Here's another story about California home prices falling into the abyss, both in southern California and the Bay area. I used to live in the San Francisco Bay area just a couple of years ago and saw for myself the lunatic frenzy of the housing boom. Builders were cramming crappy particle board boxes with cake icing-like decorations onto every square foot of land and selling these "houses" for $500,000 or $600,000 or $700,000 or more to numbskulls who were falling over each other to buy them. At the boom's peak the median Bay area house (or even condo, meaning "a one or two bedroom apartment in a lousy apartment house") sold for $665,000; today the median price is $350,000 and falling, a difference of $315,000. As I posted the other day, hundreds of thousands of California homeowners are underwater by amounts essentially equal to the present value of their property, and the situation worsens daily. These people are ruined perhaps for life. How will they ever repay those mortgages? California law limits the options creditors can employ against defaulting mortgage debtors, so more and more people are walking away from their homes. Is this honest? No. But here in the Great Depression of the 21st century, dishonesty may be the only sensible survival strategy. It will be amazing to watch huge areas of the Bay area become abandoned and deteriorate into suburban slums. Once upon a time, the Bay area was full of orchards; maybe it's time to start growing peaches again.
Read it here
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