A recent article in the LA Times expresses opinions of the fates of several key cities where the housing bubble fully burst.
Irvine Home Address … 97 STREAMWOOD Irvine, CA 92620
Resale Home Price …… $209,900
I know you feel these are the worst of times
I do believe it's true
When people lock their doors and hide inside
Rumor has it it's the end of Paradise
But I know, if the world just passed us by
Our memories of yesterday will last a lifetime
We'll take the best, forget the rest
And someday we'll find these are the best of times
These are the best of times
Styx — The Best of Times
When the housing bubble burst, it was the worst of time for loan owners and speculators, and it was the best of times for buyers and cashflow investors. Some cities and regions have dropped precipitously, and to the degree these areas were dependent upon homebuilding and construction is the degree to which they are suffering today. Some of these cities will come back. Some will not.
Housing bust creates new kind of declining city
A study says cities where home prices have fallen the most — including Riverside, San Bernardino and Fresno — could suffer long-term deterioration similar to that of the Rust Belt.
January 06, 2011 — By Alejandro Lazo, Los Angeles Times
In the Inland Empire and other former home-building hot spots, the housing bust has created a new kind of declining city, different from the nation's traditional rusting centers of industry, that could languish for years.
Although the causes of the decline in these metropolitan areas are distinct from the loss of employment from shrinking manufacturing and industry in some of the nation's old industrial powerhouses, these areas could experience fates similar to places such as Cleveland and Detroit, with neighborhoods experiencing high rates of vacancies for a very long time, according to a study to be released Thursday.
“Some neighborhoods are going to suffer tremendously or are never going to come back or come back very, very slowly,” said James R. Follain, senior fellow at the Rockefeller Institute of Government and author of the study published by the Research Institute for Housing America, a division of the Mortgage Bankers Assn.
I wrote about this same phenomenon in Ireland last May: Ghost Estates: Twenty Percent of Ireland’s Houses Are Vacant.
The long-term health of any housing market linked to the local economy. In areas where jobs are scarce and low paying, prices are low. California witnessed wage growth in excess of national norms for many years. This wage growth stimulated household formation and new home construction, and it made house prices go up faster than in other areas of the country. As a result, California home owners believe their house prices are destined to always rise faster than prices anywhere else.
Potential candidates for long-term decline named by the study are the areas hit hardest by the drop in home prices in recent years. They include several inland California metropolitan areas that grew rapidly during the boom, including Stockton, Modesto, Fresno, Riverside and San Bernardino. Las Vegas and Miami also made the list.
Las Vegas house prices will take forever to get back to the peak. Prices there are currently far below fundamental valuations, and some houses in some neighborhoods will need to triple in value to regain their 2006 stature.
Far from being a problem, the low house prices will be a huge boom to the city as workers can take lower paying jobs and live more comfortably than their counterparts in other areas. Timing does matter (a great old read).
A traditional city in decline is one that has suffered a sustained population drop, leaving behind empty houses, apartment buildings, offices and storefronts. Cleveland and Detroit, for instance, suffered from the erosion of manufacturing and the loss of residents, who left in search of jobs.
Instead of eroding a particular industry, however, the housing bust left a glut of homes because of overbuilding and the foreclosure crisis. Follain argues that the future of these cities is threatened in similar ways to that of Rust Belt cities.
“Long-vacant neighborhoods are going to develop, and we can imagine what can happen,” he said, including potentially higher crime and lower property taxes.
In California, some coastal cities already are seeing a housing market recovery. But inland areas that were built on optimistic assumptions of continued population growth and ever-climbing home values are facing a much more difficult recovery.
Any coastal market recovery is an illusion. The coastal markets are still going to get their comeuppance. Every market was subject to optimistic assumptions about house prices. Some markets have crashed and are nearing recovery whereas some markets have not crashed yet.
Celia Chen, a housing economist with Moody's Economy.com, predicts that a full recovery in parts of California, Nevada, Arizona and Florida won't occur until 2030.
“The housing boom elevated home prices in a number of areas far, far above what can be supported by the economic fundamentals, and so prices have fallen significantly, and they will remain below their previous peaks easily for a decade, or even two decades,” Chen said.
