Wow.  I know comments are superfluous but—this wasn’t a risk taking trying a quick flip.  They lived in the place for almost 15 years, apparently.  And now they walk away, muttering, “where did all that money go?”  Actually, they are probably blaming the problem on the banks, like most people nowadays.  Anyone but themselves.

BTW, where does Redfin get off calling this a SFR?  That whole block is all condos or duplexes.  How can they describe it as a SFR?

Further BTW, those old townhomes are terribly ugly (flat roof = “French, Mansard Style”).  But they are roomy and comfortable, and the neighborhood is pretty nice.

Nice park.

http://www.youtube.com/watch?v=BxuCeHUxoBY

Here’s my theory on where the money went.  They heard about their neighbors and friends who were taking equity loans on their primary residences to invest in real estate in other parts of the country.  They, like many other Californians, got sucked in and leveraged the crap out of their home.  Now investing in real estate is not a bad idea, but investing without expert help can be a formula for disaster.  Now their home value has dropped.  Their rental properties are vacant, and if they bought in Vegas, FL or some other area with large price declines, their investment is worth much less now.  Their equity money is gone.  They have exhausted their reserves.  So they walk away and start over some place else.  Sound familiar?

Great point.  They might have invested in CA also, as I know of a lot of this happening in FL with people buying properties either in their neighborhood or elsewhere in the same county.

The MLS listing calls it a SFR, although it is in fact an attached property.

Apparently their money tree died, and they’re blaming the fertilizer.

It is single-family residential; it is not single-family detached. SFR is technically correct, but SFD would be inaccurate.

It’s all used to confuse the general public.

I can fertilize their tree for free   Sorry just couldn’t pass it…

They love their pastels. I like the Speedway story. I’ll bet my 17 year old son has done that on his skateboard. He has enough injuries and goes through shoes like crazy. 

IR, keep up the good work. It’s quite sad nowadays to see new bubbles being propped up by the entire world governments.

If the Fed has any balls left, it would, pardon my French, freaking raise the rates at this point back to 2+%. Why is it still in 0-.25% range? Unemployment? Give me a break. So I’m unemployed and I need to borrow at 0-.25% interest plus whatever the pigs, um I meant the banks, would get with a markup. Try doing that with unemployment or partial employment.

The Fed as well as most of the f**ed up developed countries (EU is another great example) know that, with ZIRP, cash will be flushed out of the system (as your examples shown above). Stimulus is another leg that’s propping up this anemic economy…whatever is left of it.

Once all private cash has been flushed out….game over.

“‘Investors have started to return ... they see prices have fallen so far below the trend that they consider Phoenix housing to be a good investment,’ said Karl Guntermann, the professor of real estate finance at Arizona State University.”

I hope the prop tax and no tenant will eat them alive.

He has put his money in Maricopa, a desert city south of Phoenix that grew furiously during the housing boom to about 45,000 residents from just over 1,000 in 2000.

Offering a cheaper, more spacious alternative to Phoenix, Maricopa also has a high proportion of subprime loans and subsequently foreclosures.

**snort**  Good luck to him on that.  Unemployment is high, wages are low, and any real, paying work is in Phoenix.  When gas prices go back up, nobody’s going to want to make the commute from Maricopa to Phoenix.

Isn’t Heaven’s Gate that cult that killed themselves all in Rancho Santa Fe?

“I hope the prop tax and no tenant will eat them alive.”

That is the fate that awaits many of the vultures in fringe markets. Maricopa, Arizona, and Lancaster, California, will have empty houses for years.

Oh—and since the state budget has slashed funds to Arizona’s public works, the commute anywhere around Phoenix is going to get worse, as potholes and cracks go untended.

U.S. property investors these days are smaller and say they are more willing to wait it out—a stark contrast from the fervent flipping and reckless borrowing that characterized housing investment a few years ago.

This sounds like a marketing ad planted into the media to reel in a few more fresh fish for the slaughter.  If that is not the case, then this author clearly does not understand the difference between investing versus speculating.

Speculating on housing in Maricopa in 2009 is an incredibly foolish venture.  This speculator is going to be waiting a very very long time.  I suppose that whoever inherits his assets will not mind the 50% haircut.

Why was the population 1,000 in the year 2000?  What has changed there since other than a bunch of farm land has been turned into houses?

It’s very isolated and if you are not retired then you are most likely commuting very long distance to work every day.  Why is there going to be another boom in this city when there is plenty of affordable housing closer to Phoenix where the actual (few) jobs are at?  He is clearly hedging his bet that a large segment of the retiring booomers are going to rush Maricopa.  Good luck with that.  I suppose it could happen - the only problem that isn’t mitigated is how much these houses will bet fetching by then when a huge oversupply of exurb homes are selling for a dime a dozen.

