Recession Reshapes California’s Housing Market

Americans are no longer thrilled to extend their debts. For the last six months, the amount we owe on credit cards, auto loans and other forms of consumer loans dropped, according to the Federal Reserve. That’s the longest decline since 1991.

The party’s over.

Home equity lines of credit are now 3% from their peak in the summer of 2007.

Americans are spending less and saving more. Homeowners are turning frugal. They’re increasingly looking for energy-saving appliances. They want to live closer to where they work.

Perhaps this recession will lead to changed spending habits, just like the Great Recession.

The Los Angeles Times reports:

Leamer, the UCLA economist, believes the decline in housing prices could lead an entire generation of California homeowners to think twice about that costly remodel.

“The housing boom made us feel wealthier than we were,” Leamer said. “You refinanced based on [perceived] gains and bought an SUV. . . . [Now] we might be seeing a permanent change.”

Bell certainly counts herself among the converted. She was able to get her negative-amortization loan modified with the help of L.A. Neighborhood Housing Services, and now aims to pay off her home — not use it to finance other purchases.

“I used to think having a home was like cash money,” Bell said. “When these mortgage companies say things are getting better, I’m going to keep watching every penny I spend.”

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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