Hard to believe it’s after 8 a.m. on Sat and not a single post about San Clemente. Suspect it’s the 3 day holiday.
We bought in S.C. in 1978, sold to our son in 1999 and have been following the market for several years assuming that prices will eventually resume normalcy at which time we’ll probably buy again. An example: 102 Vial Zapata: bought in 2002 for $730,000, now asking $995,000 a short sale with backup offers accepted (for about a month or more so far - suspect it will be back on the market like 90% of s.s.).  Perfect fit for IR S.C. category 2 HELOC abusers. However, the $249 per sq.ft. price is substantially lower than most of the s.s. examples and approaching normalcy. My guess is that prices will eventually be under $200 p.s.ft. on a reasonable selection of homes not located within walking distance of the beach. We’ll probably pounce on something about then. The realtors we’ve talked to don’t think prices will go that low - anybody care to hazard a guess?
An aside: I understand that banks don’t rent out REOs. The realtors comment on one of today’s s.s. examples shows why:
“Great tenants would like to buy, and very private, so showing a tad difficult.”
One caveat on S.C. If you can see the freeway from any of the hillside views, you can hear it. Might be bothersome to some, particularly at night if you sleep with windows or sliders open.
Talega residents won’t have to be concerned about noise from the currently defunct attempted extension of the 241 tollroad (Foothill South Fwy) - at least for now. And the traffic congestion is significant through all of S.C. If you’re thinking about going to Irvine, particularly on weekends, pack a lunch!

This property is very close to I5, is’nt it? How much would you buy back this one since your are familiar with SC?

I have a good friend in San Clemente who insisted until a couple of months ago that prices in the good neighborhoods would not go down.  I had been warning him for over 3 years.

He owns a lot of rental real estate.  He also took out HELOCs on a couple of them in early 2008 to maintain liquidity, i.e., he wanted to make sure he got the equity out before the offers disappeared.  He is likely to remain current on his loans.

What I don’t understand is why all of these people who took out hundreds of thousands of dollars worth of HELOC money didn’t just set some of it aside to help pay the mortgage for a few years.  I guess if they were responsible enough to plan ahead for such a thing, they wouldn’t have ended up defaulting as soon as their teaser rate payments ended.

Not over $200 p.s.ft. and only if it was in excellent condition. That offer would very likely be rejected out of hand. Wouldn’t buy, however, because of fwy noise.
For comparison, I paid $105K in 1978 for a 3br/2.5ba condo with ocean view just over a mile inland on hillside and sold in 1999 for $200k to our son (a fair price at the time). It would probably bring about $525-$625 now depending on how badly someone wanted the floorplan (biggest and few of them) and view (about the same as this current 2br listing on redfin:
http://www.redfin.com/CA/San-Clemente/176-Avenida-Baja-92672/home/4992858
S.C. prices have been just as slow to decline as Irvine and often as unrealistic but, like Irvine, they’re dropping.
I neglected to mention that fwy noise is also audible anywhere on the hillside even if you don’t have a view. (It diminishes rapidly on the ocean side of the fwy because of the onshore breezes). It only disturbed me in the evenings - could not sleep comfortably with sliders or windows open facing ocean (for breeze in summer) due to it. It’s 24/7 and worse now.
And there were at least 6 weeks a year when a/c was needed, particularly during Santa Ana conditions which lasted about 5 days each time. Now I think it’s more. I wouldn’t be without a/c if I lived there year-round (perhaps a portable unit for the bedroom at night and l/r daytime).
Unfortunately, all the LA and O.C. traffic going to San Diego and vice versa has only one road - I5. It is very busy on weekends. Weekdays are no fun either. There will have to be some construction of new (toll?) roads to accomodate it. I think the recently nixed 241 extension will be revived in some fashion when the traffic becomes unbearable in a few more years.

Do you remember a 1965 surfing movie by Bruce Brown called “The Endless Summer”? I have a friend who built a home decades ago off Ortega highway. He said that Mr. Brown had purchased substantial amounts of land along Ortega around that time and subsequently slowly sold them off in smaller parcels. Timing is everything!

Many people did that. Unfortunately, that is still an unsustainable Ponzi Scheme, and prices will not rise to bail them out.

I once looked at a house in San Clemente on a street called Via Quieto. It backed to the 5 freeway!

That is one ugly house….

Note to self….

Buy more gold bullion on Monday.

Seriously…is this making anybody else uncomfortable?

IR…if you get a chance…I’ll bet you dinner that the Ahmanson mansion in Hancock Park might be an interesting one.

401 S. Hudson 90020

I heard (from a reliable source) that the owner turned down an offer from Madonna a few years ago.

Lots of them are making money in my book.  Simple math:
original purchase price < current sale price

Loan abuse is another matter.  What happened to the cash?  Will the bank’s go after them or just bill the Feds, who will pass the bill to taxpayer?

Options: (trustee sale with quick foreclosure without recourse vs. judicial foreclosure-with possible lien against other assess), I think the banks will go with the former and stick the bill to the taxpayers.  The latter takes too much time and collecting requires work.  Why work when you can get money without working or risk?

Who needs the Ponzi scheme when the govt will make up the difference?

Is it still considered HELOC abuse if the property is sold for a profit?  Taking those loans is definitely a risky maneuver.  A the short sales are really unforgivable.  But if they manage to get out from under the property without stiffing the lender I’m not sure it should be called abuse.

It does depend on how you define abuse. I suppose you could call adding to a mortgage balance and risking a home “incredibly stupid use” if that sounds better.

Your query is somewhat revealing. The idea that there is a legitimate “use” of a HELOC other than perhaps property improvement shows just how deeply embedded personal Ponzi scheme financing is in our culture.