Yes, since house prices had no real reason to be so high in 2006, it probably will take until 2030 in some markets for sustained economic growth to bring wages in line with 2006 house prices.
Some experts contend that foreclosures, which have pierced neighborhoods of all income levels throughout the country, are quickly turning developments on the outskirts of metropolitan areas into the nation's newest slums. Complicating any recovery for these beaten-down areas is the difficulty in predicting which neighborhoods will fare worst. That uncertainty could lead to increasing skepticism by buyers and lenders looking to make loans on homes in these areas.
“If you are looking at this from the perspective of a home buyer or a lender, it is one thing to say you are in a market where home prices may drop 10% or 20%.” said Michael Fratantoni, vice president of research and economics with the mortgage bankers group. “That is different from the idea that 80% to 90% of the value could evaporate. That changes the whole nature of the business.”
Changes the whole nature of the business? You mean, there is risk in lending on real estate? Is there risk in buying real estate too?
Many foolishly believed that the very real risks markets face did not exist. Real estate only goes up. You can always refinance. Interest rates always go down. Both borrowers and lenders need to understand this reality if these transactions are going to occur in a stable environment. If nobody believes they have any risk, they behave in ways that inflates bubbles.
Still, the future of these regions remains a point of contention. Economist John Husing argues that the inland regions of California don't have a long-term problem.
“What has driven the Inland Empire economy is, for the last 30 years, simply the fact that the rest of Southern California is completely out of dirt,” Husing said. “Right now the price differential between coastal counties and inland counties is $100,000. People will ultimately respond to that.”
Yes, the substitution effect will stimulate demand in Riverside County and drag Orange County prices lower.
The development of industrial facilities to handle cargo from Southern California's ports will also continue inland because they require lots of space, said Husing, principal of Economics & Politics Inc. in Redlands. Such development, he said, will create jobs for workers who will need housing.
alejandro.lazo@latimes.com
Has the low end appreciated since early 2009?
Housing markets crumble from the bottom up, but they also stabilize from the bottom up too. The people who buy the bottom of the housing ladder at the bottom of the market have equity they can take with them to bid up prices in the next rung of the property ladder. This unit is the bottom of the Irvine property ladder — which actually says a lot for Irvine. If this is the worst Irvine has to offer, things are pretty good here.T
The owner of today's featured property paid $188,000 on 5/18/2009. He is asking enough to pay the realtor plus make 5% or at least give himself some room to negotiate.
Of course, this brilliant plan requires a willing buyer to play along. Is someone going to step forward and pay a higher price for this unit today?
Irvine Home Address … 97 STREAMWOOD Irvine, CA 92620 
Resale Home Price … $209,900
Home Purchase Price … $188,000
Home Purchase Date …. 5/18/09
Net Gain (Loss) ………. $9,306
Percent Change ………. 5.0%
Annual Appreciation … 6.3%
Cost of Ownership
————————————————-
$209,900 ………. Asking Price
$7,347 ………. 3.5% Down FHA Financing
4.79% …………… Mortgage Interest Rate
$202,554 ………. 30-Year Mortgage
$42,429 ………. Income Requirement
$1,062 ………. Monthly Mortgage Payment
$182 ………. Property Tax
$0 ………. Special Taxes and Levies (Mello Roos)
$35 ………. Homeowners Insurance
$242 ………. Homeowners Association Fees
============================================
$1,520 ………. Monthly Cash Outlays
-$99 ………. Tax Savings (% of Interest and Property Tax)
-$253 ………. Equity Hidden in Payment
$13 ………. Lost Income to Down Payment (net of taxes)
$26 ………. Maintenance and Replacement Reserves
============================================
$1,208 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$2,099 ………. Furnishing and Move In @1%
$2,099 ………. Closing Costs @1%
$2,026 ………… Interest Points @1% of Loan
$7,347 ………. Down Payment
============================================
$13,570 ………. Total Cash Costs
$18,500 ………… Emergency Cash Reserves
============================================
$32,070 ………. Total Savings Needed
Property Details for 97 STREAMWOOD Irvine, CA 92620
—————————————————————————— 
Beds: 1
Baths: 1 bath
Home size: 639 sq ft
($328 / sq ft)
Lot Size: 690 sq ft
Year Built: 1977
Days on Market: 2
Listing Updated: 40555
MLS Number: S643991
Property Type: Condominium, Residential
Community: Northwood
Tract: Is
——————————————————————————
Charming and Peaceful lower end unit, 1 Bedroom, 1 Bath, with Beautiful views from Dining, Kitchen, and Bedroom. The sounds of the creek right outside your windows. Spacious Patio. North facing unit across from laundry and assigned carport with storage. New carpeting and light maple wood laminate floors. Freshly painted. Community Pool, spa, BBq's, tennis courts. Close to award winning schools. Walk to stores and shopping center.
