Bill Watkins over at California Lutheran Univerity Center for Economic Research and Forecasting has put up his groups forecast for California and the United States. I thought I was bearish but for California Bill is predicting negative Net In-Migration through 2011. Unemployment peaking at 13.8%. Real Wage and Salary growth negative through 2011. 8 more quarters of home prices dropping. No job growth through 2011. Not a lot of rosy predictions moving forward. But the good news for me personally is that if all the predictions come true all my preparations for the zombie apocalypse will also be helping me through the California crash.
It is definitely difficult to see how a state which has inflexible budgets and taxes, too much spending, an unfriendly business environment, a legislature unwilling to make any hard decisions, lots of debt at every level of government and an overleveraged constituency will do anything but underperform the rest of the USA.
For those looking to define shadow inventory for California I thought these two graphics from this group of slides were interesting.
You will notice the number of loans in default in California looks to be about 9.2% of all outstanding loans but the number of loans in foreclosure are only about 5.5.%. Some of that difference may lie in multiple loans on a property are in default and only one foreclosing but I think a significant percentage are also in default with no NOD filed yet. Dataquick has reported it took lenders a median of 5 months of non-payment before the NOD was filed.
Note: There will be no more posts here until Monday September 28th as I will be off watching the Kings play in Vegas. Weekly inventory reports (with inventory being taken Monday instead of the traditional saturday) and an analysis of a new law potentially affecting short sales will be up early next week.