"Inevitably, the boom turned to bust"

From the Sacramento Bee:

In the Sacramento region last year, about one of every six homeowners spent more than half his or her gross income on housing, according to a Bee analysis of new census data. That's 30 percent higher than the 2005 rate, and almost double the 2000 rate.
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Shortly after they bought their Orangevale home, in 2001, increasing housing prices presented that opportunity to use equity in their home to supplement their income. It worked well for several years. The family refinanced their house at least twice, David Cavaness said, as its value increased. Their cycle became build equity, cash out, repeat. "We paid off two cars," Christina Cavaness said. "We paid off some credit cards. We were just trying to survive."
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Then the housing market started to tank. The Cavanesses' home value dropped and their cycle of refinancing ended. Meanwhile, the rate on their loans, including a small second mortgage, crept upward. Last year, for instance, as their monthly loan payments grew, their income remained stagnant or worse as David Cavaness switched jobs a few times. Recently, Countrywide sent a letter telling them their rate would adjust again -- property taxes and insurance included -- to almost $3,000, Christina Cavaness said. That's almost all their monthly gross income.

From the Stockton:

Seven years ago, the Stockton area's population was growing, city officials were making big plans and property values were on the rise...It seemed like only better times were ahead in San Joaquin County, California and the country. Heavily impacted by Bay Area earning power and the migration across the Altamont Pass, home values became artificially inflated. Inevitably, the boom turned to bust.

Housing became overbuilt and over-leveraged. Too many homes were financed with risky lending and mortgage practices, often at the expense of gullible individuals who either were misled or were unable to understand the process. Too many sellers wanted too much for property. Some real-estate agents were all too willing to share that wealth. Predatory lenders moved in to exploit the demand that traditional lending practices couldn't support...The situation was compounded by speculators and investors who purchased property because it was cheaper, could be resold for a quick profit, used for rental or even nefarious purposes (marijuana growing).
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Some politicians are recommending a federal bailout of deceptive, predatory lenders. Just as in the disastrous savings-and-loan bailout of the 1990s, they don't deserve it. Taxpayers, most of whom had nothing to do with creating this mess, shouldn't have to pay to clean it up. A bailout only encourages this kind of bad business behavior.

From the Stockton Record:

If there's a constant drumbeat of bad, heavily reported news, does that news begin to take on a life of its own, become a self-fulfilling prophecy?

It's a reasonable question, this time coming from a reasonable guy, Carl Isaacs, who's been selling real estate in Stockton for decades. He complains about what obviously has been article after article - doom and gloom, he calls it - about the real estate market here. The relentless coverage undermines confidence and makes consumers question whether they should even own a home, he worries. (Of course, few, save a few naysayers and often-ridiculed economists, fretted about the relentless coverage as the market zoomed skyward.)
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[The] market plunge that began in early 2006 and seems to accelerate with the release of every new sale/price report seems to have no bottom. CNBC, CNN, USAToday, "60 Minutes" and The New York Times are among the major American news outlets that have parachuted into this area in recent weeks to record the squirming population at ground zero of the nation's market collapse.