HA !!
This guy has not bothered to do his home work,
I have yet to see one ghost town in IE (Well at least not in TV
), nor do I think there will ever be one.
OK maybe someplace like Hemet but I doubt even that will last very long.
Usually when these foreclosures hit the market at a decent price they do not last one day without an offer.
i dont think he is talking next month
Its going to be interesting to see the ‘substitution effect’ in action.
Of course many hard to quantify factors such as quality of life and ‘prestige zipcode’ come into play, but a few, such as median family income vs. median house price can.
I am convinced that advances in technology can only enable and speed up the substitution effect.
I work in IT and have lived in Irvine for 32 years.
I can assure you that it is becoming less important to physically travel to a job site.
So the question is a what point do many families
cry uncle and refuse to put up with high real
estate prices and move to low cost areas simply
because they now can?
“Of course many hard to quantify factors such as quality of life and ‘prestige zipcode’ come into play”
Actually it’s pretty easy to quantify those factors. You look at relative rents.
If rents in city A are twice as high in city B, but prices in city A are three times as high as city B, somethings out of whack. And if both city A and city B were recently affected by a massive housing bubble, you might want to look to that as part of the explanation.
The planned route for the High speed rail would benefit this region greatly as well, but alas I think the powers that be will waste what little money there is on the central valley route that there is almost ZERO benefit from on that part of the project, I guess that is some sort of grand plan maybe, complete the useless part first, then say gee if we just have more money we could complete the part that would actually have riders LA-IE-SD route.
That is sort of the plan. Basically, the section that is proposed to be completed first (near Bakersfield) has several advantages:
1. It’s the straightest, therefore the trains travel the fastest and it’s the cheapest and easiest to build.
2. Land costs are also lower.
3. Local politicians were uniformly in favor of it.
4. There were no NIMBY lawsuits, unlike in more built-up areas.
Path of least resistance, basically. This section can be up and running quickly, unlike other areas, with lawsuits galore and tough, tricky, slow work to build. Of course, it is in the middle on nowhere, so it’s fairly useless on it’s own. But if the entire project is to be built as planned, this section would have to be built anyways, so it does also encourage the full completion of the system to have this built first.
What?! How would “the planned route for high speed rail benefit this region”? By making it theoretically easier to get from Anaheim to San Francisco?
What I think you mean is this region could benefit from additional regional rail service. Even regular speed Metrolink-type service would enhance the substitution effect discussed in the main post if there were more trains running more frequently (and, as long as we’re dreaming, to more locations).
Also over the last year, I think it was the OC register that had the data, but the average home selling price actually increased in most of the IE while LA & OC average price decreased.
Two points:
I found a paper once by a Fannie economist modeling the price of mortgage-backed securities. The impact of default risk: ZERO! The assumption built in was the loans could be refi’d, property sold, or they were guaranteed by the GSE’s.
Check this link: Absence of Fear
Just as there was ignored risk yesterday, there is ignored risk today.
Good to know that not everybody was deluded. I wonder if this guy’s firm made money betting against the market.
