California -- America's first failed state?

They kept cashing out the rising bubble value of housing as it climbed?

Sounds like every bank on Wall Street.

 

I'll type slower ... they increased their total indebtedness every year even though their income remained largely unchanged.

 

As a long-time resident (outing alert) of the Central Valley, places like Merced, Modesto, Turlock and, to a smaller degree, Stockton and Fresno, are also tied at the hip to the whims of the ag economy as well. In some places, it's still much like Steinbeck described in "Grapes of Wrath," just subsitute legal/illegal farm worker for "Okie." There's really not a heck of a lot of room for diversification in the economy either, except building more prisons or food processing plants.

Merced has always been a strange case. Yes, it got the university, and growth projections called for a community around 40K in the university area, while the city itself is about 50-60K. But in many ways, the area is still looking to recover from the closure of an Air Force base in the mid-90s, and civic leaders have been suckers for the latest Harold Hill selling boys' bands.

 

There's a place called Mountain House that is the best illustration of what was happening. It's out near Tracy and Stockton, south of Sacramento, and the town didn't exist before the early 2000s. It's like the real estate Field of Dreams -- just appeared out of farmland with the belief that "if you build it, they will come." There is still a stray website out there from 2006 advertising "home prices starting in the low $400,000s." It was supposed to be a bucolic retreat from the Bay Area rat race.

By 2008 it was better known as the place where homeowners had the most negative equity of any place in the nation.

 

About 5-7 years ago, if you were going to buy a house in certain parts of LA or certain parts of the Bay Area, you didn't make an offer, you made a bid that was almost always higher than the asking price.

Safe to say that's not the case anymore, with the possible exception of the most exclusive places in the state, like Malibu, Palo Alto, La Jolla, etc...

 

Yeah, the problem with Mountain House is that it is 1hr. 45 mins from the Metro area. Great new houses but damn what a commute.

 

We got lucky in that we sold our house 5 yrs ago in a small suburb very close to SF and yes, we got 5 offers which was stupendous. Then we bought "up" in a better school district with better weather where we did not have to bid against others. It was so crazy we could use a home equity on the first to buy the second before we even sold the first. Ridiculous in hindsight, hanging out there on two mortgages. Luckily for us, our values have dropped but only about 10-15%, not off the cliff. I think of our first home and shudder to think its dropped probably 30-35%.

I burn a candle for our good fortune and feel bad for those who were less fortunate.

 

Must have been hard for them to continue to increase their total indebtedness without having any profit-seeking banks willing to provide them the loans, huh? And I'm sure the bank they defrauded by providing false income reports probably didn't use MERS at all.

 

Don't get me wrong ... I never meant to imply that they defrauded the bank. What I am saying straight out is that what they were doing was stupid.

 

I remember pricing rentals in Burlingame about a decade ago and for $2000 a month, you would get a one-bedroom that was something that was slightly better than a complete dump. It was just insane.

People would be stunned at the number of people in the Bay Area who regularly commute 90 minutes each way.

 

Well that's for sure. Very stupid.

Plenty of people did it, though...and as a result, plenty of malls sprung up around me here in the IE...and many of those malls are now about 50-75 percent vacant, and the developers who built them are bankrupt.

 

The latest from La-La Land: the Los Angeles City Council passes a resolution urging residents to have a "meatless Monday." It's just a resolution, not a law, but the fact it passed by a 14-0 vote and no one apparently asked if they have more pressing issues to attend to is either laughable or enough to make you cry.

http://www.dailynews.com/breakingnews/ci_21968781/los-angeles-city-council-endorses-meatless-mondays