The California meltdown caused by the historic housing bubble burst that led to tens of thousands of foreclosures and dramatic dip in real estate tax collections has some other issues coming to the table. Contra Costa County, and affluent suburban Bay Area commuter area is deep in debt, on a scale of some countries.
CC County Supervisors took a first look today at the county’s $2.6 billion projected debt for retiree health benefits and set the bar for a round of labor negotiations later this year, endorsing a pullback in benefits for about 1,100 nonunion employees and retirees.
Those employees, many of them middle managers, (in the real world these would be white collar exempt positions) attacked the supervisors for, among other steps, seeking to cap the county’s health care subsidy beginning in 2010. What kind of plan is so expensive? How about retire at full pay after 20 years plus free HMO coverage. That is what government employee unions have done to the California dream.
Meanwhile, back at the ranch, foreclosure filings jumped 57% in March compared with the same month last year and rose 5% versus February, as the nation’s housing market continues to deteriorate.
RealtyTrac, an online marketer of foreclosure properties, said Tuesday that 234,685 homes were hit with foreclosure filings last month, which include default notices, auction sale notices and bank repossessions. Of those, 51,393 homes were lost to foreclosure – a 10% increase over the number of homes lost in February.
“What this report shows us is that the housing market correction is ongoing and we shouldn’t expect the sub-prime problem to vanish anytime soon,” said Jared Bernstein, a senior economist with the Economic Policy Institute. (Reported by CNBC)
On a year-to-date basis, the number of homes repossessed by banks are up 129%. By contrast, the number of foreclosed going up for auction increased a comparatively low 32% since March 2007.
That data shows that more troubled borrowers are just walking away from their homes after defaulting. With no value and real estate taxes on par with rent in California, what would you do?
After a home goes into foreclosure it goes up for public auction; if the home doesn’t sell, the title goes to the bank. But when a home owner walks away the title goes straight to the bank, which then tries to sell the house on the open market where it can command a higher price, rather than at auction.
“When people have nothing left in the home, they get a foreclosure notice and they’re gone,” said Rick Sharga, a RealtyTrac spokesman.
The foreclosure rate in California was the second highest in the nation, (close behind Nevada) with one in every 204 homes receiving a foreclosure filing in March. Foreclosure filings were reported on 64,711 California properties in March, up 21% from the previous month and up almost 106% from March 2007. Home prices are still falling with no end in sight.
People who purchased a 1500 square foot home in California for $950,000 could be paying $800 a month in real estate taxes alone, in Contra Costa County.