| US: California's economy to slow down
California's economy, which doubles that of Russia, will slow this year because of a stagnant housing market and mortgage foreclosures, economists predicted Monday. Economists at the University of California in Los Angeles (UCLA) are forecasting real gross domestic product growth to be 2.1 percent, 1.7 percent and 2.5 percent in the first, second and third quarters respectively in the coming fiscal year. "We are still forecasting a significant slowing of the California economy in 2007, as the double whammy from construction and mortgage finance creates drag on the rest of the economy," UCLA economist Ryan Ratcliff said in the forecast. The housing market in California will be stagnant for some time because of a surge in mortgage defaults and an "implosion" of the subprime mortgage market, according to the forecast.
New Century can't issue mortgages
New Century Financial Corp., the nation's second-biggest subprime mortgage lender, was ordered to halt operations in its home state of California Tuesday, and Fannie Mae stopped buying the company's loans.
California told New Century to stop taking mortgage applications and turn over pending loans to other lenders, the Irvine, Calif.-based company said in a regulatory filing. The state accounted for 37 percent of New Century's loans in 2005, the most recent year for which data is available. New Century said similar orders came from Florida and Washington.
Fannie Mae, the biggest source of money for U.S. mortgages, served notice it will no longer buy New Century's loans, according to the filing. New Century must deal with the cutoffs after at least 10 other states said they want the company to halt operations, and the lender said Tuesday it expects to receive additional orders from more states.
'No real-estate recession here'
"But there's no real-estate recession here," Welton said. "We've got very stable growth here in Victoria. There's not a lot of overbuilding, not a lot of high-risk, highly leveraged real estate transactions." Marsh is quick to agree that the market is welcoming. And he, like a handful of real estate agents interviewed for this story, said the market in Texas is solid. Marsh is moving to his "dream home" on a lake northwest of Austin where he'll spend mornings bass fishing, he said. A SELLERS' MARKET The local market, as it is now, is a sellers' market. There are more buyers than there are houses to sell. Even so, appreciation locally isn't as incredible as it can be in other areas. "In Victoria, we haven't seen escalation of appreciation by 20 percent since the 1970s," said Lee Swearingen, a Victoria broker.
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