I don’t think they did. 5 year returns are about the Russell 2000. They run a mutual fund company, so leveraged short bets are outside what they’re able to do. Maybe for their institutional clients…
I disagree with the article. In the city of Riverside at least, there are no masses of empty houses, even small, older ones in bad neighborhoods. Now, there might be masses of empty apartment buildings as former residents of those became first time home buyers (since prices dropped in many cases by 50% or more). But the percentage of single family homes that are unoccupied does not seem to be any higher than normal; the opposite might actually be true. I would love to see actual statistics of occupied vs unoccupied houses (and apartments) if they exist. But there are certainly no Detroit-style neighborhoods of empty houses.
It’s easy to check % vacant housing units at the census.gov website. Enter a location name and then follow this link that says, “See more data for Riverside County, California on the Fact Sheet.”
Riverside city, at 7.2%, is below the national average of 11.8%, but Riverside county is above the average at 13.8%. This data is from a 2005-2009 dataset, so I would imagine all those numbers are worse today.
The problem with Gov stats is they don’t differentiate between apartments an SFH, Yes I would agree that I would not want to be an apartment owner in the IE, but homes are not empty long in the better parts on the IE anyway.
Everything looks like a nail if all you got is a hammer.
That’s sort of helpful, but not really. I would want to compare 2006 versus 2010, and also include apartments versus SFR.
I do suspect desert areas of Riverside County might more resemble the article’s conclusions. Places like Hemet or parts of Palm Springs.
That seemed to be your idea…which is backed up by the statistics I showed. I’m afraid that data to the detail you want will probably not be free. But going a level down in the housing, vacancy rates are shown for homeowner vs. rental.
I think one basic idea is that when you have an oversupply, the least desirable areas will see the largest price hits because they will be the ones with insufficient demand. Less desirable units will stay vacant (even at very low prices) while more desirable units will see price decreases, but not the degree of the less desirable units.
I agree with this. For example, in pretty much any city, houses seem to be holding up better than condos, because houses are a superior product than condos.
I guess my only real point is that in Riverside (and places west, so Corona as well, for instance), the Detroit-like empty neighborhoods hasn’t happened and won’t. To the east of that, maybe it has or will.
To continue to use Detroit as a model, Detroit’s home prices rose 25% from 2000-2005, and I cannot imagine its population was growing then. While those were some of the heydays of the SUV & the big3, there were still declines there. Just because things are looking up now, does not mean that it will forever.
Link to the report: A Study of Real Estate Markets in Declining Cities 84 pages.
Riverside is a cesspool. At least in Rust Belt cities there was once (and still remains, in some cases) thriving industries, and over a century of development, infrastructure, and human capital. Riverside mostly grew from the artificial support of a housing bubble, and deflated just as quickly.
Basically, the future of Riverside is lower-income spillage from Los Angeles County, and immigration from Latin America. Perhaps the latter will bring eventual growth and transformation, but only if real roots are dropped (as opposed to more transient, dual-residence immigrants).
“Riverside mostly grew from the artificial support of a housing bubble”
I disagree, at least in the city of Riverside itself (as opposed to Moreno Valley, Hemet, etc.). Riverside has had a fairly steady growth over the years:
http://factfinder.census.gov/servlet/ADPTable?_bm=y&-geo_id=16000US0662000&-qr_name=ACS_2009_5YR_G00_DP5YR4&-ds_name=ACS_2009_5YR_G00_&-_lang=en&-_sse=on (hope that link works)
YEAR STRUCTURE BUILT
Total housing units
95,322
+/-1,272
95,322
(X)
Built 2005 or later
3,087
+/-375
3.2%
+/-0.4
Built 2000 to 2004
8,359
+/-578
8.8%
+/-0.6
Built 1990 to 1999
9,465
+/-599
9.9%
+/-0.6
Built 1980 to 1989
15,019
+/-848
15.8%
+/-0.9
Built 1970 to 1979
19,509
+/-770
20.5%
+/-0.8
Built 1960 to 1969
11,819
+/-752
12.4%
+/-0.8
Built 1950 to 1959
17,514
+/-831
18.4%
+/-0.8
Built 1940 to 1949
3,891
+/-421
4.1%
+/-0.4
Built 1939 or earlier
6,659
+/-447
7.0%
+/-0.5
Now, the last decade’s data here is incomplete, but it looks like there were no more housing units built in the 2000’s than in the 1950’s or 1970’s. There is a lot of older housing stock in the city.
