fact, three states — Arizona, Florida and California — are contributing 44% of the total number of foreclosures in the country as of late.

Combine all of this and mix it together with the fact that California has been having trouble for a decade or more in getting a handle on stabilizing its housing markets (some experts maintain, as well, that the state’s famous Proposition 13 exacerbated the situation) and it’s easy to see how CA foreclosures begin to affect much of the rest of the country. This rate tends to put a scare into investors just about everywhere, for a fact.

The reason this is so is because investors in the broader markets as well as the housing market are very jumpy at present and aren’t entirely sure that the country has reached bottom, at least in terms of home prices. They are reluctant to jump back into housing markets without at least an even chance of making back what they’ve put into it over the long run. This tends to depress markets, truth be told.

It can then be said, with a great deal of certainty, that what goes on with the rate of CA foreclosures affects not only California’s economy but the nationwide economy to some extent. When foreclosure rates out in the Golden State finally begin to decline appreciably and steadily it might be that investors across the country will feel better about getting back into the markets in a big way.

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