The Inland Empire’s Less Flattering New Nickname: "Foreclosure Alley"

http://p.castfire.com/fcieq/video/26078/26078_2008-09-25-215549.flv

New KCET series “SoCal Connected” travels to the Inland Empire — or as the show has redubbed it, “Foreclosure Alley” — to document the impact of the current housing mess. It ain’t pretty. Correspondent Lisa Ling writes:

SoCal Connected tracked down some surreal sights associated with the crisis – a company that specializes in removing whatever people leave behind in their foreclosed homes. The process is called a “trashout” – a term the company came up with because it perfectly describes what happens. Everything that’s left is dumped in a trailer and taken to the landfill.

Then there’s the guy who started a business to spray-paint dead lawns. That’s right. He paints brown lawns green. We also tag along with a couple of code enforcement officers who are spending more and more of their time having to drain slimy, abandoned pools.

Have we hit bottom yet? What will “bottom” feel like?

Apparently Times Do Change in Lakewood

The full Lakewood slogan (there wasn’t room on the sign): “Times Change, Values Don’t… Well, Except Home Values, Down 19 Percent This Year in Lakewood.”

Retro Friday: The Passage of Prop 13

What a fascinating find: An NBC News report from 1978, right before California voters approved Proposition 13 in an infamous tax revolt that still has a major impact on the state today. (Check out LA City Beat’s recent coverage of Prop. 13′s lasting effects here.)

Retro Friday: The Passage of Prop 13

What a fascinating find: An NBC News report from 1978, right before California voters approved Proposition 13 in an infamous tax revolt that still has a major impact on the state today. (Check out LA City Beat’s recent coverage of Prop. 13′s lasting effects here.)

The Plight of the Bubble Homeowner

Every time Los Angeles Times columnist Meghan Daum brings up her experience as an L.A. homeowner, I feel oddly comforted: It reminds me that I’m not the only Gen X’er who was finally ready to buy a home in the mid-2000s — and wound up doing so, despite the crazy bubble prices.

Like Daum, I’m constantly surprised at how much I spent on such a small house. It somehow made sense four years ago, when things were so frenzied that it wasn’t uncommon to be outbid by 40 people on a house. Just managing to secure a winning bid felt like an accomplishment — and was a sign that you better jump on that house, or you may never become a homeowner.

In her latest column, Daum compares that frenzy to quick-fad fashions that eventually fade. That Member’s Only jacket that once looked so cool, now seems a little ridiculous:

Many of us who bought property did so with the nagging shame known to customers who pay full price because they’re too impatient to wait for a sale. Meanwhile, the smug renters have been living it up in far-nicer homes than they could ever afford to buy.

The subtext of all this is “The Tortoise and the Hare.” As we were taught in kindergarten but perhaps forgot by first grade, the race is won patiently and cautiously, not by jumping on a bandwagon. When the real estate market reaches its nadir (how will we know? Maybe when HGTV trades shelter porn for actual porn) the renters — especially those with money in the bank from well-timed home sales — will waltz back in and snatch up formerly overvalued homes for rock-bottom prices, thereby joining the ranks of those who bought in the market crash of the early 1990s. The rest of us will remain tragically zipped inside Member’s Only jackets that we can’t take off without losing a ton of money…

While I’d be lying if I didn’t admit that my house often seems like a roller-coaster car making a long, steep plunge into oblivion (the fact that it’s approximately the size of a roller-coaster car may have something to do with that), I’m getting a little tired of people insinuating that I was stupid to buy it. No, it’s probably not going to double in value in the next decade, and yes, I could probably afford an extra bathroom if I were a renter. But like everyone who bought at the “wrong” time, I had my reasons. Some were better than others, but they had less to do with building my investment portfolio than with building my life.

True there: Of course, had I been thinking about my investment portfolio, I would have bought a house in the late 1990s and made a killing. Instead, I waited until I felt sufficiently “adult”: Married, with a kid on the way. But by the time I felt “adult” enough to buy a home, it was 2004, and the bargains were long gone. And at the time, it looked like they’d never return. Of course, even in 2008, I know plenty of people still waiting for the return of those bargains. And waiting.

