Remember When It Was This Easy?

So You Want To Buy A SF Home In Lake Forest? Better Like Trains

I checked out Realtor.com today and searched for a home to buy given my annual income. I searched for a 4 bedroom 2 bath, any sq foot home in the $400,000 to $500,000 range.

Most of the homes for sale on Realtor.com in Lake Forest, California given such parameters are to be describes as - oh how shall I say this politely - pieces of shit. Most are run-down, poorly maintained short sales or foreclosures. And what's really amazing is how so few single family homes in Lake Forest have anything even closely resembling a backyard.

Anyway, I digress.

I found a whopping 21 listings on Realtor.com priced between $499,000 and $400,000.

One could decide to buy such a home at such a WTF price, but when I looked at the map I noticed something rather surprising. Most of the homes for sale were located very near to the Amtrak Train Line that runs right through Lake Forest on it's way northbound and southbound between Irvine and San Juan Capistrano.

Can you imagine paying between $400K and $500K to listen to this kind of nonsense day in and day out for 30 days, let alone 7 to 10 years?

Update Mid July 2009

Well, we're smack dab in the middle of summer. I've been busy as hell over the last several weeks both traveling and working on several major work-related projects.

Man, I hope everyone is hanging in there this summer. We are going to have a "very interesting" latter half of 2009. I feel it in my bones. Can you?

A lot's happened over the last month and half since my last post, but especially just recently:

$20 million in cuts for K-12 education in the Saddleback Valley Unified School District. If California ever gets to 47th rank nationally from 46th, do we send a gift basket to Governor Schwarzeneggar or to State Secretary of Education, Dr. Glen W. Thomas?

OC business and personal bankruptcy cases skyrocketed up to 62% in May 2009.

The California Association of Realtors shares with us that the median home price in Orange County is $474,110 (median family income in is $81,260), 6 times income.
Gee, one does wonder why Orange County is the riskiest housing market in the nation right now, or why foreclosures in California in July 2009 are up 24.7% year-on-year. Congratulations California and Orange County Realtors!

Dr. Housing Bubble shares with us another great, detailed post explaining how the FBI has found the state of California to be ranked No. 1 in the land in rampant mortgage fraud! Nice. First, a heaping helping of state-wide financial bankruptcy, followed by a tinge of moral bankruptcy for dessert. Dee-licious.

And in cas you want to know just why California is still issuing IOUs at Day 12 of the most embarrassing of state-wide budget crises, let me just clue you in. It is because:

a.) Each and every single California lawmaker in Sacramento is an incompetent, self-serving, cretinous dickhead. There are no exceptions.
b.) Californians voted these freaking idiots into office in the first place.

In other news that will probably shock readers of The Rancid Truth Blog to their very core, Realtors openly display their penchant for pathological lying.

I like Nick Gogerty's youtube video:



And finally, Lawrence Roberts at the Irvine Housing Blog, one of the finest educational resources you will ever find about the great housing crash (that is still ongoing to some degree at the nation-wide epicenter in Irvine), takes us back to a time of the last housing market bottom: 1997. Very informative read. Recommended.

Foreclosures Are Not Like Death

Sometimes you read a newspaper article and don't quite understand....what.....they're trying to....Did they just..?

There was an article in the Orange County register today written by Greg Hardesty and Rashi Kesarwani about local foreclosures and the psychological and emotional toll it is taking on local citizens and their families.

I think I understand the underlying message that is trying to be conveyed here (i.e. foreclosures are an event worthy of mourning), but I don't believe the three case examples cited are very supportive to the main idea.

Mr. Palmer's story is a sad one, but in my view it serves best as a textbook example of how deplorable health care costs have become in the United States these days, not to mention the soul-devouring frustration of dealing with disingenous healthcare insurers. Mr. Palmer's case serves to remind us all that even with the highest morality and greatest intentions to fulfill our contractual obligations, we are all just one serious illness or two away from permanent "foreclosure" ourselves.

