Area still feeling effects of real estate crash | LoanSafe

(Source: By Rachel Raskin-Zrihen Times-Herald, Vallejo, Calif.) – Solano County homeowners lost about half their property’s value since the housing bubble burst, which, like elsewhere, seriously impacted the area’s economy, experts say.

Four years after the recession hit in December 2007, five Bay Area counties have lost a collective $386 billion in home value, according to the real estate information gathering firm, DataQuick. Among those, Contra Costa County was hit the hardest, followed by Alameda, Santa Clara, San Mateo and San Francisco.

As I predicted from the very beginning of the housing debacle, San Franciso was hit least hard by the crash.

Huge loss in home values cratered the Bay Area economy | LoanSafe

(Source: By Pete Carey, San Jose Mercury News, Calif.) –Bay Area homes have lost more than a third of a trillion dollars in value since the housing bubble burst about four years ago. And in the process, they have taken a big chunk of the economy with them.

During the boom, homeowners borrowed against that mountain of money, fueling a huge surge in everything from yacht sales in Silicon Valley to home heating upgrades in Antioch. Later, when home prices collapsed, their loss of money and confidence crushed those same businesses.

Adding more strain, while the equity went away, the debt remained, further hobbling those who hung on to their homes.

While the devastation of the housing crisis has been well reported — foreclosures; people stuck in homes they can’t sell; houses sold for a fraction of their value — one issue that has received less attention is the remarkable loss of housing values and its impact on the economy. Home equity loans, for example, are running at about one-tenth the level they hit four years ago.

But it’s probably not overstating the issue to say that the economy’s ultimate recovery depends on restoring stability to the housing market. “Consumer spending won’t fully recover until the housing market stabilizes and people feel that their main assets — their home — will grow in value,” said Jed Kolko, chief economist with the real estate website Trulia. And consumer spending makes up about two-thirds of the American economy.

In a reversal of the “wealth effect”

Yep, and we probably haven’t seen the worst of it yet. Between the overhang of foreclosures yet to hit the market, and the possible surge in new foreclosures as increasingly overstretched owners trapped in underwater mortgages finally give up the ghost with a short burst of jingle mail to their bankers (or whatever strange conglomerate now claims to own their property). Remember, unemployment rates aren’t falling because the number of people finding work is rising on a net basis, it is because of tens of thousands of people dropping out of the work force entirely. Those “no longer counts as unemployed” won’t be doing much to boost either the economy in general, or the housing market in particular, either.