"To say the bubble has burst is an understatement"

From the Sacramento Business Journal:

The meltdown of subprime mortgage lending has changed the banking landscape for more than just individual high-risk borrowers. Even homebuyers with high credit scores have encountered tighter lending criteria. It's natural to wonder whether the ripples will extend into business lending as well.

Technically, they haven't yet -- banks say they have not tightened up their criteria for business borrowers. But while the standards might not have changed, the economy has. It's getting tougher for some businesses to meet the old thresholds. For many small-business owners, especially, the shockwaves from the tighter mortgage market have wiped out a longstanding source of cash: the entrepreneur's own home equity.
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"Before the housing market went south, most people who were borrowing money to start businesses were using equity in their homes," said Panda Morgan, director of the Greater Sacramento Small Business Development Center...For those whose home equity has withered away, a loan is now a matter of presenting a bank with solid credit reports and business plans. And collateral. "If you don't have collateral because you are overextended, you can't get the business loan," Morgan said.
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Yet even as late as June and July, entrepreneurs working with the development center were still able to tap the equity in their homes for loans. "Even though the market changed about a year and a half ago, the fallout has not taken effect until recently," Morgan said.
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The housing market is not the only segment of the economy to sag. Office leasing in Greater Sacramento plunged in the third quarter, the first such drop in more than three years. Commercial real estate brokers say retailers such as furniture stores are ailing, too. The closer a company is to the housing market, the more likely it is to feel the pinch.

From the Star Bulletin:

Central Pacific Financial Corp., which three months ago assured investors it had no exposure to the subprime lending crisis, said yesterday that third-quarter net income plunged 55.8 percent after it took a $21.2 million provision for loan and lease losses due to a rapid downturn in California residential construction.

Clint Arnoldus, president and chief executive of Central Pacific, said the bank was hurt by the subprime downturn indirectly, after national homebuilders unloaded California inventory at 10 percent to 30 percent discounts and nearby local contractors who Central Pacific had provided loans to were left without buyers.
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Joe Morford, an analyst with RBC Capital Markets, called the earnings "disappointing" but not necessarily surprising given Central Pacific's exposure to some of California's weaker markets like the Inland Empire and the Central Valley regions, where there have been significant declines in home values.

From the Tracy Press:

The rise in home foreclosures is an opportunity for people who want to buy homes now. About 20 of those prospective homebuyers turned up at the office of Fallavena & Willbanks real estate brokerage Saturday morning to see what kinds of deals they could get on houses that have been through foreclosure...Fallavena and three other real estate agents from the office led people on a caravan through Tracy neighborhoods to look at houses that are back on the market. Some of them are among Tracy’s newest homes.
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The previous owners of a three-bedroom house on Maison Lane in the Edgewood subdivision apparently didn’t live there long enough to put in any landscaping in the backyard. "They moved in long enough to put up a few pictures, then the mortgage adjusted and they were out of here," said real estate agent Claire Trinkle, who helped organize the tour.
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In one recent sale, the previous residents took anything that could be removed, including the dishwasher, stoves and the kitchen sink. And then, apparently angry at being forced to move out, they smashed the countertop tiles.

From the Sun-Post:

A committee will recommend that Manteca buy land where below-market-rate housing can be built and sold to middle-class folks, such as teachers and police officers. After months of falling home prices, a workforce housing committee will deliver its final report next week against a much less urgent backdrop... With many houses now selling for $100,000 less than the asking price in February, the committee has seen much of its work taken care of by a declining market....

“In reality, that is just a market fluctuation, and it doesn’t really address workforce housing,” [Ben] Cantu [committee chairman] said. “The slump that we’re in now hasn’t come down enough. Workforce housing is in the realm of $250,000 to $300,000. Even houses that are being repossessed sold for $400,000 or more.”

From the Modesto Bee:

Two years ago, economists, Realtors and others carried on a lively and unresolved debate about whether skyrocketing housing prices constituted a bubble -- a bubble that was destined to burst. Today, in Stanislaus, San Joaquin and Merced counties, to say the bubble has burst is an understatement. Plummeting prices, a major slowdown in home sales and widespread predictions that things will get worse before they get better suggest that this is something far more serious than a routine market correction.
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It's obvious now that the demand for valley housing was artificially inflated by speculation and subprime mortgages that put many people into houses they couldn't really afford. And for all the new homes that were built, very few were truly affordable to those with typical valley incomes.