The case of the Brixey family is so far removed from Mr. Palmer's, I almost got lost. OK, so I'm sure the Brixeys are going through a ton of mental anguish right now, afterall it must be quite difficult for large families with children to lose everything and start anew. However, it's pretty easy to see that, of the three stories described, the Brixey's probably utilized the least common sense and financial restraint in their decision-making over the last several years. I'm not saying they deserve foreclosure. I'm just asking the question after reading "$700,000" and "2005" in the same sentence, is this the part where we're all supposed to be shocked? I'm glad they're getting the help from friends and the community. But it is a sad and frustrating truth about Orange County real estate that very few constructed family residences here - even those priced at $700,000 - are really suitable for familes of three children, let alone six.

Cue the melancholy music and cut to a psychologist name Sharon Gerstenzang, Ph.D., of Fountain Valley who specializes in high conflict, trauma and crisis:

"Some mental health experts liken the experience to grieving over a loved one's death. Being foreclosed upon can sometimes be more than like a death in the family."

Well, I'm going to have to disagree with the honorable doctor on this one.

OK, so losing one's home may indeed be a traumatic experience that makes people very sad.

But foreclosure is not death, nor is it a "death in the family". If people are really feeling this way, then we have an incredibly mentally sick American society.

Homes are lost in fires and floods and storms in the hundreds every year across America. Also, family members are killed in traffic accidents, home accidents and violent crime. Some families are shredded by divorce. Some children go missing and are never found again.

Those are real examples of painful, brain-searing loss, from which few ever fully recover.

Relatively speaking, home foreclosure, while traumatic, is temporary. It ends. You can pick up your shit, move away and live on in another place. You can go rent a house or an apartmen and estabish a new life for yourself and family. You don't have the previous roof over your head, but you have yourself. And you have your family.

Most of the foreclosures in Orange County today, I suspect, are rarely related to Mr. Palmer's harsh circumstances. Life-saving drugs were so expensive and his insurance coverage was so restrictive that he decided he had no other choice but to leverage himself into oblivion to just stay alive! How in the fuck can the Brixeys or the Tiffins be placed on equal footing with that?

They shouldn't be.

Foreclosure is more often than not the end result of when individuals buy more house than they could really afford and cannot meet their financial obligations under contract (the mortgage). Not always, but frequently foreclosures are often linked to risky financial decisions made years ago that have resulted in default. Low to no down payments, pick-a-payment mortgage programs, adjustable rate mortgages and buying at the housing peak.

These are events brought about by a human being's own cognitive thought process and own volition. All of us would be wise not to compare such events with the loss of homes to natural disaster, or to the death of a loved one.

Sure, Americans who live their lives as if it were a Lifetime Original television series entitled "Foreclosure" with Meredith Baxter Birney, might wish their foreclosure to be as traumatic as death. I can imagine that it might "seem like death" for some to find out just how incredibly naive, foolish and financially inept they really were.

But foreclosure is not like death.

In fact, let me close by saying that every single foreclosure and bank owned property that doesn't get marked to market is preventing the very economic recovery that this entire nation will soon desperately need. How ironic is it that ongoing taxpayer support for over-leveraged homedebtors may result in the death of economic viability for the United States of America?

Botox profit down 58% in 2009

You may notice that your local Realtor may not be looking their "best" lately. This may be one reason why:

Allergan Inc., maker of the wrinkle-smoother Botox, reported Friday that its first-quarter profit fell 58% as the recession slowed sales of eye and beauty products.

California Association of Realtors Use Outlaw Josey Wales to Sell Homes in 2009

The California Association of Realtors have chosen to dump their advertising dollars this summer into some fairly lame radio spots.

The first one is so dumb, I hesitate to post the link here. Man, it royally sucks. Not that one should expect much creativity from the NAR/CAR dudes.

SPECIAL NOTE TO REALTORS, THE CAR AND THE NAR ORGANIZATIONS:

Listen, we radio listeners have had quite enough of ads portraying dumbass married couples making stupid financial choices in your "appeal to action" ads, thank you very much all the same. We don't need to be reminded how emotionally self-centered, irresponsible and carefree people have been when working "side by side" with Realtors on the biggest purchase of their lives! Look, Century21 sort of ruined this theme for everyone with the Suzanne Researched This ad. I mean who doesn't remember the classic bloodsucking Realtor line: "This listing is special John! You guys can do this!!"



