Another OC Realty Thread. Mea Culpa :) (Long Beach, Fresno: transplants, short sales, foreclosures)

[NeuroSigh]

Moved here from Milwaukee, WI (we were transplants there too). Currently renting in OC. We've considered buying in OC and have been trying to acclimate to the sticker shock. In WI, 95% of folks would be content to live in a $320k home for the rest of their lives, and most professionals I know (i.e., JD's,MD's, Ph.D's) do just that.

I realize that we have to increase our budget and had resigned to checking out $500k+ homes in various cities from LBC to Dana Point. We've done about 20 open houses up until this point.

So, I'm all about "drinking the Koolaid" and "When in Rome," etc. etc., but IMO, the housing situation is completely out of hand in SoCal Homes that I wouldn't spend a night in are listed for $600k and selling within a week! And, even crazier, many of these homes were once in excess of $650-850k. Often these homes are in complete disrepair. And forget about staging; the home owners (or perhaps renters ) have more often than not trashed the place or just up and left during the open house (without cleaning up in any way). One home we looked at was owned by a lawyer (diploma on the wall), and one of the windows facing the backyard had been seemingly kicked out a while ago. And the filth!?! Add to that, you've got lots that back right up to the freeway... My folks (not of immodest means) came out from NY and we showed them some homes, and they could not believe that someone who had an income that could allow them to afford a $700k home would live in such a squalor.

Hope I didn't offend anyone and /rant, but I do want to ask, do others here feel that sinking so much money into such a poorly kept home can't be a good investment? The weather's great (though I must say that 2012 highs and lows have been on par w/ Fresno ), but with the traffic, congestion, and cost of living, is it really worth $4500 a month for 30 years for a tired home backing up to the 405? What about concurrently saving 10-15% of income for retirement while paying the mortgage and car(s) at the same time? I guess if you made $300k a year, but w/ that kind of money you could do much better in most other parts of the country than the $600k tenements out here...

[EscapeCalifornia]

Yeeeeeeeeeeeeep, sadly that's the reality of OC housing.

[Coldjensens]

Where are you looking? They are not all that way, but in some areas it could be more common. Are you looking at foreclosures and forced sales?

[pacific2]

Originally Posted by NeuroSigh

and most professionals I know (i.e., JD's,MD's, Ph.D's) do just that.

That's my exact cohort (also describes several of my neighbors). I'm a transplant from Manhattan, but unlike many who moved to Orange County, I didn't drink the Koolaid and get suckered into buying an extremely expensive tiny piece of cr@p in some older area of OC.

BTW, you are asking the wrong people if you seek housing advice on C-D, because that's exactly where most of them will direct you.

I saw what was out there when I was house-hunting years ago, and decided to live in a newer community. Unfortunately, given the present bubble, you probably missed the $700k train and may have to consider upping your budget to $1M+ (I know, you don't get much for that in OC ). At least when you pay through the nose in Manhattan, you get walk-ability and tons of cultural amenities thrown into the mix; not here.

Maybe prices will drop. I don't care about it for the immediate future, because I'll just rent this place out if I ever decide to move back to the East.

Of course, there is sunshine here and that's why many people, myself included, moved to SoCal.

[Joe Van Fossen]

As coldjensens asked, are you looking at a lot of REOs and short sales? I've seen what you're talking about and I hear you on that, but I still see a lot of homes that are very well kept and nicely staged. You may not be seeing them because you're waiting for open houses to view the homes. A nice, well priced home in this market is getting offers way in advance of the open houses. In some cases, sellers don't even want to bother with it.

[Outdoorfanatic1]

Yup it's a crazy market. Maybe try Corona or something? That is what I had to do...

[NeuroSigh]

Originally Posted by pacific2

I saw what was out there when I was house-hunting years ago, and decided to live in a newer community. Unfortunately, given the present bubble, you probably missed the $700k train and may have to consider upping your budget to $1M+ (I know, you don't get much for that in OC ).

I guess that's one of my points. Having to throw another $300k on the fire to make the home acceptable is kind of crazy, particularly considering that that extra $300k will cost you $600k over the life of the loan.

At this point, I'm trying to see the negative of just renting at $2k per month in a desirable beach location and pocketing the rest of the money, and then moving to somewhere more affordable for the twilight years...

CJ, I don't readily see any of the homes we were looking at online at the moment, but a couple were in Orange east and west of the 55. Another was in Tustin and one in LF. Maybe < 1/2 were foreclosure I'm suspecting. BTW, love the south of the 55 area of Costa Mesa, but ~$700k to even enter the market there.

[Joe Van Fossen]

Originally Posted by NeuroSigh

I guess that's one of my points. Having to throw another $300k on the fire to make the home acceptable is kind of crazy, particularly considering that that extra $300k will cost you $600k over the life of the loan.

At this point, I'm trying to see the negative of just renting at $2k per month in a desirable beach location and pocketing the rest of the money, and then moving to somewhere more affordable for the twilight years...

CJ, I don't readily see any of the homes we were looking at online at the moment, but a couple were in Orange east and west of the 55. Another was in Tustin and one in LF. Maybe < 1/2 were foreclosure I'm suspecting. BTW, love the south of the 55 area of Costa Mesa, but ~$700k to even enter the market there.

What about this 4bd/3ba in Costa Mesa listed for $600K? It will likely get bid up much higher, but it's nice and not in a state of disrepair.

I'm not sure if you will be able to get what you're looking for in a desirable beach location for $2K a month. Though you should be able to find a nice 2-3 bedroom townhome on that budget more inland.

[NeuroSigh]

Originally Posted by Joe Van Fossen

What about this 4bd/3ba in Costa Mesa listed for $600K? It will likely get bid up much higher, but it's nice and not in a state of disrepair.

I'm not sure if you will be able to get what you're looking for in a desirable beach location for $2K a month. Though you should be able to find a nice 2-3 bedroom townhome on that budget more inland.

Funny. We just walked through that townhouse in CM yesterday. It is nice and the HOA's are reasonable, but I too had the suspicion that it'd go for more than the asking, with the current pandemonium out there. I've seen some nice 2bdrms on both Balboa Penninsula and in Long Beach for $2000-$2300. To purchase, we're talking in excess of $800k in these areas.

[ducviloxi]

Yes, it's INSANE, but people are buying at that price which means the demand is there. Don't ask me how people are willing to pay $600k for what would be considered starter homes in other parts of the country but perhaps standards of people here are much lower when it comes to housing? Who knows

But remember one thing, American's love to over extend themselves on credit...they will do it for anything from cars, TVs, vacations etc. so people buying too much house should not come as a surprise. People making $60,000/yr should not be buying BMWs either but I know plenty who do just that...it's just the culture. More often than not a couple that wants a certain house will find a way to use credit to make their purchase using super low downpayments and high DTIs...the government also encourages this behavior.