A California gold rush for foreclosed homes

Sales of existing homes jump in December, but the new bargains are just a sign of bad times

Published January 15, 2009 3:00PM (EST)

The good news: In California, anecdotal reports are trickling in, suggesting that buyers are rushing back into the housing market. In Southern California's Victor Valley, sales of existing homes rose by 17 percent in December (compared to November) and 207 percent compared to December 2007. Sales of existing homes also "jumped" in San Joaquin County, reports RecordNet.

The bad news: Foreclosures continue to drive new sales, and median home prices are in freefall -- in both regions, prices have dropped 40 percent in a year. Nationwide, reported the Associated Press, foreclosures rose 81 percent in 2008, compared to 2007.

In Stockton, California, the seat of San Joaquin County, an incredible 9.5 percent of all housing units received a foreclosure notice in 2008, reports the AP.

The consequences for California's economy continue to be severe. The San Francisco Chronicle reported on Thursday that the state is facing a $41.6 billion deficit, and may start sending as many as ten million taxpayers IOUs instead of tax refunds in upcoming weeks.

But Thursday's new national data on weekly jobless claims, which jumped 54,000 to a "more-than-expected"  524,000, contributed an unexpected upbeat note to the news from California. Of all 50 states, California registered the largest decrease in new jobless claims -- 14,796 -- according to the Wall Street Journal's Jeff Bater.

A sign of the bottom? Has everyone already been fired?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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