share stories on the 90s bust

[kev374]

Some of us were not in SoCal during the last bust so I thought it would be cool if we started a thread sharing information about what you or someone you know personally experienced during the last housing downturn.

[gn]

A friend of mine bought a house in the beginning of 1990. During the first 6 months of 1990, prices were still going up. It was a new house, so he was reluctant to rent it, fearing that the tenants may ruin the house.

Then prices started going down. He kept hoping that prices will come back up, so he didn’t sell. By 1997, the market price for his house is less than what he paid for it in 1990.

[drunkle]

my parents bought a new 4/3 tract house in the santa clarita valley (castaic, specifically) around ’90. market bust almost as soon as we moved in. but it really didn’t bother us much; they were always compaining about “the economy” for as long as i can remember, my mother regretted, fretted and whined alot, but that’s mostly it. we survived. they still own the house.

funny thing, i discussed this current boom/bust with them at a family get together and they said “houses always go up”. they completely forgot about the 90’s.

thing is, even at the height of that boom, the house was still affordable. overpriced, maybe, but affordable to middle-middle class self employed small business owning single wage 2 kids + dog. you can’t say the same thing today.

[Anonymous]

I bought a new home in Tierrasanta in December 1991. I got a great deal on the home from builder. I think I asked for a 30,000 reduction, and I got it. No homes were selling. I sold it in 8 months later (I was lucky). I noticed that the same house sold in 1995 for 50,000 less than when I bought it. ouch to that buyer. At one [point in early 1990, those home were close to $300,000.

[Happy renter]

My friend bought 2 houses around 1989 to flip for profit with her sister who was an agent. Houses went up 10% in few months, but they wanted at least 20%. So, they did not sell. Around 1990, houses started to fall and they could not even sell for break even. They rented out for loss a few years and tired of it. They sold with big loss in 1997. After that lesson, they never flipped or invested in real estate any more, except their primary residents.

I think it’s not nice and a kind of insane to flip houses since houses are basic living requirements for everybody, but not luxury! I do believe in karma.

[waiting hawk]

Ok here goes mine.

I was a bad kid-young adult. Kicked out of my house many times by parent throughout 92-94. We live in Inland Empire. I (broke into) lived in 5 different townhouses that were not for sale, rentals, or anything (just abandoned). They just sat there (no clue to this date why). Then after everywhere was a 50% off sale in 95-97 I had 2 of my co-workers buy a second house and let their first house go back to the bank. During that same time both my next door neighbors and along with my family bought 2nd houses and dumped the townhouses back to the bank. One thing you have to remember that in ALL 5 cases that I personally know of they were all prime loans. Chuck that idea of only alt-A and subprime only getting hurt.

The reason why all this happened was due to lower monthly payments.

cheers

[sdappraiser]

The biggest bust of the 90’s. End of an era. F-n Nirvana.

http://en.wikipedia.org/wiki/The_Decline_of_Western_Civilization_II

[murray]

In San Diego from approx 1991 to 1997:
• Property values decline slowly month after month, year after year until value is less in 1997 than in 1989 (SD median down ~20%, LA down ~ 25%, actuals – not adjusted for inflation)
• No increase in traffic on freeways during this time
• Regularly see loaded U-Haul trailers heading out of SD
• Unable to raise rents on income property due to low demand
• REOs set the market value in almost every neighborhood
• Eager contractors readily available for a reasonable price
• Estimated 500,000 jobs lost in SoCal, SD unemployment > 8%
• 90s economic downturn is 2nd only to the Great Depression

It seems most people don’t know (or forget) just how bad the 90s downturn was – caused by the loss of previously good paying, military-related jobs IMO. Unless unemployment returns to 8% range you won’t see the overall economy as bad this time, again IMO. What’s unique in this recent real estate price run-up is the unbelievable speculation, cheap money, no-qual loans and mortgage fraud. Real estate is due for a correction… 20 – 25%??

[CardiffBaseball]

sdappraiser, Nirvana gets a lotta credit for the bust up, but recently, I have also told my budding young hair-band loving son, that The Black Crowes also stormed onto the scene as regular kick-ass rock’n’rollers without fluff. And of course Encinitas’ own Eddie Vedder and his little troupe helped out.

