California's Coming Housing Crisis

During the last housing crash, California's exurban areas "imploded," resulting in millions of foreclosures for middle- and working-class residents. In the next downturn, the high-end may be hit hardest.

The reporting comes from "America's ubergeographer" Joel Kotkin, writing for The Orange County Register says, "particularly the 80-90 percent of all new multifamily construction that is considered 'luxury,'" with dwindling demand and price drops occurring in Manhattan and San Francisco, along with other luxury markets. International investors are also easing off their activity in high-end markets in the U.S. Kotkin says that while a declining housing market spells bad news for homeowners, any resulting price reductions may create opportunities for younger and entry-level buyers.

Little over a decade ago, the housing sector almost brought down not only the American but the world economy. Today the reprise of the housing decline will be playing a very different tune.

In the past bust, it was the fast-growing exurbs, aspirational home of the middle and working classes, that imploded, driving millions of people into foreclosure. Aided by dicey lending practices from the private sector, devastation was most precipitous in states such as California where public policy helped drive to unsustainable levels.

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