Monday, March 09, 2009
Now that the state government has again forestalled the inevitable by recently passing a budget, one that will surely not age well and may be in dire need of rework by summertime, attention once again turns to the dismal state of affairs in the region's housing market.
This story in the Sacramento Bee, in which Victor Clawson probably speaks for a far higher number of homeowners than most of us would like to believe, goes a long way in explaining why things are sure to get worse in the California state capitol before they get better.
Something about the way global finance flew so dangerously high and then spiraled into chaos tells Victor Clawson that trouble with the four houses he owns in Natomas isn't his fault.This lack of personal responsibility is likely to become much more pronounced, particularly in light of the many bailouts being offered at a dizzying pace in Washington.
"We are players in a game and the game is controlled by somebody else," said Clawson.
This sense of being unfairly bruised by powerful financial forces is key to understanding why Clawson is strongly considering walking away from his mortgages. Given the risky, ethically questionable behavior of lenders and financial institutions that caused "this enormous machine to grind to a halt," should he feel obligated to keep paying on houses now worth far less than he owes?
It will soon be cut-and-dried for many - if I don't get a bailout, I'm bailing...
For investors and owners of second homes that are now worth far less than they owe - where, for good reason, no aid will be forthcoming - this will result in a new wave of properties going back to the bank to join the inventory that already sits on their books and, for the most part, off of the resale market.
At the rate we are going, it doesn't seem as though there's any possibility of housing markets like the one in Sacramento stabilizing anytime soon and at least one more software engineer seems to have things figured out:
It's a question that Ryan Jessup of Sacramento answered a year ago, when he, too, sensed the financial game had turned against him. Early in 2008, the software engineer stopped making payments on his Victorian house in Oak Park. A long habit of playing by the rules, he said, had provided him a good income, a credit score of 804 and a lovely $430,000 house.Of course it could be worse for people like Clawson and Jessup.
But when playing by the rules meant riding down the housing market to who knows where, he said, "It came down to morals or survival. I chose survival. It made no sense to stay."
There's a whole other group in Sacramento who could care less about the future of the U.S. financial system and the innovative credit products that were foisted upon an unwitting home buying and investing public (or so the story goes).
These other people now live in tents.
Apparently Oprah has taken up their cause and, from the looks of this report also in the local paper, some of them got their fifteen minutes of fame a couple weeks ago.
A national spotlight will shine on Sacramento today, and the images promise to be less than flattering.
In a program about the recession and a growing homeless population, the wildly popular "Oprah Winfrey Show" this afternoon is featuring California's capital city, among other venues. The program will include interviews with struggling families at the Cal Expo and St. John's shelters, shots of homeless children at the Mustard Seed School at Loaves & Fishes and a sprawling "tent city" near the Blue Diamond almond factory where hundreds of men and women sleep every night.