Real-estate is a huge portion of the Phoenix metro area’s economy.  With unemployment running high - there are a lot of people sitting around out here with nothing but time on their hands to come up with new gimmicks and schemes to make money the only way they know how which is hustling.  The local radio stations still continue to pump the “Secrets to Making Money in Real Estate” on a regular basis.  The “tax credit” is also being interpreted as “free money” by those who are comfortable living in ignorance.  Local marketing ads are also beginning to pitch the (predicted) “buy now before interest rates go up” to create the urgency element to jump start another mania.

Across the nation, home prices rose for a third straight month in July, encouraging investors to buy property. The S&P/Case-Shiller index of house prices in 20 metropolitan areas rose nearly 4 percent in the period.

Hopefully these “investors” are cash buyers lining up to give back their bubble money and not borrowers who will be upside when mortgage interest rates begin their ascent. 

Our central bank has doubled the money supply since everything hit the fan.  Notice how none of it is making its way into the economy?  The banks are telling us exactly what is going to happen through their actions; real estate is going to continue to decline.  They are sitting on their piles of bailout money to pay for the future losses that they know are on the horizon.  In the meantime, they are all going to pretend to be solvent and compete with each other to snag the remaining borrowers with incomes and down payments.

The Government is clearly going to have to raise interest rates if they want to prevent a run on the dollar by foreign investors and in order to do that, money will have to be removed from the system which means mortgages are going to cost more.  Anyone buying today without a sizeable down payment will be going underwater instantly when this happens.

Anyone who (foolishly) bought a house because of an 8K “tax incentive” will eventually (and hopefully) pay it all back (and then some) via interest payments over the life of the loan.  There is no free lunch and many of these people who are buying using 30 year mortgages will be getting into their new houses only to find that the pride of ownership wears off after about 6 months and 29.5 more years seems an eternity.

I see the present condition in Phoenix as untenable for the forseeable future which is why I shall be continuing to rent even though I could purchase a house and stretch monthly payments to be half what I pay in rent each month.  If you step back and look at the cost in the long run versus a one month granularity - the proposition is clearly a loser.

Don’t fall for the tricks being peddled.  Keep saving your money and wait for interest rates to bring down prices even lower.

Hi David!

Well, the listing also says no common walls, which is most certainly incorrect.

If the Fed has any balls left, it would, pardon my French, freaking raise the rates at this point back to 2+%. Why is it still in 0-.25% range? Unemployment? Give me a break. So I’m unemployed and I need to borrow at 0-.25% interest plus whatever the pigs, um I meant the banks, would get with a markup. Try doing that with unemployment or partial employment.

That’s not the point of low interest rates.  The point is to have a business be morely likely to be willing to get a loan to expand their business and hire more people if interest rates are low.

Yes, it was.

Heaven’s Gate was an American UFO cult based in San Diego, California and led by Marshall Applewhite (1931–1997) and Bonnie Nettles (1927–1985).[1] On March 26, 1997, police discovered the bodies of 39 members of the Heaven’s Gate cult, all of whom had died by apparent suicide. [2]

The group’s end coincided with the appearance of Comet Hale-Bopp in 1997.[3]

Yes, we haven’t had a good AZDavidPhx rant for far too long.

Speculating on housing in Maricopa in 2009 is an incredibly foolish venture.

Depends on the price.  If prices are low enough, he can rent out the houses and make a good profit.  Lots of fringe areas have rents greatly exceeding monthly costs to own.  In prime areas, the situation is reversed.

A quick flip through Zillow (Redfin doesn’t service Arizona) shows things like a two year old, 2,300 sq ft house with 4 beds and 2 baths for $100,000.  A quick flip through Craigslist shows asking prices for 4 bedrooms in Maricopa are between $825 and $1,200 a month.  The potential for profit is there, IMHO.  Taxes and HOA fees might be the deciding factor.

My friend the realtor says housing is the only safe investment left.  Don’t you guys know that? 

Buy Buy Buy!!!!!

If prices are low enough, he can rent out the houses and make a good profit.

::dies laughing::

You don’t live here, or you’d never make that remark about renting houses in Maricopa, of all places.  The knife-catcher couldn’t do worse unless he started buying property in Florence.

There are houses being torn down right in metro Phoenix for lack of buyers.  I predict that once this round of knife-catchers find their fools’ gold is just that, the bulldozers will be lining up in Maricopa.

And it happens with such depressing regularity that you can predict each stage.  Phoenix rode the last boom and hit bottom so hard that properties were practically given away, for pennies on the dollar.  One of my mother’s best friends bought a 1700 sq. ft. house for $5000, with a $500 down payment, in 1990.

I’m not sure if housing in Phoenix and the surrounding regions will ever go that low, but we’re still too early in the “bust” part of the cycle for speculators to aim to make a killing in real estate here.

Do you have a link for the Phoenix teardowns?  That would be interesting.  AFAIK, that’s only happened once before, with some incomplete, vandalized models in Victorville.

In any case, there have to be people willing to trade a 45 minute to 1 hour commute for a two year old, 2,300 sq ft, 4 bedroom, 2 bath house for $900-1,000 a month.  In Southern California, people are willing to pay twice that for that commute.

