Despite the hard economic times impacting the Lake California community, you can see why people like being here in the first place.

Our small and only convenience store in Lake California is still operational after having temporarily closed for about a couple months last year. It re-opened under new owners, who kept pretty much the same original format, but staff it mostly themselves and added a few extra conveniences such as adding a barbeque gas exchange station.

About a year later, not only is this unfinished house still not completed in Lake California, but the only other house, a large and completed house, on the same cul-de-sac street has remained unocuppied since the day it was built. I took this picture because it was a great line of sight of what happened when the housing bubble burst.

I'm expecting that because of the sheer number of houses still unoccupied in Lake California that the housing prices will again drop another 10 to 20% over the coming year. Because we are somewhat on the outer fringes of the Redding metro area, I don't expect to be see much upward rental price changes.

The home community that I live in has seen a significant decrease in house occupation over the past two years. Both houses for sale and houses for rent are staying empty. This de-population has now affected the closure of our local convenience store and will cause us to have to drive further out for our convenience items.

The root cause of this de-population must be that a people are going to where there are more jobs available. The consequence of the migration will be that prices and rentals will have to keep dropping from the current July 2010 rental and sale prices in order to attract occupants.

Travelling through the town of Woodland, California, my wife picked up the local paper during a Starbucks coffee stop. Per this article, that local county's deficit is currently at $22 million, but they could only come up with a plan to cut $1.5 million. Some other tentative (but unexplained) expenditure reductions might bring the deficit about 20% downward. So they have come with a plan that will only save $2 out of $10 dollars in the red. There's not a peep about actual debt reduction of any kind.

This is not a good sign. This means that things are not going to get any better sooner or that the necessary political decisions are being made for an easier transition to fiscal reality. The rest of the paper had various articles about different local agencies lobbying for federal handouts - again there appears to be no other plan to adjust expenditures to true means.

Homeowners insurance doubled in one year in my area for everyone. To cover the home I'm in, the insurance premiums doubled from $850 in 2009 to $1,700 in 2010. The reason for this drastic increase: our local fire station was no longer able to be staffed full time and this dramatically increased the fire risk.

And the underlying reason for the fire station reduced coverage? I'm making a guess that it's probably a combination of dropped tax revenue and reduced volunteers. The reduced volunteers are probably because many have had to move out of the area in search of work or have had to take on extra hours in their normal day jobs.

Homeowners insurance doubled in one year in my area for everyone. To cover the home I'm in, the insurance premiums doubled from $850 in 2009 to $1,700 in 2010. The reason for this drastic increase: our local fire station was no longer able to be staffed full time and this dramatically increased the fire risk.

And the underlying reason for the fire station reduced coverage? I'm making a guess that it's probably a combination of dropped tax revenue and reduced volunteers. The reduced volunteers are probably because many have had to move out of the area in search of work or have had to take on extra hours in their normal day jobs.

This house property a few streets away from mine was suddenly abandoned while still in its construction phase. A graphic example of what the end conclusion of a boom of "malinvestment" looks like.

The economic waste is all the spended effort and cost that went into getting this far when in the end it is not wanted. Maybe the waste was equal to about $20,000 before they stopped. A bigger malinvestment would have been a completely finished house. After a drastically reduced sale price from $300,000 to $150,000, the waste then might have been in the order of $150,000. Repeat this street after street and the collective wasted money and effort becomes enormous.

 

I bumped into two individuals recently who work for different organizations at the local government level. They both mentioned independently that staff and pay cuts were imminent. A third individual who works for still another local public service provider is mentioning increased work hours and less overtime pay. This is a sign of growing public budget issues that are going to rock the State of California to the core during the next couple of years.

So if my local newspaper says that the houses are becoming more affordable to the median household income, then, conversely, doesn't it also mean that it has and still is NOT a good time to invest in a house as prices are still too high? Yet, at the Federal level, the impetus belief in Congress seems to be that the prices should not keep falling or stay down, but go back up - but then that means housing would remain unaffordable to the average household income.

For those who had been renters (and typically the least wealthy part or the most prudent part of the population), if the prices had fallen hard and fast enough, they would have been able to afford a house much sooner. Now the housing market price re-adjustments seem to be unnecessarily dragging out.