Wednesday, July 19, 2006

Orange County Beaches = Toilet

It might be sunnier at the Orange County beaches this summer, but if you are looking forward to a swim that refreshes the body and spirit, there's really no need to travel any further than the bathroom toilet in your own home! You see, Orange County beaches couldn't be more polluted this year. California health officials suggest that you might as well splash around the inside of your "big white telephone" at home instead. You'll actually be exposed to fewer infectious bacteria!
Surfs up, dude!

Monday, July 17, 2006

US going penniless

Say goodbye to Abraham Lincoln. Figurately and literally, the United States is going penniless. Wonderful plans lie ahead for our illustrious American currency - and they won't include "honest Abe".

Monday, July 3, 2006

OC Home Reality

Since moving to the OC in February 2005, I've been one of the tens of thousands of renters here. I consider myself fortunate, however to live in a nice neighborhood and in a single family home. But why, as a renter, do I find myself in the company of so many renters? Let's start with four reasons for now. People much smarter than me can add to this list:

1.) A ridiculously massive shortage of housing
Whether it was a lack of vision, utter stupidity, or just human negligence, no one anticipated the population explosion in this part of California, because if they did, they would have build more homes here. A lot more homes. There may have been tremendous policital pressure also to prevent housing construction on protected land. Hence, reason number 2:

2.) A shortage of space
There's ocean and protected land to the west of highway 5 (basically a north-south freeway) and mountains and protected land to the east of Orange County. The whole Lake Forest area in the 1960s and 70s, supposedly, was just fertile farm land and dirt roads as far as the eye could see. Now it's a concrete jungle with carefully planned strip malls, gas stations, apartments, small condominiums, and 2-to-3 bedroom single family homes. That's pretty much it. The Marine air station on Irvine Blvd. has been closed for some time and perhaps homes will eventually be built there in the future? There are also a number of condominium construction plans in Irvine, but affordability is a major challenge (see reason number 4).

3.) Orange County is a desirable place to live
The weather is perfect in Lake Forest, California. I mean, it is awesome. I grew up in Michigan and Wisconsin. This place rocks, in terms of weather. It's sunny every day except for a few days in early June and January/February-time frame. Other than that, it's 75 degrees F and lovely. Evenings and mornings are cool and pleasant - around 55 to 65 degrees F.
So who wouldn't want to live under those conditions essentially guaranteed 24/7 ?

4.) Lack of Home Affordability: Monthly mortgage payment vs. Rent payment
Unless you are already wealthy, or your parents gave you a massive downpayment for your home, or you already bought a home back when prices were in the $300K range, you are likely a renter in Orange County.
In Lake Forest, I consider myself lucky - for now anyway. I pay about $2500 for a 4 bedroom 2.5 bath single family home. Rent will be reviewed next spring and I know it will definitely go up substantially, perhaps to $2600/month or more.
Anywhere else in the USA, $2300 a month would buy you a damn fine house. Not in Orange County. In Lake Forest, you won't find even a 3 bedroom 2 bath single family home for less than $625,000. And even if you did, you wouldn't bother to buy it because the home quality (construction, interior, neighborhood) would be way too screwed up to justify the price. No way. If you want a quality, single family home, you have to be ready for cough up between $625K to $700K (July 2006). The $625,000 house would translate to a monthly mortgage payment of around $3500 to $4000. Now granted, there are a crap-load of creative, half-baked financing schemes by local banks and lending institutions offering adjustable rate mortgages (ARMs) and interest-only mortgage loans in order to cajole people into purchasing an asset for a price they know in their gut doesn't make any sense. I'm not even sure why I call it "half-baked". I mean, when you step inside these homes and you consider that they are priced at over half a million US dollars (not considering the recent inflation numbers since 2002), you will wonder why I use the term "half-baked". Anywhere else in the continental US most of these homes would be worth is $180,000 or $250,000 max. Yet people go into perpetual serfdom regardless. That fact alone is too f-ed up for words.

These four reasons are why there are thousands of renters in Orange County. Few can afford to buy a home at such inflated prices. Right now (summer of 2006) there are indications that the inventory of houses in the OC are going up substantially and that home prices could take a downturn in 2007 and 2008. Unfortunately, few if any affordable (less than $400K) homes are being built here. Even if prices go down, we all see that mortgage interest rates are on the rise. Unless the war stops tomorrow, the Fed miraculously reverses the damage of the last three years of inflation, and we start paying down the national debt, interest rates will continue to climb. That $625K house may only cost $575K next year, but the interest rates will be higher in 2007 and 2008 and the monthly payment will still kick your teeth in.