The plan may help a few hundred thousand homeowners'; however foreclosures will continue to move higher in the months and years to come. We are missing the one key element that could make a difference and that is new jobs that pay good wages going forward.
Do you realize the unemployment rate today in Fresno County is approaching 14%? The medium average household income in Fresno County is only $49K and the medium home price in Fresno County is $170K according to the latest statistics according to the NAHB/Wells Fargo Housing Opportunity Index http://(www.nahb.org
Even with home prices falling almost 50% in the last three years only 53.1% of Fresno County residents can afford the medium priced home as of 4th quarter of 2008.
The affordability index is still to low in Fresno County so either wages must rise or home prices must fall in the coming years. When you look back over the last 20 years the affordability index reached an all-time high in the 1st quarter of 1999 with 68.1% of Fresno County residents being able to afford a home in Fresno County.
Where will these good paying jobs come from in the coming years to boost wages beyond the rate of inflation to spur higher home prices? If you can answer that question then homes might start appreciating again one day; however right now I do not see the this occurring in Fresno.
Wages are stagnating and adjusted for inflation they are right around 1999 levels.
The perfect storm is brewing as we speak when it comes to the foreclosure crisis that is literally sucking the wealth right out from under the average American consumer. These bailouts are a joke in my opinion and the next generation (i.e. my generation) will be saddled with all this new debt to repay.
We need to put the breaks on our reckless irresponsible spending habits to some degree and build up our savings for a change. If we do not take drastic action soon we are creating a whole new generation of Americans that will wind up depending on the government for everything.
Social Security is about broke as a joke today and the politicians' in Washington are not working on a viable plan to keep the system solvent for the next 50 years and beyond.
Look no further than the new state budget just passed in the dark of night this past Wednesday. Did you see all of the new tax increases that we will need to pay? This budget will really solve the problem considering the fact we now need to borrow another $11 billion dollars by issuing more bonds to close this projected $42 billion dollar deficit by July 2010.
The chart below is just another stark reminder this foreclosure crisis is along way from being over. I just spoke to a friend of mine who is a real estate broker in San Diego and he thinks the market will tough for at least 4 more years.
Wake up Californiansâ€™ we are in for the fight of our lives and our governing body in Sacramento is broken nine ways to Sunday.