You are correct that most of the rust belt still has significantly more diverse industry than Riverside. You can’t even compare the industrial complex of Riverside to the rust belt since Riverside’s bearly exist.
Even Detroit, hit hard by the recession, has more industrial capacity than Las Vegas. Detroit is more relevant than Las Vegas moving forward as well. Cheap housing is meaningless. Housing can be free, it won’t create revenue. After Detroit centralizes and knocks down entire neighborhoods it’s future will be brighter than Las Vegas.
I don’t think you can compare the two cities that are quite different in its make-up and deduce that Detroit would be more (or less) relevant than Vegas in moving forward. Detroit is an industrial metropolis of 5.7 million people, while Vegas is a service city of 1.5 million. Having greater industrial capacity in itself is not a defining factor in sustainability, it is how much of that capacity can be served by its population. Right now, Detroit is pretty dismal there after a gradual decrease in the demand for their industrial capacity. Maybe a city of 5 million can’t depend purely on service industry as its sole means of sustainability, but then Vegas isn’t growing to be that big. Counterpoint, however, even San Diego has sustained itself quite admirably as a service-dependent metropolis, although they have recently added new world industry into the fold. And they are vastly larger than Vegas.
Having said that I am of the opinion I don’t think Vegas with its current capacity can support a population of 1.5 million, nor support the current level of housing inventory. I just don’t think the demand is there and won’t be for a long time. So perhaps for a different reason I would agree that future might look brighter for Detroit than Vegas. But then Detroit has a long way to go, unless the country moves back into industrial and manufacturing.
Don’t leave out these facts:
Unemployment is lower in Detroit than it is in Vegas.
There are more higher education jobs in Detroit.
The probability that Amercia stops building cars and those entrenched companies move high paying HQ jobs out of Detroit is politically unfathomable.
As for Las Vegas, the probability that Amerricans entertainment habits change is extremely high. Look at history.
“Unemployment is lower in Detroit than it is in Vegas.”
False. Detroit’s unemployment rate (as of 2009) is 28.9%!!!
http://blogs.abcnews.com/theworldnewser/2009/08/unemployment-in-detroit-climbs-to-289.html
Now, the unemployment rate in the greater metropolitan Detroit area is much lower (less than half) than in the city itself, and metro Las Vegas has an unempolyment rate higher than metro Detroit by two or three points. But when I was refering to Detroit, I’m talking about south of 8 Mile.
Plus, all this talk about industry in Detroit and Riverside is also BS, considering the population of Riverside is currently less than a third of Detroit’s today (and less than one sixth of it’s peak population).
My point was that it doesn’t make much sense to compare the two. I never said Detroit had better or worse prospects, just that it is difficult to compare the two. I think it’s pretty obvious that the comparisons are difficult, no matter how you try to spin it.
Chances are that neither town are going anywhere in the foreseeable future. It doesn’t even make sense to be predictive here. Fact of the matter is, Detroit IS in the rust belt that has been in decline for some time, so I suppose a case can be made that Detroit is a declining market. But there is no evidence that Vegas is going anywhere, nor that gambling and related entertainment is on the decline. So you’re basing your predictions on conjecture that this type of entertainment is not sustainable, with no empirical evidence that points to such.
But as the credit contraction continues and other states and cities turn to gambling to close their budget shortfalls, Vegas’ barrier to entry moat around its industry will dry up, depressing its income potential. Couple that with fewer dollars to spend on gambling in general = bad times for Vegas.
The point about Detroit housing falling to near zero (as an advanced case for the rest of America) is that its manufacturing days are over because of the cost of living relative to thte rest of the world, predominantly expressed in the wages paid there. If you can buy a 2000 sf house in a nice neighborhood for $25,000 (not there yet, even in Detroit), then you will be able to pay wages that make America competitive again in the world manufacturing market. This is what is happening, through currency depreciation and falling asset prices. The only question is, how long will the process take?
The price of fuel in the future and critical shortages thereof might be the deciding factors in whether Detroit and other Midwestern burgs regain their past success.
