Irvine, Former Subprime Capital, Struggles in Wake of Meltdown

<p>While housing markets in the rest of the country reel from the mortgage crisis, Irvine, the city that was once home to 18 subprime lenders, is seeing its local economy suffer as the effects of high profile bankruptcies ripples to other businesses.</p>
March 29, 2008, 9am PDT | Michael Dudley
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"The subprime mortgage meltdown has shaken the entire U.S. economy. But nowhere might the impact be as stark as Irvine, California, a planned community nestled between Los Angeles and San Diego.

A year ago at this time, Irvine was home to 18 subprime lenders, including many of the leaders in the field, such as New Century Financial and Option One. Then, in what seemed like the blink of an eye, 4,100 good-paying white collar jobs were gone, or roughly 2% of the city's work force.

And while that may not sound like a huge number of jobs lost, the ripple effects of the collapse of what was once a vibrant industry has extended far beyond the mortgage lending arena.

By the end of [last] year, almost 9,000 subprime jobs were gone from Orange County. Many of these people have been unable to find new jobs. And economic officials say that was only part of the economic pain.

Suppliers and service firms from hotels and restaurants to printers and software developers that had come to depend on the lenders for a bulk of their business have had to cut staff as well.

Ellis said one hotel in town has lost $1 million in annual bookings as a result of the subprime collapse. And small businesses, such as local trophy shops that produced the monthly sales awards, have been hurt.

Today, the office towers in central Irvine that used to house lenders like New Century and Option One have floor after floor of empty offices. The Chamber of Commerce estimates that 20% of the city's Class A office space is empty, a record high."

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Published on Friday, March 28, 2008 in CNN Money
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