This post originally appeared at Speak Out California.
Yesterday Governor Schwarzenegger ordered 10,000 state government employees laid off and ordered the wages of 200,000 more cut down to the bare minimum allowed by law.
This is 210,000 people who will not be keeping up with their mortgages or car payments or attending “back-to-school” sales. This is thousands of local retailers that will see a sales decrease. This is how many foreclosures and car repossessions. What will this do to our own jobs and housing prices?
This is 210,000 families disrupted.
Bay Area housing prices are finally falling, declining last month for the first time in more than four years.
This means that every buyer desparately trying to “get into something” before prices go up even further is going to take a new look around. It means that every seller holding out for that offer “over asking” is going to realize they need to get out.
Even more, it means that all the speculators will understand the party is over, and it’s time to bail. And, finally, the landlords with “negative cash flow” but thinking they’re making up for it with appreciation have to face it that they’re really just losing money. Not to mention all the people who are “over their heads” with mortgage payments they can’t keep up with.
Here it comes. After this news buyers will start demanding price reductions. This can only accellerate — this bubble could “unwind” very rapidly. Where IS the bottom? Just remember what happened when the stock market bubble popped. Existing-home prices fall for 1st time in 11 years,
Median sales prices of existing homes fell from year-ago levels in August for the first time in 11 years and just the sixth time in the past 38 years, the National Association of Realtors said Monday.
Sales of existing homes fell 0.5% in August to a seasonally adjusted annual rate of 6.30 million, the industry group said.
And the ripple effects are beginning to spread with mortgage companies and realtors starting to lay off employees: