I guess it's good to be unique. But is California a little too unique for its own economic good? It seems the nation's real estate crisis is playing out a bit differently here than elsewhere. Maybe it's because we are so big? Or so populous? Or so broke?As they say in SoCal: "Whatever!" The fact is, the mortgage market is, well, different in California.
For starters, California accounts for almost half of the wealth lost in the U.S. housing market since its peak in mid-2006, according to new research from Deutsche Bank detailed recently in Housingwire.com. There are more trial and permanent mortgage modifications here under the government's Home Affordable Modification Program (HAMP) than anywhere else in the U.S., according to the U.S. Treasury Department. That's 191,000 permanent and active trial modifications through January, to be exact.
But, of course, the fact that there so many modifications in California in the first place is because there are so many foreclosures and soon-to-be foreclosures in California. The so-called foreclosure pipeline in this state is so clogged, you'd practically need one of those really, really big pipelines carrying natural gas across Eastern Europe to fit them all.
And, of course, California is nothing if not creative -- but in this case, not in the Silicon Valley or Hollywood sort of way. Analyst Ying Shen is quoted by Housingwire.com as saying, "Besides market share and loss of housing wealth, California is a market for innovative mortgage products, with a high concentration of subprime, option ARM, and jumbo loans."
That's the kind of creative disruption you can live without.
We Californians have also, since 2007, defaulted faster on our mortgages than "any other U.S. non-agency borrowers," according to Deutsche Bank. Going hand in hand with that: higher foreclosure starts than the rest of the country.
My best guess is that California will continue to be "unique" for some time to come--especially when it comes to the real estate debacle.
The situation here is far from stabilized. Our unemployment and underemployment rates remain way above the national average. And, along with just a handful of other states, California accounts for more than 50 percent of all forecloses in the U.S.
Like I said, sometimes it's good to be unique. Sometimes, it just sucks!
Charles Feldman is a journalist, media consultant and co-author of the book, "No Time to Think: The Menace of Media Speed and the 24-hour News Cycle." He has written about real estate related issues for several years.