One L.A. Times Writer’s Real Estate Crystal Ball

Let’s face it, even a few years ago it wasn’t hard to predict the current housing downturn. My fear, way back even when we bought our home in 2004: That once all the crazy, short-term (think three-year, low rate ARMs) readjusted, there would be a lot of people who suddenly couldn’t afford their home — and a glut of foreclosures would drag down the market.

That’s why in 2005, when the market was still exuberant, I switched my 7-year ARM to a 30-year fixed mortgage — despite a higher rate.

The idea, of course, would be to refinance or sell when that ARM was up. That made sense in 2005. But at the same time, I had this sneaking suspicion that home values were going to potentially drop by the time the ARM was up, while 30-year rates would be higher — and not only would we be stuck in our house, but the value would be lower, and we’d be forced to accept a 7 or 8 percent loan.

L.A. Times writer Peter Hong had that same sneaking suspicion back in 2005 — but he went much more extreme, and sold his house (for a hefty profit). Now, in a recent piece, Hong explains how all of his friends now see him as some sage of the real estate marketplace:

Our friends said we were crazy. Relatives asked whether we were in financial trouble. But in April 2005, my wife and I bailed out of the American dream. We sold our two-bedroom Pasadena condominium and became renters again.

We got nearly three times what we had paid for the place nine years earlier. It seemed to us like a staggering profit — and a sign that the market had been pumped up beyond reason.

That’s why we decided to rent instead of buying another house right away. We wanted a place with a yard and a third bedroom, but we weren’t willing to pay the sky-high price or take out an exotic mortgage to buy something our income did not justify.

So our plan was to take our profit and wait for prices to return to Earth. The madness had to end, we thought.

For a while, we wondered whether we would prove to be the crazy ones as home values in Southern California overall continued rising through last spring. But a closer inspection of real estate sales data shows that signs of trouble were already appearing when we sold.

Hong talks to some experts, who say that what he did isn’t for everybody — and even Hong admits he’s not so sure when he’ll be able to jump back into the market. He wants to do it, however, before his 8 year-old daughter is too old to appreciate it.

Signs of the Times: Trendy-Adjacent

“No, no, no, we’re not trendy — just look at our roof. But the trendiness is within walking distance. So yeah, we’re gonna need four month’s rent and three references.”

Sign o’ the Times

Yep, we’re going to be seeing a lot more of those “FORECLOSURE” cards slapped on real estate signs. Get ready.

Taxing Times

It’s that time of year… a friendly letter from Los Angeles County Treasurer and Tax Collector Mark Saladino that it’s time for the first installment of your property tax bill.

For those of us who bought our house in the past few years, that’s a pretty hefty bill. It doesn’t help things that thanks to the infamous Prop. 13, I pay more tax on my tiny house than I know plenty of people pay on beautiful, large homes three times the size of mine in more ritzy neighborhoods. Bastards.

That’s why I’m starting to wonder whether it’s time yet to evoke the “decline in value” statute in the assessment process:

“If you have evidence that the market value of your property on January 1, 2007 is less than the assessed value shown on this tax bill, you may request a review for the 2007-2008 fiscal year. The filing period is January 1 through December 31, 2007.”

Well, because it falls on Jan. 1, probably not. The housing market didn’t really collapse until this summer. And besides, with so few homes selling right now, I’m not even sure how an appraiser would go about determining house value.

Now, next year, the county should probably brace for a whole lotta “decline in value” submissions. Because if the market continues to decline, I’m sure as hell not going to continue to reward the county just because I had the unfortunate luck of finally having enough money to buy a house in 2004.

Location, Location, Location

A comment left on the L.A. Times’ real estate blog, L.A. Land:

“Not to gloat, but I moved from LA to Madison, Wisconsin 18 years ago. We bought our current house in 2002. It’s about 30 years old, designed by a student of Frank Lloyd Wright, and sits on a 19,000 square foot lot…It cost us $230,000.”
-CT

Dear CT,
Not to gloat, but please call us on January 15, when some of us are wearing shorts while walking to Yuca’s for carnitas tacos on their outdoor patio. You can tell us all about that 3 feet of snow you had to shovel that morning, only to discover your car won’t start.
Hope that $230,000 home has a fireplace. Jackass.