WASHINGTON (MarketWatch) -- California Gov. Arnold Schwarzenegger said Sunday he believes his state will shake off its housing troubles by next year.

"We just have to wait until we grow our way out of the situation, and I think by next year, we will grow out of it," Schwarzenegger said in an interview on NBC News program "Meet the Press."

Schwarzenegger said he was shocked by the speed of the subprime mortgage crisis that froze financial markets last summer and has yet to clear up.

He said the turmoil erupted shortly after economists had assured him that the California economy and the national economy would stay on a strong growth path.

"I am as amazed as everyone else about how quickly it came," Schwarzenegger said.

California has seen its state revenue shrink as the housing crisis has deepened and foreclosures have risen.

Schwarzenegger said that California has a diversified economy with many different sectors -- entertainment, high-tech and bio-tech -- with which to weather the storm.

But the Republican governor was reluctant to put too much blame on the housing or mortgage industries.

"There were big mistakes made by borrowers and big mistakes made by lenders. I think everyone was on such a roll ... that people started speculating," he said. "And of course what happened, the housing market was like the dot-com bubble, there was a housing bubble and finally the whole thing collapsed."

A new report by Chapman University said that the two biggest drags on the California economy were the mortgage and construction industries, which were also the first to feel the housing market's downfall.

Five of the top 10 metropolitan areas with the highest foreclosure rates in the country are located in the state.