How do Californians lose their homes? Let me count the ways.
Just over 2,000 homes went up in flames last week in Southern California. And 24,209 California homes were foreclosed on in July, August and September -- an all-time quarterly high, according to DataQuick Information Services of La Jolla. That's a rise of 40 percent over the figure from April, May and June.
Indeed, California foreclosures seem to be powered by their own Santa Ana winds, so hugely and abruptly have they swept the state.
In Los Angeles, Orange, San Diego, San Bernardino, Riverside and Ventura counties, there were 1,960 foreclosures in the third quarter of 2006. In this year's third quarter, there were 13,314. They are particularly pervasive in San Bernardino and Riverside counties, the working-class exurbs of Los Angeles and Orange County, and the fastest-growing counties in the state. With affordable housing in Los Angeles now a fond memory at best, working- and middle-class families have been migrating inland to cheaper tracts and subprime mortgages, which in some parts of San Bernardino and Riverside account for nearly half of all mortgages.
A report this month from Congress's Joint Economic Committee predicted that by the end of 2008, roughly 2 million homes with subprime mortgages will be foreclosed on. If those foreclosures were spread evenly across the United States, 250,000 of them would be in California, which is home to 1 in 8 Americans. In fact, the areas with the nation's highest concentration of subprime mortgages include California's San Joaquin Valley and its two southern exurban counties, San Bernardino and Riverside. If the committee is on the mark, as many as 400,000 Californians may lose their homes. According to DataQuick, by the end of September, 41,062 Southern Californians had been notified that their homes were in default -- a way station on the road to foreclosure.
Foreclosures aside, more than 5 million homes in 2000 were in wildland-urban interface -- places where homes are near or among trees and bushes that can fuel fires. That number is growing as the state's population continues to swell and new homes continue to rise in the hinterlands. And there's not a single homeowner in the state who can boast that his or her place is immune to a catastrophic earthquake.
So, is there something about Californians that puts them in denial about risk? Permit me to rise to my fellow Golden Staters' qualified defense: Not entirely. Not as such. Not without the complicity of others.
The Inland Empire, as San Bernardino and Riverside counties are called by their chambers of commerce, may look about as shaky as the Austro-Hungarian Empire these days, but is that really the fault of the hundreds of thousands who have flocked there in search of the only affordable homes within commuting distance of Los Angeles? Yes, it's clear that they failed to understand how risky their mortgages were. But it's also clear that the leaders of Merrill Lynch, Bear Stearns, Citigroup, Bank of America and other financial institutions, all of them privy to financial data that the Inland Empire homeowners never saw, made the same miscalculations.
Indeed, it was Wall Street's Masters of the Universe who created the Rube Goldberg bundling of and speculation on mortgage securities -- subject to few, if any, regulations -- that now threaten the nation's economy, not to mention their own jobs.
As to the fires that Southern Californians seem finally to be learning are a natural, recurrent feature of the terrain in which they live, Golden Staters must recognize that living in paradise doesn't come without cost. The price may be avoiding construction in wind-swept canyons or insisting on fire-resistant foliage. It certainly entails paying for more firefighters. Last year, San Diego's fire chief, Jeff Bowman, resigned because the city refused to fund additional firefighters or equipment in the wake of the disastrous 2003 Cedar Fire. A study from the Center on Policy Initiatives, a San Diego-based nonprofit, concluded that the city had the fewest number of firefighters per 1,000 residents of the state's major cities.
Half a century ago, Californians understood what it took to create a great state. Taxpayers funded the nation's best highway network, water system and public universities. The state's population exploded in the greatest home-construction boom in history, under a system of mortgages that the federal government tightly regulated. A sustainable California will require a return to the policies of public investment and financial regulation that built the postwar paradise between the Sierras and the sea.