Like Jim the Realtor says, there’s nothing price can’t fix.

And that’s the rental price.  If they have decent credit and 3.5% down for a FHA loan, it would be closer to $550-600 a month (plus taxes and insurance).

Since you are more bullish than I am, you are generally on your own defending your position here, but this time, I have to agree with you; there is a price discount where any asset has value.

There probably are some teardowns in these fringe markets, but most of them will end up being lived in by someone. There will be people in Lancaster paying $800 a month to live in a McMansion, but as long as there are people with an income—even State assistance—then there will be cashflow from the available housing stock. That cashflow has a value.

Personally, I would buy investment properties in the Phoenix area or Las Vegas because they are inexpensive cashflow. Prices in Las Vegas are back to the mid 90s before there was even a hint of a housing bubble. There is money to be made there. You can find immediate cashflow and real potential for appreciation after the inventory is worked off. That is the risk/reward of a fringe market. It all depends on the price.

To defend the other side, the amateur investors—like the people who get profiled by news reporters—probably has overpaid in the wrong market. They will not be happy with their long-term result.

Here’s an amusing piece detailing the current status of the Las Vegas market:

http://www.cnbc.com/id/33310096

Actually, Turtle Rock Drive gives Laguna Seca a run for its money.

True, there’s no corkscrew, but you got great changes in elevation, turns of decreasing radii, straightways, Camry LEs, you name it.

I’ve always thought they should close TR Drive once a year and give us the Irvine Grand Prix.

Unfortunately my neighbors and the IPD have a hair up their a$$ about such things.

So sad…  imagine an open wheel race car going full tilt going up the hill from the intersection of TR and Campus to the park….  I’ll bet they could hit 200 mph on that stretch.

I’ll bet I could put seats on my roof and make money too. 

That would be a great track. I would do a post on that one, but some teenager would probably want to see just how quickly he could make a lap….

I just hope that the family did, in fact, waste the money and are now losing the home for lack of financial responsibility. I would feel terrible if they felt forced to use the money to cover some sort of long-term illness.  My schadenfreude would dry up pretty quick if that was the case….

Off to pay my bills (medical bills, being unemployed and cobra payments now quickly draining my savings). 

—soon to be University Park Renter. :D

Weren’t they all wearing Nike shoes when the bodies were discovered.

That’s the only weird part I remember.

Back in the day… and maybe still today, the Turtle Rock portion of your track is/was Uni High’s Cross Country course.

IR, How do you know how much HELOC money they used of the $125,000 available.  Does OC recorder’s office publish what was used or/and what is available?

My under-aged children are no longer receiving weekly credit card offers nor HELOC offers.  From the other post, the offers may be starting again.

AZDavidPhx, Welcome back.  What no picture?  :-}

Anybody to write about the storm drain run to the ocean?  No view but a fast and dangerous adventure.

I was living in L.A. at the time, and remembering hearing the local morning jocks on KLSX come up with a parody of “Saturday Night”, based on the Heaven’s Gate cultists.  I don’t remember all the lyrics, but this couplet stuck in my head:

I, I, I, I can sing this way
‘Cause I got castrated the other dayyyy!

Woops, sorry—they weren’t local, but syndicated (Mark & Brian), and on KLOS, not KLSX.

Here’s what I’ve found:

A NY Times on foreclosures and teardowns, with this note:  “As properties stay vacant for longer periods of time,” says Joe Schilling, a founder of the National Vacant Properties Campaign, “it’s inevitable that even in some of the fast-growing communities, they’ll have to look at demolition.” Phoenix, for instance, has set aside a quarter of its grant money to tear down abandoned homes.

Derided Housing Fix Catches On:  “Besides Cleveland, Minneapolis, Youngstown, Detroit and Cincinnati also have plans to use at least one-third of their neighborhood-stabilization funds for demolition, reports indicate.

List of cities now bulldozing and rehabbing:

Flint, MI

Detroit, MI

Saginaw, MI

Cincinnati, OH

Columbus, OH

Youngstown, OH

Buffalo, NY

Indianapolis, IN

Victorville, CA

Little Rock, AK

Des Moines, IA

Minneapolis, MN

Phoenix, AZ </i>

I’ll need to get my camera fixed, but there are quite a few empty lots where 1200 - 1400 sq. ft. houses used to stand.  Just this week I passed another teardown.  In another week, I may see another one.

Yeah, that’s all we need.  You’ve gotta love the government.  Throw another $8k tax incentive at buyers to get into a housing market already wildly distorted by the existence of the home mortgage interest deduction, which probably inflates prices 20% above their natural market value.  What a massive distortion of the economy—and one that more or less directly results in periodic housing bubbles as more and more capital to allocated from productive uses to real estate.

Still is.  My kid has been running Uni xcountry for four years and they do those runs.

AZDavidPhx - Good to know your OK.