That great sucking sound you hear now is California, as the state hurtles toward a housing-led depression. California seems cursed - earthquakes, fires, riots, mudslides, illegals, Britney Spears, and now a massive housing crash.
A giant wave of defaults and foreclosures is now hitting their shores, and it's getting ugly. As predicted here, the state is now facing massive deficits, home prices are in a death spiral to the bottom, and "for sale" and "foreclosed" are the new signs of the time.
Because California home prices detached from all known metrics - price to income, price to rent, historical price trends - and the Ponzi Scheme made California housing gamblers do really really stupid things - namely take out interest-only and negative-am loans they had no chance of ever paying back, while hoping against hope that the mad appreciation continued.
And then it didn't.
So who gets hurt the most? It's not the homedebtors - having put nothing down they just turn in the keys and walk away, and it wasn't their home anyway, it was the bank's. So it's the banks and CDO buyers - the bagholders and their shareholders, who'll get reemed.
And these toxic avengers are led by Washington Mutual, Countrywide, Wells Fargo, First Federal, IndyMac and CIT Group. The Great California Housing Crash is going to destroy 'em, along with Freddie Mac and Fannie Mae who bought up the junk, haven't marked-to-market, and now can't sell it off. And the US taxpayer is gonna be on the hook.
And that's the way the cookie crumbled.
Report: California foreclosures up 421% in Q4, hit 20-year high
Foreclosures in California hit a 20-year high during the fourth quarter of 2007, a real estate research firm reported Tuesday.
DataQuick Information Systems said 31,676 homes ended up in foreclosure during the quarter ended Dec. 31, the highest number since the company began tracking such numbers in 1988.
The foreclosure figure is a 30.8 percent increase from the previous quarter and a 421.2 percent jump from 6,078 foreclosures in the same the same period of 2006. Homeowners received 81,550 default notices during the quarter, up 12.4 percent from the previous quarter and more than 114 percent from the year-ago period.