2 Bed, 2 Bath Aliso Viejo Condo Awaits You. Just $430,000!

Aliso Viejo is a lovely Orange County community positioned south of Lake Forest and north of Mission Viejo, California.

16 Alicante
1,496 square feet in size ($287/sq foot)
2 bedrooms
2 bath
2 car garage
Price: $430,000
Last Buy Price: April 1993, $125,000

Assuming you can scrounge up $86,000 for the 20% down payment, you can finance the remaining $344,000 with a fixed rate 30 year mortgage. Monthly mortgage payment at a 6.13% mortgage rate from the local bank and presto: A monthly mortage payment of just $2,091.29. That was easy!

But wait a second. What do we see just down the road nearby?
Another 2 bedroom, 2 bath condo, slightly smaller in size, for $390,000!
A $40,000 difference!

87 Pamplona
1,213 square feet in size ($322.00/sq foot - WTF?)
2 bedrooms
2 bath
2 car garage
Price: $390,000 as of Feb 18 (holy crap!)
Original Buy Price: November 2006, $421,172 (holy crap again!)
Days on Market: 137 days (yikes!)

And dammit if both condos don't have brand new gas stoves!

Aarrrrghhh! Runaway!

Come on people! Let's get with the program, shall we!
The temporarily increased loan limits are starting to make no sense at all if people keep dropping their pants on price!

Cramer Says: "Dump Your House"!

Jim Cramer from CNBC on the collossal housing crash and whether you should keep paying your mortgage on a so-called "asset" declining in value, or just dump your losses and rent.

Very compelling statement also on prioritization of paying your bills: Pay off credit cards first, THEN pay your mortgage.

Nice!

Transcript Courtesy of Housing Doom:

Here's the video link: http://tinyurl.com/2kqgnf

Transcript:

Torabi: "I have to bring up a video we did yesterday that was entitled ‘Walk away from your house’". Torabi: "Jim Cramer says, y’know, ‘there is a time to walk away from your house’. To re-visit the video yesterday, you said, ‘when your house is down 20%, essentially, when you have no more equity left…’"

Cramer: "Right"Torabi: "…that’s a good time to sell…"

Cramer: "Yeah"Torabi: "… but what [unintelligible] because that"

Cramer: "Well not just sell, to walk away. You can’t sell it."

Torabi: "How do you walk away?"

Cramer: "Well you just default on the mortgage. It makes huge economic sense. You go rent. Uh, you don’t want to lose your job, so you keep your car. Uh, you keep your credit cards so you can buy, and all that really happens is is that you made a bet and you lost, so don’t compound it by continuing to pay."

Torabi: "Now the hierarchy of debt, you were saying also that y’know, your credit card debt should be less of a priority than if your house is losing value"

Cramer: "Oh, yeah, credit cards are much more important than your house. Remember, your house is only a good bet if you can build equity. But if you are going to lose money each month, you might as well rent. You shouldn’t own."

Torabi: "And, but, yesterday you’re also saying there are no places in this country where there is value in homes. A lot of homes are depreciating…"

Cramer: "No, No, there is no place where [mumble] you wouldn’t be down on your home if you bought it in 2006, that’s what the issue is. So, I’m saying that buying homes in 2006 was like buying the Nasdaq in February of 2000. They’re very very similar - it was better to be margined out than to continue to put capital against those Nasdaq stocks."

Cramer: "There was a report this morning by David, I believe it was David, uh, Blitzer, on, when I was on with the wonderful and fabulous Erin Burnett and it was that the, some housing prices have, uh, been, have actually stopped going down and some are going up and I just think that’s not true. I think, like, bad CDOs, and, like, bad leveraged loans, the actual mark to market is down everywhere. I get that from the 5 homebuilders whose conference calls I listen to. There are no up markets, and there are markets that are falling 20-30%, and those are the ones where it’s much smarter to walk away from your house."

Torabi: "Is the 20-30%… what’s that based on, or is that just…"

Cramer: "It’s where the, uh, purchase prices are, uh, when you back in the discounts. The discounts are very hard to see, cause all the homebuilders do two things: One is is that they offer incentives that don’t surface, so the list price is $250,000, but you’ll get rebates just like a car, so the list price of a car is $25,000, y’know, but you’re really only paying $18,000, so take in that, and the second thing is is that there’ll be Realtors, and what’ll happen is is that you’ll say ‘look - the list price is $225,000′, but you can negotiate down and go $190,000. I’m using the negotiable prices.

Cramer: "This is happening in the inland empire, in Sacramento, uh, it’s happening in Phoenix, it’s happening in Denver, and it’s happening in Las Vegas, and in southern California, uh, anywhere near the bread, the so-called bread basket, Modesto, these are all places where there’s tremendous overbuilding, and where it may pay to leave your house."

Hey Jim,

"Boo-Yah!" from overpriced and overvalued Orange County, Southern California.

Orange County & Irvine Slammed by Slate.com Article

Mr. Daniel Gross of Slate.com unleashes a rancid torrent of truth about the Orange County housing market, with a special dose of vitriol - nicely delivered - for that carefully planned OC McCity called Irvine, which Mr. Gross generously dubs "a center of reckless real estate lending and borrowing" and "the nation's capital of real estate folly".

Until recently, Orange County was New Jersey to Los Angeles's New York -- upscale but generally ignored, and not nearly so chic or happening as its urbane neighbor. Television helped change the image with glitzy offerings such as "The O.C.," "Laguna Beach" and "The Real Housewives of Orange County." These shows portray the county's glittering beach communities as the capital of plastic surgery and extreme consumption. But inland, just over the hills, the massive planned community of Irvine has become the nation's capital of real estate folly.

Wow. Ouch.

Yeah, see that gaping wound I have right over there? Yeah, I'd like you to throw a fistful of salt in it please. What? No salt? Well, do you have terpentine?

Indeed sub-prime mortgage loans (even prime loans), irrational exhuberance for real estate of any shape, color or size, and financial illiteracy are indeed biting the OC middle class and even the more well-to-do.