Swan Drive or Swan Dive?

There are plenty of people out there in Lake Forest, California who believe housing values will come roaring back to 2005 levels any second now.

Here's another textbook example of devastating value loss in the community suffered mainly due to a complete inability to accept reality:

23952 Swan Drive, Lake Forest, CA
Single family
4 bedroom
2 bath
1,471 sq feet
5,035 sq foot lot
Previous Sale 9/13/2005: $659,000
LISTING PRICE: $389,999

It boggles the mind to consider that only 5 years ago in 2005 some nitwit agreed to pay $659,000 (over 10 times the median income in the county) using what looks to be close to 100% financing - all not just for the pleasure of listening, but of facing 12 lanes of roaring traffic generously provided free of charge by the State of California and the 5 San Diego Freeway.

So what you're saying is I get the fortune of living right next to one of the busiest, smog-choked highways in the nation?

Where do I sign?

As if that were not enough comedy for you to consider, the home was listed for sale just two years later in October 2007. The proprietor has been chasing down the market ever since. The property is now in foreclosure and facing auction later this month at an estimated market value of $342,000 (Realtytrac). And the home is still up for sale (207 days?) listed at $389,999.

So what lending institution did their homework and looked at the appraisal data on this property? Express Capital Lending. Nice.

Just to add more insult to injury, the previous owner purchased this healthy lifestyle winner back in October 2001 for $198,500. Now think about this for a moment. The previous owner managed to successfully sell this carbon monoxide ranch only 4 years later for almost half a million more? With a $659,000 listing price today, one would believe the owner to be chronically high on highway 5 fumes!

It'll be interesting to see how this home fares at auction. $389,000 seems delusional to me. Now I know that "beggars can't be choosers" when it comes to buying homes and I like getting high as much as the next person, but I'd rather be a beggar than give myself and my kids emphysema living right next door to the damn freeway.

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.

What would you do-Oo-Oo, for a Klondike Condo??

Some person might indeed be willing to brave blistering winds and scorching, uncontrollable, wildfires for an opportunity to own and occupy this beautiful 3 bedroom, 3 bath condo in the Trabuco Canyon (Lake Forest) area.

I remember fondly back to a time in early 2005 when I first moved to Orange County and started renting, when a local Realtor, after listening to my confusion about local single family home prices here, proceeded to admonish me about my expectations. He said that I needed to set my "sights a little lower" than a single-family home, and "consider buying a small condo instead". "Work you're way up" the rungs of the home ownership ladder to achieve your dream of Orange County single family home ownership!

In other words, "Ride that bubble, dude!...Don't worry, everybody's doin' it!".

This lovely condo was purchased back in November 2004 at a perfect, Hubba Bubba Bubble Gum price of $435,000!

Today's 2009 Asking Price: $350,000 (a pre-approved, packaged short sale)

Address: 28496 Klondike, Trabuco Canyon, CA 92679

Down on the Corner

A lovely 4 bedroom, 3 bath, single family home purchased on a hot August day in 2006 for $715,000. 2,000 square feet and a 5,984 sq ft lot.

Fast forward almost three years later and this corner abode is one of the lowest priced short sale single family homes in all of Lake Forest, California.

$715,000, which is almost 7 times the median income here in Lake Forest (approx $99K per anum), must have seemed like the "price is right" back in 2006. Nevermind the home's location being nestled almost equidistant from both the Amtrak train line and the 5 Freeway.

Asking Price: $399,999

Address: 24191 Hurst, Lake Forest, CA 92630

Creedence Clearwater Revival - "Down on the Corner"

Using Fear to Earn Real Estate Commissions: "Housing Prices Going UP in Orange County!"

I am searching for a home to buy in Lake Forest, California and surrounding communities. I wanted to share with you a recent real estate flyer I received via e-mail from a rather well-respected, highly experienced realtor in the area. I've removed the names to protect the shameless (except for those quoted in the flyer).

Read it. What do you think?

Housing Prices Going UP in Orange County! So Consider Buying NOW.
In case you forgot, you first contacted me through my web site at www.xxxxxxxxxxxxx.com and started searching there for homes. You have been getting your requested emailed updates from me since then.

If you are waiting for housing prices to hit rock bottom before you buy a home to live in or rent out, wait no longer.

Orange County home prices last month ACTUALLY ROSE for the first time since June, according to DataQuick.

The median selling price was $375,000 — up $5,000 from January but still down 27.9% from a year ago.

