orange county
Buying a house in Orange County
26Jul09 | 0 comments
So you think it's time to buy real estate in Orange County California?
I highly recommend you do some research first and I don't mean just looking at houses. Here is an excerpt fro Dr. Housing Bubble:
Yet for some reason, there is this belief that we will once be back to the bubble heyday. I was talking with a person trying to sell their home. They had pulled the home off the market and told me, “I’m going to wait for one or two years when the market bounces back.” Bounce back to what? The manic easy credit induced bubble days? Those days are long gone. In fact, in this particular area the homes are littered with Alt-A and option ARM loans. How can you tell? You see massive additions to the home and remodeling projects that have costs upwards of $100,000 courtesy of a HELOC. This is not Beverly Hills but your mid-tier market.
The shadow inventory of people 'waiting to sell' their houses is growing every day. Everyone thinks housing always bounces back so they are waiting to sell. Sorry, but I don't see the green shoots. And even if the GDP stopped going down, the financial shenanigans that went on the allowes so many to buy so much house for so little, is not going to happen again. That part of finance is dead. The only part that is still alive is Fannie Mae - a bad idea that will probably never go away.
Who cares if the state has an 11.6 percent unemployment rate, the highest in modern BLS record keeping history? That is a minor footnote. Who cares that nearly 50 percent of option ARM loans sit in California anxiously waiting like ticking time bombs to level equity in mid to upper priced areas?
Take a look at the chart at the link. T0he key point here, is that NOD's are sky high and the Alt-A and Option Arm timebomb hasn't gone off yet.
Although notice of defaults decreased from the first quarter, they are still sky high. However, foreclosures did increase. Keep in mind there is some serious funny business going on since some banks don’t even bother to start the notice of default process for half a year. We’ve had many comments posted on this site of people sitting in their home, missed payments and all, and have yet to hear from their lender (please share if you have a similar story in the comments). Yet things are supposedly fantastic. 124,000 notice of defaults were filed in Q2 of 2009. In these cases, the bank has sent a notice. When do you think the Q1 and Q2 NODs will hit the market as inventory? Try Q3 and Q4 of this year. This aligning of the planets including the Alt-A and option ARM tsunami will engulf the mid to upper tier markets.
I know someone who is looking to buy a house. The person they are renting their condo from offered to sell it to them for $400k - his loan value. He has supposedly owned this place for a long time. I'm thinking, something is wrong in this picture. Its a 2 bedroom/1000sqft condo in a bland neighborhood. Turns out he's HELOC'd it so many times to buy boats and vacations - he now has nothing to show for it. He's going to have another rude awakening when he tries to rent it. Similar condos are selling there between $250 and 300 and rents are going down.
The fantasy economy is not coming back. Do yourself a favor and take your time and buy the right house for you - there is no hurry. We will be scraping along the bottom (whenever we reach it) for years to come.
Dr. Housing Bubble.
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This website is based on a blog format to bring you up to the minute info, tips, and opinions on fun and educational family things to do in Orange County California. Any type of family and kid topics are game here.If you know of a place, activity, or other useful information for Orange County families, feel free to contact us.
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