The second radio ad from the CAR has a very different theme. It's called "Piece of Me". A little bit of Dirty Harry mixed in with some outlaw Josey Wales and some Pale Rider.

The final message of tha ad is: "The California Association of Realtors. For your piece of California. For your piece of mind".

Christ. How appropriate is it that Realtors can suggest that any of their actions are responsible for home consumer "piece of mind"? I'm trying to figure out for the life of me what they could possibly mean by that. Where were California's Realtors when the notices of default started flowing in from the subprime crisis? Did they hold "Piece of Mind" seminars to former clients? Did they give back a piece of their ill-earned commissions on such garbage sales?

And just where are the California Realtors going to be when the tidal-freaking-wave of Alt-A and Option ARM loans first come up for recast this summer?

Honestly, how does using a 6%er help me or my piece of mind in buying a house in the third most fucked up real estate market in the country, southern California?

Oh, it's going to be a fantastic summer in California real estate, you can tell.

Man if I'm Realtor, I'd sure keep some extra funds available for the dry cleaners:

California Alt-A Foreclosures: A Wave of Mutilation

WAVE OF MUTILATION - The Pixies
cease to resist, giving my goodbye
drive my car into the ocean
you'll think i'm dead, but i sail away
on a wave of mutilation
a wave
wave

i've kissed mermaids, rode the el nino
walked the sand with the crustaceans
could find my way to mariana
on a wave of mutilation,
wave of mutilation
wave of mutilation
wave

wave of mutilation
wave

Housing Ladder To Nowhere

I've posted a number of local, Lake Forest, Calfornia examples where, during the time frame of approximately 2004 to 2007, people really bought in to the irrational exhuberance over "owning a home" and paying top dollar. The housing ladder only went up and the number of rungs was believed to be unlimited.

The examples I've cited have been mainly single family homes, and typically with 4 bedrooms, 2 baths or more. I want to make this important distinction, because none of us should lose sight of the fact that families are involved here. The lives of parents and children are probably being turned royally upside down by these trying financial times.

In my view, people who work today in the real estate profession rarely if ever admit to the social impact of their recent handiwork. Realtors, mortgage lenders and bank CEOs will talk all day about new listings, median home prices, monthly sales numbers and perhaps notices of default, the new tools for their website, and a recent closing experience, etc. But they don't seem to fully appreciate that behind all of these astonishing numbers are people. People just like you and me. People with hopes and dreams. People with worries and loves.

The downturn in the California housing market has quantifiable ramifications to be sure: bankruptcies, business closings, lost state and federal revenues, lost tax dollars, federal and state budget crises, increased taxes, unemployment (housing related and other), budget-related degradation of public services, and reduction in funding to school districts. These are serious, quantifiable issues that we've only begun to come to terms with.

But the other side of the coin is equally blemished. The social price tag of this downturn may not be known for many years. The housing market bubble and crash has affected people personally and psychologically in terms of their daily stress, their overall health, as well as the cohesiveness and well being of families. It may be too that the crises brings people closer together than before, which would be a good thing. My posts on this blog have often been sarcastic and angry. However, I do feel badly for those who made honest mistakes and for those who suffer because of them, especially young kids who may not fully understand what's gone wrong.

Since I started The Rancid Truth Blog about Orange County Real Estate in 2005, I was pissed off. Really pissed off. I've worked very hard, traveled extensively and earned good money. I've paid more than my fair share of state and federal income taxes, yet I have been utterly priced out of the volatile housing market here. I should be paying more for the privalege of renting a single family home, but I'm not. It's cheaper to rent here. And we all know today that Orange County California home prices were fueled by snake oil sales people (liars), irresponsible lending, irresponsible borrowing (lying on mortgage qualification docs), and unabashed greed.

And I'm still pissed off about all of this.