For calendar month February 2009, Orange County saw:

$375,000 median selling price that is 42% below June 2007’s peak of $645,000.
Single family homes sell for 41% less than their peak pricing (June ‘07) while condos sell 46% below their peak in March 2006. Builder prices for new homes are 42% below their February ‘05 top.

Home prices usually rise in February vs. January. Last time they fell in this period? 1999!

January was the 7th straight month of sales gains vs. the year-ago period. That follows 33 consecutive months where sales failed to beat the previous year’s pace

Delores Conway, a real estate economist at the University of Southern California, says home prices have come down 40 % in Los Angeles and Orange County since the mid decade peak.

She notes that those prices, coupled with record low interest rates, mean today’s buyers can secure the same monthly payments home buyers enjoyed six years ago."

This is marketing from a Realtor. This person is trying to earn my trust.

Look, I understand as well as the next person that even Orange County California Realtors have to earn to eat.

What I don't agree with is cherry picking recent 2 month MLS and DataQuick numbers, throwing down a fear hypothesis (prices going up) in an e-mail piece with zero supportive evidence, all in order to cajole people to buy a home and promote a self-serving, commission-paying agenda.

We've all seen this film before. And it sucks.

If I'm of just average intelligence and I read the above Realtor pamphlet with the stated 41% drop in single family home prices, I'd be asking myself "why did that happen?". "What factors could cause such a major drop?", and then determine whether this drop might continue down to 50% or 60% or more?

50%! You're crazy!! NO! NEVER! That can't happen. This is Orange County, California!

No, you've got to BUY NOW or....*yawn* you'll be priced out of the market forever you no-buying-fence-sitting-wastes-of-space!!!!!

I'm just an idiot renter here. But do we really need this? I mean, given all that's happened over the last 2 years in Orange County residential real estate, at what point do we conclude: "Hey, we should really stop ourselves with all the shameless bullshit!"?

Here's a message to Realtors from a prospective buyer: Drop the fear tactics, and do what you can to start instilling some confidence instead.

Renting in Orange County. No Ball and Chain.

I'm still renting a single family house here in Lake Forest, California, paying way less than it would otherwise costs me to go into debt to live in a similarly-sized home per month here including mortgage, insurance, taxes and upkeep, particularly when one considers the economic situation and unemployment risks in this state. I mean, if I lose my job in the coming months, I have flexibility to pick up and go elsewhere. Look Mom! No strings!

I've said all along that this is wrong. It should be a privilege to rent and have this kind of freedom to get up and freaking leave. I should be charged a freaking premium to live this way and have no real obligations other than the monthly rent and utilities, especially right now.

But Orange County, California, and I presume many parts of the United States of America, have had it wrong all along. Instead, homeownership (homedebtorship) has been marketed at the premium, partly due to narcotic-like liar loan products since 2002, the resulting run up in single family home prices, and the incessant industry lies about "home appreciation" that everyone and their dog was suppose to "take to the bank". Come on. Who doesn't remember the famous Orange County, California adage: "15% is in the bag!". Jesus, who in their right mind isn't for 15% appreciation on their money?

But I've been renting. And I've been saving.

Like a mad dog.

I can't say I'm way, way ahead. Indeed, I've even lost money on investments over the last 12 to 18 months. But I have no ball and chain to me. I'm still throwing money into savings accounts and retirement accounts. I've cut my expenditures where I can. I started to grow a garden in my back yard, and I'm not eating out as much. Driving my car less and my motorcycle way more.

That all said, I would love to "own" (or actually go into debt for a home) here. I have been looking too. Carefully so. Homedebtorship definitely makes sense under certain circumstances. But not under all circumstances, and certainly not at any price.

We are now witnessing record home sales in Orange County the last few months.
And local realtors have claimed that these transactions have occurred either at or above the asking price! So these buyers either have a lot of down payment cash available, or their willing to continue borrow large amounts of money to live in a house. That's their choice. They must have awesome job security and a dependable income too, or maybe they won the lottery and inherited some serious dough.
More power to them.

Single family home prices are coming down now and mortgage rates too. Maybe the time is now to buy, or at least may be quickly approaching?

Not in my view. Not yet because home sales prices are still not congruent with local incomes in Orange County. Not yet because renting is cheaper, and it shouldn't be. Landlords can't rake renters over the coals. They certainly want to, and there time will soon come. Also, as I have stated numerous times on this blog, I do believe more housing trouble is on the way in the form of the shamefully under-reported Alt-A prime loans.
Sunny times are not necessarily guaranteed, nor is it "full-steam ahead" for California housing market.