With the financial crisis, we might start seeing a few more defaults in the Greenwich, CN (we can all hope, can’t we?), but so far, the defaults have tended to hit very marginal areas hardest. Here in California, people in Santa Monica aren’t defaulting, it’s the poor bastards out in the high desert or even down in Bakersfield in the hot, smoggy Central Valley.
In these godforsaken places, all sorts of mini-McMansions have gone up on the theory, apparently, that, hey, they’re in California! Every peon in Guatelombia has seen Baywatch and wants to move to California (even though Lancaster, CA looks more like Death Valley Days). So prices can only go up, up, up!
Imagine you’re a homeowner in Santa Clarita in 2005, now a nice established exurb 35 miles north of LA. You bought your house in 1995 at the bottom of the market for $175,000 and a decade later it’s worth three or four times that much. You can take cash out with home equity loans, so why not find an investment property?
Of course, you’ll have to look farther out, deeper into the dusty high desert, like in Lancaster, 70 miles from downtown LA. They’re building many new 3,000 s.f. homes on Cul-de-sacs with all the amenities. You should buy one up now and resell it when new refugees from the LA Unified School District arrive.
The family you sell it to will, no doubt, be moving to the exurbs to get their kids away from all the Guatelombians in the LA public schools. It’s not like Bush is going to close the borders and stop the flood of Guatelombians. So, there will always be refugees looking for “good schools.”
That’s one reason, you realize, why these new homes in the exurbs tend to be so big — they’re expensive in the hopes of discouraging low rent people from moving in next door. Sure, they cost a fortune to air condition during Lancaster’s summer (March-October), but it’s all in a good cause.
You start shopping around outside Lancaster. The Cypress Creek Estate sales agents talk about the new high school that’s going to be built to serve these new neighborhoods. It will be diverse, but not too diverse, if you know what I mean. Two-thirds white, one fifth Hispanic, enough Asians to show your neighborhood’s a good investment, enough blacks so that the football and basketball teams will be competitive. Sounds good!…
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