Sure, I was the responsible one. I didn't take massive risks, yet my federal and state taxes are going up, my rent stays the same, yet I'm helping unqualified people stay in homes that they can't afford, and that I might otherwise have been in a position to buy myself (if prices where allowed to adjust) and assume all of the responsibility that this might entail, including paying local property taxes.

I'm convinced that I'm right to be angry about what's happened here (and still happening here), and to demand change. I don't want a medal for being financially prudent the last 4 years. But I do think that the housing market needs to be allowed to shake itself out and correct, fully understanding and appreciating that there will be significant financial and social casualties in the process. The sooner the market heals itself, the sooner it can recover.

On to today's example:

The setting is June of 2005, Lake Forest, California. The single family housing market is white-hot. Home buyers, lenders and Realtors are living the high life. Homes are selling like umbrellas during a rainstorm, and at stratospheric prices.

A lovely 4 bedroom, 3 bath single family home, 2,150 sq. feet and 10,800 sq foot lot (most of it on a useless backyard incline) located in the beautiful Bennett Ranch area, sold to a new owner for $680,500. That's $311/sq foot.

Fast forward 6 months later to January 2006. The home sold again, this time for $795,000! That's $370/sq ft!

It's now April 2009 and the home has shed it's toxic loan glamour and become a short sale offered at $445,000 ($207/sq ft).

25551 Glen Acres, Lake Forest, CA 92630

Glen Acres is the place to be.

Home Sales Up in Orange County. Mortgage Defaults Also Up.

Orange County median home prices rose 2.2% between February and March of 2009.

Meanwhile, Orange County home mortgage defaults increased 19% in Q1 of 2009 over Q1 2008.
So is it finally time to sing halleluja to an OC housing market recovery?

I don't know man. I've got a really bad feeling about this. And this.

I mean seriously, with all that we have experienced in the last 18 months within this state, do California residents now make the biggest procurement decisions of their lives when there is uncertainty about future employment?

In other news, if you live in OC, you're home is probably overvalued (overassessed) and you're probably paying more in property taxes than you should be. Many homedebtors in OC are now filing appeals with the county to adjust their home property tax bills. But less property tax revenues in OC is going to likely negate some drastic cuts in educational programs by OC school districts. These cuts included firing teachers, eliminating courses and closing down elementary schools.

A Home Price Haircut - Apache Style

2005 must have been an interesting year in the Orange County housing market.

Very interesting.

I mean, could things have gone any better for homesellers, buyers and flippers at the same time? No way! College textbooks will no doubt include case studies about 2005 as the year of idiocy, of the seemingly unending, carefree, unregulated, real estate orgy.

15%+ appreciation on home sales. Skyrocketing home prices. Champagne and chocolate fountains. Hot hors d'oerves. And of course, parties around OC would not have been complete without the loud, depreciating jokes about foolish renters and housing market doomsayers.

"I just bought a new SF home for $700K last weekend! Guys, I'm so rich now!!!"

Four years later we can only look back at this period with our heads cocked to the side and a "WTF?" look of grimace on our faces.

That's all we can do. Because the damage is done. And like it not, we're all paying for it. Big time.

Today's example is 21892 Apache in Lake Forest. The location is appropriate. This is a beautiful 4 bedroom 3 bed, single family home with a massive backyard in lovely Lake Forest. The home is close to schools and far enough from the free way and the train to enjoy.

Now let's look at the ridiculous sales history that could only make sense to individuals in complete and utter denial, or in a drunken stupor of irrational exhuberance:

February 18, 2000: Sold $313,000

July 4, 2005: Sold for $700,000

November 14, 2005: Sold for $744,000

April 22, 2009: For Sale for $499,000

The greater fool asks: "So, uh...guys..like, where did my 15% per year home appreciation go?"

Oh, it's in our homedebtor bailout taxpayer checkbook. We'll go get it for you.

$499K for the same house that sold for 40% more before.

Now that's a home price haircut Apache-style.



Thanks again to the Orange County realtors, mortgage brokers, and financially inept borrowers for the greed and complete lack of integrity, and for all of those funny jokes.