Bloomberg.com: News

Almost $1.3 trillion of homeowner equity was lost in California since home prices peaked in December 2005, Zandi said. Discounts of as much as 50 percent will extend into 2010, helping clear a glut of foreclosures and leading to a more balanced housing market, said Ryan Ratcliff, an economist at the Anderson Forecast at the University of California in Los Angeles, and Christopher Thornberg, principal of Beacon Economics LLC in Los Angeles.

“Half off in a decent neighborhood is close to the bottom,” said Bill Gross, co-chief investment officer of Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. Property markdowns of 30 percent to 40 percent give the market “price illumination if not sunshine,” he said.

`Beginning to Happen’

California led the U.S. in default notices and bank seizures for the 18th straight month in June and had seven of the 10 metro areas with the highest foreclosure rates, according to Irvine, California-based RealtyTrac Inc., which sells default data. That drove down prices and led to “discounted distressed sales,” with two-thirds of transactions under $500,000, compared with 40 percent a year earlier, the California Association of Realtors said.