Interested in Rancho Santa Margarita (Irvine, Mission Viejo: for sale, real estate, HOA fees)

[firsttimehousehunter]

Hi All -
My wife and I are shopping for our first home in south orange county. We have narrowed down to Mission Viejo, Laguna Hills and Rancho Santa Margarita.

After having visited RSM a several times to look at houses with our realtor, for me it wasn't until a trip we made today that has made me consider focussing our search. It was a trip to RSM Lake. My wife and I brought our 3-year old son and walked all the way around it. We started off by walking through little courtyard centerpieced by a nice fountain and were greeted by some young residents that offered a piece of bread to my son to feed the ducks. He loved it; was taking pictures every few minutes - yeah he's a little mini-photographer. We continued on the path to see people having picnics, tossing a frisbee and a football, jogging, fishing, walking their dogs. Then we get to the beach and swimming pool area, which looks to be out of commission for the winter, but we didn't care - it was great. We stopped by and chatted with a few residents who had lived here for 23 years (I didn't know the city had been around that long). They were very cordial and couldn't stop talking about how much they loved it here and how all of their children did as well. Needless to say, I was very impressed and could definately see raising our family here.

If you're still reading after my long post, I have some questions regarding the total cost of living here; both my wife and I work in Irvine. The biggest cost we see vs. the other two areas I mentioned is the Toll Roads. I am planning for $2,080/year ($2 ea way x 2 cars x 5 days/wk x 52 wks/yr), which comes out to a whopping $62,400 on a 30 year mortgage. Fortunately, home prices are cheaper, but we need to know if their are other costs. Can you please speak to the following:

- Property taxes (I've heard RSM has some of the highest in OC - anyone know what a good example rate to plan for would be?)
- Mello Roos (I hear, most of RSM still has this - what rate should we plan for?)
- Water and other Utilities (I've heard that the water bill is more expensive because it has to be pumped up the hill - how much should we expect for a 3-4 bd/2.5 ba? Are other utilities more expensive compared to other places and, if so, by how much?)

Are there any other costs we should be considering vs. living somewhere else like Mission Viejo or Laguna Hills?

Thanks in advance for your help.

[bhcompy]

for prop tax/mello roos, if you plan for 2% of the sale of the house total(adjusted upwards at 2% a year usually) you'll be over budget on taxes(i dont know specific areas for sure, just that property tax can go upwards of 2% around that area from what ive heard). property tax base is based on a percentage of what you buy it for

as far as the toll road, thats assuming that the rates dont go up. also keep in mind rates vary on the toll roads depending on time of day

i also imagine the HOAs may be more expensive in RSM than MV

[firsttimehousehunter]

Thanks bhcompy -
So, are you saying that it might be 2% for the property tax/mello roos combined? Then, every year after, to increase by 2% of what was paid the year prior? For instance, on a $420,000 sales price...

Year 1: $8400.00
Year 2: $8568.00
Year 3: $8739.36

This may be a silly question, but is the 2% increase each year more than what I might expect in say MV? What I'm trying to understand is whether we only take the hit on the first year, but thereafter it might increase at the same rate as anywhere else; or the rate of increase is another added cost to consider.

Thanks again!

[EscapeCalifornia]

Your numbers are correct. The 2% annual increase is a limit imposed by prop13 and applies statewide. But since your tax rate would presumably be higher in RSM, the total dollar increase per year would be more even though they'd both be going up 2%/yr.

[firsttimehousehunter]

Sorry, I have more questions...

Toll Roads:
- Anyone have any information on whether or not the toll roads could ever become freeways? Wishful thinking, perhaps. To bhcompy's point, it is probably more likely that the cost increases over the years.

Mello Roos:
- This isn't a foreve thing, right? Of course the idea behind them is to pay for the initial infrastructure to build out a new community, but they are paid by a 20-30 year bond or something. So, if a house was built in 1990, it should end next year or 10 years from now depending on the length. They can't just renew the bond, can they?

Thanks!

