As the housing crunch has rolled on, affecting nearly every state of the Union, no single state has been more battered and bruised by market conditions than California. According to a report released last week by First American CoreLogic, home prices in the Golden State have now fallen an average of 28 percent from their peak three years ago. Some local markets within the state — including Stockton, Merced, and Modesto — have actually seen price corrections nearing or exceeding a whopping 50 percent, the report said. (See the heat map, below, for a risk classification covering the state.) “Given the magnitude and acceleration of these declines, California home prices are not expected to recover in the near term,” CoreLogic chief economist Mark Fleming noted. Where the risk is CoreLogic monitors 28 key core-based statistical areas in the state, and identified two Southern California markets as the most likely to see price declines in the next six months: the Riverside-San Bernardino-Ontario area, and the Los Angeles-Long Beach-Glendale area.
For the so-called Inland Empire, news that prices are likely to keep falling shouldn’t surprise — the Riverside area in particular has been hit hard already by the housing turndown. But for residents of Long Beach, Glendale, and Los Angeles, the news likely comes both as unwelcome and as somewhat of a surprise — while very few markets in the state have been immune, very few residents of L.A. likely would classify their area as among the riskiest in the state, let alone the second-riskiest housing market in the entire nation. Driving the LA-area’s risky ascent is a weakening local economy and job market, according to the CoreLogic study, as well as a surge of delinquencies and foreclosures. During the four quarters ending in Q1 2008, CoreLogic reported that more than 320,000 pre-foreclosures were initiated, which is 28 percent higher than in 2007 and more than triple the number in 2006. Currently, for every new residential building permit issued in California, three foreclosure notices are being issued — a stunning ratio to consider, given the quick growth so recently recorded within the state’s housing market prior to the housing bust. More worrisome to CoreLogic’s economists, however, was a rise in 90+ day delinquencies, which more than tripled during the last year, as the rate rose from 1.5 percent during Q1 2007 to 4.8 percent during Q1 2008. For more information, visit http://www.facorelogic.com.