These old Great Lakes cities grew in what were the most favorable locations in the country in the pre-auto era, pre-petroleum era. They are well above sea level, have the most generous supplies of fresh water on Earth, fertile hinterlands, and excellent water transport routes, in addition to being equally accessible to all parts of the country east of the Rockies.
These things have not been too important in an age of super-cheap oil, which is now ending. Cheap fuel makes it not only possible to have fleets of millions of trucks traversing the continent, but make it possible to build and maintain the fantastic Colorado River plumbing system that makes it possible to run city areas of 2 million people or more in the high desert.
Should fossil fuels become scarce and expensive, these places will be more difficult to maintain and will be able to support far fewer people. Water will be impossible, as the mega-dams and aquaducts that these large populations rely upon become progressively more expensive to repair and replace.
Really? The peak-oil-doom prophesy may have some merit over the very long term, but do you really think in a post-fossil fuel world millions of people are going to migrate from the hydro and solar-powered southwest to the frozen midwest? What is it about midwestern industrial cities that sprang up in the early 20th century to build fossil-fuel powered industrial machines that would be more hospitible to large populations in an energy scarce future than the desert cities that sprang up in the late 20th century? The location of the great lakes cities was only more favorable than the west 100 years ago because the economy of the west (and the plumbing you refer to) hadn’t developed yet. Take away those considerations (which time has done) and the midwest is just as inhospitable as the west, although in different ways.
It amazes me that the vision of the future presented by peak-oil-doomsters and knustlerites always ends up looking pretty much exactly like the late 19th century. Not only will our collective scientific and technological knowledge level suddenly revert to that of early industrial era, but there will be a reverse-migration from the west to the midwest. The future may well suck, but I’ll put my money on it sucking differently than the past did.
After Detroit centralizes and knocks down entire neighborhoods it’s future will be brighter than Las Vegas.
I don’t know why so many people in here hate LV so much. I love that town!
Las Vegas is America’s adult premier playground … like it or not, that’s a fact! I can understand how some people hate the place due to the heat, gambling, sex, etc … Then don’t go!
As for me, I love the place. I love to play golf in Summerlin, hike in Red Rock, spoil my wife at the Forum Shops in Caesars Palace, and go to concerts. I sure the hell don’t like to waste all my time getting drunk, losing money gambling like so many other do there. Maybe that’s the reason why so many either love the town or hate it.
Las Vegas is essentially a giant carnival.
Every carnival eventually gets shut down.
Like I said, I understand why some people hate the town. Most of these people have no discipline and go there to get drunk, lose money or go to strip clubs.
“Every carnival eventually gets shut down.”
Apparently people have been saying that about LV for many years.
http://www.originallifemagazines.com/LIFE-Magazine-June-20-1955-P2474.aspx
Wrong!
You forgot to include speculating on real estate on your list of why people go there.
Make sure you insert it next to losing money.
Yes and all the gory details of speculating stay in vegas
who said anything about speculating?
the far east contingent will party in LV and irvinerenter’s renters will deal their cards and valet their cars.
There are two reasons I go to Vegas:
1) Visit close friends who live there
2) Skyzone Trampoline Park
I went once when they first opened, and now I’m hooked, making trips to vegas primarily for this. We need more of these things around! They’re starting to franchise out (there’s now one in Sacramento!) but I swear if every city had an indoor trampoline park it would fix the problems of obesity and depression.
I have a naive question after all that I’ve read: I’m thinking of paying off my loan on my rental property. What if the bank doesn’t have the note? Will I own it after I pay it off? Or do these rules apply to foreclosed properties? Is there a way for the bank to get a new note if they’ve lost it and they still have the loan?
And what if they have lost the note…who do I owe the remaining balance to?
Request from your servicer (who you send the payment to) the payoff amount.
After paying according to their instructions, make sure they file a deed of reconveyance.
http://homebuying.about.com/od/glossaryqr/g/Reconveyance.htm
Once the deed of reconveyance is recorded, you now have proof that the loan paid was off in case anything funny ever happened with the note.
