There are several key problems with California’s housing market.  First, many of the homes here are overpriced and the inflated values are plummeting farther and farther down.  If you own property in California, chances are good you are terrified of the outcome of such concerns.  Now, without getting on a soapbox here, there is a lot of worry about the housing market throughout the country.  The difference n California is that prices are so much higher than any other area and they are falling quite quickly.

 Here is a closer look at the problem.

 ·         Home prices continued to grow to some of the highest in the country, as demand for properties rose and it was easy to purchase an affordable loan

·         Lenders were offering jumbo loans, which are loans that are thousands of dollars more than the standard home loan in any other part of the country.

·         The housing market crisis hits when the Californian homebuyer is unable to pay his adjustable rate loan reset (blame it on whoever you want, but the bottom line is, it happened.)

·         Houses start to foreclose because homeowners simply cannot afford the new monthly mortgage payments.

·         Lenders are losing money hand over foot and in turn determine they will not be giving out any more risky loans, subprime loans came to a halt and for the first time in years, jumbo mortgages (which financed most of these large, Californian homes) are no longer available.

·         House prices fall as the properties around them foreclose.  Even people without risk of paying their mortgage are seeing their mortgages become upside down, where they owe more money on the home than it is worth.

·         Selling a home in California is next to impossible because of the upside down mortgage

As you can see, this is a very serious situation and there is no easy answer as to how to fix it.  FHA is trying to help.  They are offering more help to struggling homeowners who need loans that are more affordable.  They are also working with homeowners not yet defaulting that need to keep from doing so.  The Bush Administration and FHA raised the allowable amount that FHA could insure homes in this pricey neighborhood for.

 The risks are still there.  California is suffering, but there is hope for many who contact lenders to inquire about possible FHA help.