It is like credit cards. The only sane use of credit cards is to pay the balance off each month. Carrying a revolving balance—financing consumption—is extremely foolish, but some would just call that “use.”

I was helping the economy

Sorry for the late post thrifty.

These people make me want to vomit.

There, I said it ... I feel better now.

Very interesting post on SC. I never understood why everyone here is so obsessed with Irvine. If you add Aliso, Laguna Niguel, San Juan and SC to your roster you get 5-10 times the inventory of only looking in Irvine and a better chance for a good deal. You can also be closer to the beach. If you work in Irvine you can take the 73 and get there in 15-20 minutes for $200 a month.

Here is a great article on knife catchers in Phoenix.

http://www.nytimes.com/2009/05/24/business/24phoenix.html?_r=1&hp;=&pagewanted=all

This quote summarizes the attitude of most buyers: “You need to buy when there’s blood in the streets,” he said with a shrug. “Even if it’s your own blood.”

The abuse is when the is a walking away with money in the pocket.
Say:
Purchase price: 400,000
Purchase loan:  399,000
HELOC loan:    200,000
short at:    450,000

Or the “Owner” walks away with $150,000 loan forgiving or possible cash in pocket.  That $150,000 might even be tax-free (depends on date of forgiven).  Taxpayer is billed ~$200,000 ($150,000 for loan default and $50,000 for RE and Bank late fees).  The HELOC abuser / “owner” is now a victim.

I know of two that gave back the keys (on with no money for 6 M) and other other had to bring some money to the short closing.  They can’t get a home loan for 2 years, but credit is good enough for cars on credit.

Apologies as this is OT, it’s continued from the previous thread but IMHO it’s important so here goes - (IR, please feel free to delete this as it’s your (marvelous) blog. (about some ugly $hit that affects us all))

I wrote - “It wasn’t just the home “owners” who stole the money from us, the banks & mortgage brokers got hefty fees for their ‘services’ and the realtors got their their 6% as well…”

AZDavidPhx responded - “I am calling out fauxowners who are squatting after defaulting on their mortgages.

It is (and should be to you) just as offensive as AIG throwing parties after getting bailout cash.

These pigs on the other side of the spectrum don’t get a free pass.  These mother-fers were part of a two-person tango.

If this pig mailed back the keys after defaulting then I would chalk it up to another gambler biting the dust.  But no, she sat in the place stuffing herself and taking a dump at everyone else’s expense for two years.

This is B.S.  You should be outraged.  But hey, if you want to go the “all’s fair ho ho ho hah hah hah” and take to morals down a notch then who am I to stand in the way.  What do I care?  Let’s all get naked and go streaking through the local elementary school everyone - who are THEY to JUDGE US!”

& here’s why I posted this:

Yes, I blame all parties in this mess, those that ‘bought’ & those that ‘sold’, but my major beef is with those that ‘sold’. Why? Because it’s those that ‘sold’ these bogus mortgages & loans who knew what they were doing was fraudulent at the time they were doing it yet did it anyway because they knew they would get their cut in any case, knowing full well it was their client/(prey) and some lending institution somewhere that would get left holding the bag (& ultimately, responsible taxpayers aka chumps like many of the readers of this blog & myself).
  John Q. Public sees his neighbors make off like bandits w/their HELOC $. His mailbox is full of similar offers. Why should his neighbors’ houses ‘earn their keep’ & not his? Yeah, right, he should have known better, BUT, it’s the bank officers, the mortgage brokers, the realtors, they’re the ones who get paid the big bucks TO KNOW THIS STUFF yet they pimped these fraudulent products right down the line. Hate the homeloser all you want to, sir, but if you don’t first & foremost target those few with the power to have made it all happen in the first place, you’re both blaming the victims and setting the stage for the next bankster ripoff of “We, the people”. Priorities, man, priorities!

IR,

Even that’s about to change. Prudent savers with good credit are once again being tapped to pay for the foolish credit card revolvers. “Deadbeats” are what collection agents call us who pay our balances off monthly and get airline miles or cash back for card purchases. For that privilege under the new law that the bank lobby wrote, we get to pay fees to use those cards starting next year after having our credit lines cut because the trillions we bailed out the “too big to fail” outfits with wasn’t enough for the poor things to feel comfortable lending us back our own tax dollars. Oh, slightly OT, but our bond buddy Bill Gross says the US and the UK are about to lose their AAA credit rating for the first time ever. But “the bottom is in.” Wasn’t it Seinfeld, or George, that said “it’s not a lie if you believe it.”

How many people in Irvine don’t own the land their homes are built on?...and don’t even know they don’t own the land?

If they don’t own the land, then they would most likely be paying a lease on a regular basis (monthly, quarterly, yearly) by separate check. Can’t imagine an owner not having been advised at the time of purchase that the land (or their share of commonly owned property in a condo complex) is not being sold with the structure.

Uh… All of them?  I’m not an Irvine expert, but the Irvine Company owns all the land there, right?

I had no idea that the Irvine Co still owned the residential land. I assumed it owned and leased the commercial land (apts, business locations, etc). And that it had sold the land with the master planned communities such as Irvine. In any event, I think the residential sales docs must stipulate that the company still owns the land.
Interestingly, Palm Springs is laid out like a checkerboard with Indian ownership of every other square mile except the acreage sold off piecemeal. This has resulted in some homes being owned (fee simple) and others being built on leased land. Like homes on leased land are usually cheaper since the land is leased and not part of the purchase. After 50 yrs the land and all structures on it reverts back to the Indian owners. Wonder if all the homes in Irvine revert back to the Irvine Co after a given period?