If you have any doubt about what you are doing, get an hour or two of an attorneys time. They can make sure all is straight.
Thank you, Walter. The deed of reconveyance was never recorded with the property that we just sold in June. We had refinanced our first in 2004 with GMAC, and they left their first “lien” in place. So they had two “firsts”. It was a stressful couple of weeks to get that straightened out, as those departments at GMAC are overwhelmed with work and our sale couldn’t close until they fixed their mistake.
I may spend the hour with a lawyer to make sure that everything goes smoothly. We have time on our side this time around.
Why?
The interest is fully deductible against rental income (vs. home mortgage interest that MAY be partially deductible depending on your income level.) Unless the rate is very high, or you really do have no better option for your cash, leave the loan and employ your cash elsewhere. Pay off any other debt, including your home mortgage debt, before this.
I do agree that it may be decades or more before we may get the result to this bubble experiment. I used to do REO maintenance inspection for a real estate office. During the brief 18 months that I did this, I saw the IE appearing more ghetto-rized. In many formerly solid middle class neighborhoods I saw that the majority of the people was the type I saw in east and South central LA. There are still pockets of the IE that were still solidly middle class, most of the older homes <90's neighborhood were increasingly become slum like. Pretty sad to see actually.
rising prices and heloc withdrawal gives owners capital to improve a property (or just waste it on crap). this phenomenon works both ways.
once this fake economic / real estate recovery runs out of steam, we’ll start to see this happening more.
Ghost towns? might take a while
There are 4 REO, 6 in default (that I personally know of which means there must be more) units in my condo complex. I have not paid on this condo in more than 6 months and I am just riding it out. Orange County is a nice place to live, nice weather but that is it. Companies are moving out and people and jobs are going with them. This place is just way too expensive. I wish I never bought this place.
Most of the people that are paying on their houses here are underwater and in denial. The smart ones are now starting to realize that it is an uphill battle and not worth the 5-10 year wait for housing prices to come back…
Which condo complex are you in? It would be interesting to know which complex is seeing that distress.
How real is the substitution effect, and how much are people willing to tolerate? I’d rather rent in the beach cities than own in the IE especially since it’s closer to work. I have a friend who commutes from Corona to LAX every day, all for the sake of owning a home (which he can afford). I don’t think that headache of commuting is worth it.
Eventually, the government should stop subsidizing housing and divert the money into building cheap ways to commute to LA from Riverside and OC.
There are always better and lucrative jobs in big cities.
It seems that half of the Japanese population work in Tokyo and commute using trains each day.
how bout we leave lightspeed railway building up to the private sector?
if it’s such a great investment, an entrepreneur will build it.
First, the government must leave building all auto highways and roads to private entrepreneurs.
“Culver to Jamboree? $5, Sir”
Actually that commute is not too bad if he can take metrolink and the flyaway bus. Probably come out to about $350/month with very little driving involved.
The driving wouldn’t be the problem there-the sheer length of time for the commute would be. That would have to take at least two hours, each way.
That’s what he’s currently doing, and you’re about right with the time. In my previous post I said, “I don’t think that headache of commuting is worth it” and that holds true.
I’d much rather drive my current 5 mile, 15-20 minute commute than sit on a train for an hour or two, even if it means I’m one of those low life renters.
The Flyaway bus Irvine-LAX costs $25 each way.
Why is it so expensive? It’s always empty.
And Metrolink is expensive, too: Tustin-Union Station-Tustin $18.50
The monthly pass for metrolink is $250 I think to go from corona to union station. Probably take about 50-75 minutes of relaxing on the train – napping, napping or doing some computer work. The flyway bus from Union station to LAX is like $50. monthly pass and take about 20-25 minutes.
Police nab pair in $1.1 million house for sale
http://huntingtonhomes.ocregister.com/2011/01/19/police-nab-pair-in-1-1-million-house-for-sale/126290/
We don’t have any other debt. The rate isn’t high, but it’s quite a bit higher than the 1.8% we’re getting in the bank. I plan to review my numbers with my CPA next month to see if paying it off makes sense. Meanwhile, I’m going to wait for a few questions to get answered by my lender.