Bloomberg: California Leads U.S. in Defaults, Home-Price Decline - "The depth and magnitude of what's happening is really grim"

Wow, the other day I said something about the real estate tail wagging the economic dog, and this March 20 story by Daniel Taub and Dan Levy hammers home that point with some grim numbers.

California's Gross Domestic Product is predicted to drop 1.5% in H1 2008.

The state has the dubious honor of experiencing the most foreclosure filings of all the states for 2007, plus the greatest Q4 2007 price declines.

It is estimated that this most populous of all the states will lose $25 billion in personal income in 2008.

Property values are estimated to fall by some $630.7 billion, according to UCLA forecasts.

California gave birth to the sub-prime loan and is now paying the price. Nearly half of the 25 biggest sub-prime lenders were based here, and nearly 25% of sub-prime loans were issued here. 31,000 jobs were eliminated last year in the sub-prime mortgage industry. Employment fell 6.7% in the financial services, and employment declined 6.9% in the construction industry. Furniture retailers Levitz, Wickes, and Bombay have gone belly-up.

Half of the ten most expensive U.S. cities for home prices are in California.

The time it would take to deplete the supply of homes on the market at the current sales rate has more than doubled to nearly 17 months in January 2008, YOY.

In January, California had more foreclosure filings than any state. Stockton ranks #2 in foreclosure rates, Riverside-San Bernadino is #4, Sacramento is #5, and Bakersfield is #7.

But hang on, it gets better, or worse, depending on how you look at it.

The property tax revenue growth rate is declining. It is forecast to drop to 6% this year, then 3% in 2009. Personally, I'm surprised they are still forecasting revenue growth. I think this will turn into a decline soon. Applications seeking reassessments have more than tripled in San Diego within a year, and Los Angeles County is reviewing assessments on 310,000 houses and condos purchased since July 1, 2004. Reassessment applications are growing.

Standard Pacific Corporation, based in Irvine, has seen its share price decline by some 89% in 3 years. KB Home, based in Los Angeles, declined some 60%.

I'd sure like to know how a person making $36,000 a year managed to qualify for a $412,000 house in 2004!?! That must have been some real financial mortgage witchcraft! I mean I'd love to live in the redwoods too, but not at the cost of getting myself in hock at the rate of nearly 12X my income.