[firsttimehousehunter]

Thanks Escape -
Do you happen to know if there is a resource somewhere that I can compare average property tax rates by city in Orang`e County?

[EscapeCalifornia]

You're not going to see the toll roads become freeways. The government wants to make freeways into toll roads instead. And the tolls will go up. The 73 toll road was $2 when it opened. Now its over $5.

Mello Roos should in theory expire but don't be surprised if they come back at you and threaten to let your sewers back up into your houses and roads crumble if you don't extend them. Such is the way of government.

I don't know of a site that lists property tax rates by city but if you look up a house on Zillow, it will show last year's tax bill. If you find a house that sold 2-3 years ago, just divide the sales price by the tax and you'll get the effective tax rate.

[Charles]

Some homes in RSM have HOA as low as $46 month, and I've seen some which include a pool like this one:

8 Caminito Altura, Rancho Santa Margarita, CA 92688 | MLS# S545162

I am pretty sure there are several public pools in the community (same for MV) - may be a lot cheaper to go that route versus the whopping $175-$200/mo HOA fees.

If you have already accepted the possibility of paying like $200/mo for HOA then you may also want to consider Ladera Ranch (another place that is getting wiped out by distressed properties).

"More than half of the homes currently for sale in Ladera Ranch continue to be distressed properties"

from

Uptick seen in Ladera's distressed properties | properties, percent, distressed, homes, market - News - OCRegister.com

Here's one that some poor guy bought for $1.3M in 2004; Now he's selling it for $800K:

24 Winslow St, Ladera Ranch, CA 92694 | MLS# S550961



Mello Roos is written off on your federal taxes (OK, big deal).

Redfin is an excellent tool for searching homes. On it, you can see the existing tax bill. Now, if that home was purchased like four years ago, you can assume that the price you'd pay for that house will be significantly less, like 40% perhaps. You can extrapolate that for your estimated tax bill. So, if Joe Bubble bought that house for $900K (and his prop taxes are $15K/year) in 2005 and the going rate for that home now is $600K, then it wouldn't be unreasonable for you to be paying around $10K/year for prop taxes. (It's also possible that his taxes went down by petitioning.)

Here's a tip on using redfin for searching previous sales, don't filter, make everything "any" or "all", no "min", no "max". I think zillow and trulia don't have this database problem, so you can use those for previous sales.

One last tip from one dad to another, with three year old son, be careful of buying a house in a neighborhood loaded with retired people or empty nesters. Before you seriously consider a home, walk up the street and knock on doors and meet the neighbors.

Otherwise you might get stuck with this



instead of this (it paid off for us, our daughter with her new friends in Huntsville):

[dfarmer002]

As to the mello roos....and property taxs for that matter.

Each neighborhood has a different mello roos bond. In fact, I have seen them differ by builders within the same neighborhood. So .. when you are looking at an area or even specific homes, go to the orange county tax collectors web site ( where you pay your property tax) and type in the address. It will pull up the tax bill and allow you to see the specific details of that bill showing you the percentage in property tax for that parcel as well as the specific dollar annual mello roos. It also shows you the recorded sales price of the last sales too...sometimes useful information to have in real estate negotiations

You can not do mello roos by figuring a percentage as it is a flat annual tax and is not tied to the value of your home. Only the property tax itself is a percenatge based calcalation, the mello roos is a flat annual tax, hence the need to search specifics parcels and subdivisions.

I have found that sometimes where the mellor roos maybe high, the underlying tax rate is lowe making a parcel affordable. Sometimes they are both high, sometimes not.. its very variable and an overall statment to figure 2 percent the value of the home throughout a city like rsm is just not accurate.

[firsttimehousehunter]

Thank you everyone for chiming in.

dfarmer -
Since mello roos is a flat rate, that shouldn't increase, right? I would think that if a bond was divided for a specific period of time, they would know up front how much each resident would need to pay it off by the end of the period.

Others -
Is there anyone that lives in RSM that can speak to more close to home living expenses like the water bill I mentioned? Are other utilities more expensive than somewhere else? Any other expenses that we should be considering?

Thanks again.