[hipmatt]

In 1990 my parents sold their home in Diamond Bar, CA for a huge profit from what they paid for it in 79 I think. They moved us out to Temecula, bought a nice Ranch style custom home on 1 acre in a nice area of the city. I think they paid about $350k for it at the time. I remember in 95 it was worth about $250k after my dad put another $100k into a patio, landscape, and other upgrades. At one point it was about 33% off of what we paid though. It probably didn’t start going up significantly until 1997 though. I think we weathered the price decline better then all the tract homes, I think they were hit harder.

They complained about it a bit, but since the mortgage was only $1400 per month at the time(I think they had combined income of about $90K), and the fact that they made decent money on the first house, kept them from whinnying too much. Since then they have refied the house to a 15 year, and it will be paid off in 2 years. It’s currently worth about $700k, if my parents would perform the needed upgrades and updates, it could easily be worth $950k.

[PD]

We rented a townhouse in Aliso Viejo in ’92. The landlord paid 170k for it (I’m not sure when). In ’95 he offered it to us for 130k. We said no (doh!). As of the most recent peak, it was worth 650k.

[Anonymous]

I lived in a condo building in downtown LB from ’95 till ’04. I rented at first and bought a unit on short sale at the end of ’96.

As a member of the HOA board, seeing the financials and collections I can tell you that 80% of the units in that 81 unit building went into foreclosure at least once during the 90’s. You have no idea what that does to the HOA’s finances, reserve funds, etc. You also have no idea how aggressively we started going after deadbeats once I got on the board. We hired a pit bull collections attorney who believed in filing liens, garnishing wages, etc. Of course all of his billable activities accrued to the deadbeat homeowner’s accounts – not to the Association’s.

It took a while, but we ultimately managed to screw most of the people who were trying to screw us. We collected $10,000 in back dues from one guy who was renting his unit out and living in a home in Huntington Beach. He tried to refi the Huntington Beach house – but had to pay us off first. Sweet! We also aggressively pursued money from the banks who took properties back since they were responsible for paying the dues once they took possession of the condo. They tried to tell us we had to wait until they sold it. We filed a lien against them, hounded them and threatened to turn them over to the pit bull attorney. They generally paid us to make us go away.

We also had issues with absentee landlords renting to less than desirable tenants just to fill the units. If the tenants were creating problems, we sent a courtesy notice to the owner with a copy to the tenant. The second incident was a warning letter, the third/fourth/fifth, etc. were fine letters that went against the owner’s HOA account. After getting a couple of letters on a problem tenant either the tenant was looking to move or the landlord was looking to replace them with someone less troublesome. The fines weren’t forgiven though. If the landlord didn’t pay, it was turned over to the collection attorney.

Most associations weren’t as hard nosed as we were. Most associations probably suffered more than we did as a result.

[Critter]

I bought a 4-bdrm, 3 bath house in 1995 in San Diego. It had been on the market for four years… starting price was $230K in 1991 (!) and I got it for $149K.

Classic situation of the owner thinking it was worth more than it really was and chasing the market down, down, down. I had actively been looking at condos up until that time and couldn’t believe I could actually buy a house.

Sold in 2002 for $380K – it is “worth” (Zillow data) $500K today… but I think they would be lucky to get $450K for it.

[Happy renter]

I started looking for my 1st house in 1992. The prices were about 20% down from peak. The agent pushed me to offer a house on the 1st day he showed us the house. He said house prices would go up again soon. Fortunately, I changed my mind. In 1993, foreclosed houses were everywhere. Vacant houses were owned by real estate agents or flippers. I bought my house that was pre-foreclosed and 40% off from the peak in 1993!

[MANmom]

MANmom

I was dating my husband in 1989 when our realtor friend talked him into buying in Mission Viejo. He purchased a 2 BR 2 1/2 BA condo with less than 1000 SF for $138,000 VA no-no. A year later we were married and lived there for another year. By 1992 there were several of our unit for sale in the neighborhood of $99,000! OUCH!!! Luckily we could rent it our for a small loss every month, but what a hassle. We weren’t able to sell it until 2001, when we finally made $40,000. Don’t tell me the market can’t drop 30%…we lived it.

[Author]

Posts