Sunday, June 13, 2010

Greenacres: The Place to Be?

In 2005 life was obviously very good in Orange County, California. There were so many things you could see, do and achieve. It never really mattered how much money you actually earned from your employment or what you're disposable income looked like after all expenses and debt payments. All that mattered during this glorious slice of time was how much you could borrow. Banks throughout the land enabled all Americans - both rich and not so rich - to borrow heaps and heaps of dough.

It is shocking to consider the shear amount of money that Californians not only borrowed to buy their primary residence or investment property, which was sometimes $500,000 or even more, but also how much they borrowed on top of all of that in the form of HELOCs (home equity lines of credit) loans, which the consumer could use...well, for almost anything from a set of new kitchen counter tops, to a new Harley-Davidson motorcycle, to a vacation for two in the Azores. It didn't matter what you're net paycheck looked like, or your next paycheck for that matter.
The banks who gave lent the money did not care. So why should anyone have cared?

Here's a single family house in Mission Viejo that was first listed for sale June 20, 2005, a full three months after it was purchased in March 2005 for a whopping $930,000.

What's interesting is how this house was listed and then delisted over and over again in utter futility over a period of 4 years. Why?

Today (June 2010) it is listed once again for sale at $715,000. With a 20% down payment of $143,000, the income requirement to purchase this bad boy is $141,500 assuming 5% mortgage and zero other monthly debt liabilities (I've always been interested to know just how many people in Mission Viejo bought their cars for cash, i.e. have no auto loan(s)) This home is located in the Capistrano Unified School District, which is on it's 7th superintendent in just 4 years. Given the recent district turmoil from questionable past leadership and the impact of the California budget crisis might be something for prospective buyers with families to think long and hard about.

28861 Greenacres, Mission Viejo, CA 92692
4 bed
2.5 bath
2,800 sq. feet
6,000 sq. foot lot
457 days on market (technically speaking yes, but based on original list date)
Asking: $715,000 (Correction - MOVED UP TO $745,000 on day of post!)
Last Purchase: March 2005, $930,000

HEYYYY! Great to see you again! Where have you been!?

This is a beautiful house. The owners took good care of it. But given recent comparable sales (comps) of like size and features that have sold in the $650K range, Greenacres comes back to us somewhat (update: way) overpriced. This is common to see everywhere in Orange County, I believe, whenever sellers and banks try to place a tourniquet on monumental financial mistakes of the past.

The thing is, it's been 4 freaking years since the original purchase. I mean, I don't know what it was listed for in 2006, 2007, 2008 and 2009 (I wish Redfin kept a history of this), but hasn't the train sort of left the station already on $745,000?

We'll soon see.

Sunday, June 6, 2010

A Few Tools for Prospective Orange County Homebuyers: School Locators and Performance Rankings

As if the uncertainty associated with the Orange County residential housing market weren't worrying enough on it's own with all of it's cookie-cutter home designs, HOA fees, high home prices, ridiculous FHA financing exceptions, as well as a tidal wave of shadow inventory and foreclosures ready to drench the streets, any prospective home buyers here that already have children or are planning to have children had better take time to consider the important question of schools.

When shopping for a home in OC, so much energy and stress is wrapped around the size of home and the ridiculously high prices one encounters here. This is natural because unlike the glory days of Orange County's Christmas past, today you sort of like have to be able to...wait for it....really afford the house you're going to live in.

During the home procurement process, school districts and school performance may end up being an oversight for some. But since buying a home is the single largest financial outlay of anyone's life, failing to consider schools could be a costly mistake not just for buying today, but also when trying to sell the same home later on.

Besides everyone by now should know that the California budget crisis is a very, very serious problem. The lack of past spending and budget accountability controls in Sacremento and throughout the state will not be resolved promptly nor thoroughly. Incredibly extend and pretend politics have this crisis already dragging on longer than necessary. The budget crisis is having devastating consequences for local schools and communities in Orange County school districts, such as Capistrano Unified, including Saddleback Valley Unified School District. Even after past school closings, program cuts, elimination of transportation, teacher layoffs, larger class sizes and new pay cuts, risks remain high that Orange County will see more of the same in coming months and years, including future school closings, redrafting school district boundaries, changing student transfer rules and more teacher layoffs.

Still, it is important to bear in mind those things outside of one's control and focus on those items that lie within one's control.

If we buy that house, which school(s) will our children attend?

How good is that school?

It's impossible to predict how this massive clusterfuck of a state budget will end up, for the Saddleback Valley Unified School District (as well as others in Orange county) there are some nice website tools already available that prospective home buyers can use to help them make a slightly more informed decision.

Tool #1 Saddleback Valley Unified School Locator
This tool allows you to simply type in the street name of the home you are interested in buying. The website then outputs the three main schools that are "resident schools" that your children would likely attend for elementary, intermediate (middle) and high schools. You can then look up the API ratings and Great School ratings for these schools.

Tool #2 California Public School Ratings
This website shows the API or Academic Performance Index for each elementary, middle and high school in the state. The API index is a scale from 200 to 1000, which 1000 being the best.
Good elementary, middle and high schools usually reside in the 800+ category

Tool #3 Great Schools California
This is more a subjective school rating site where parents and students can contribute their reviews and ratings of every school in the state. The site still shows scores for schools in Orange County that have closed, such as O'Neill in Saddleback Valley Unified (Lake Forest).

Unfortunately, specific, sorted information regarding the performance and/or ratings of special education programs (SDC) for children at Orange County schools is not unavailable today. For answers to such questions one must turn to the specific special education director and program specialists for the school district.