[FormerOwner]

Here’s the latest on the Stonewood debacle:

“One of several men accused of running a vast mortgage scam has allegedly begun to launder money through his wife’s clothing boutique and may be preparing to flee the country, according to a lawsuit brought Tuesday by a fresh pair of aggrieved investors.”

http://www.nctimes.com/articles/2007/05/23/news/californian/4_02_405_22_07.txt

[FormerOwner]

OK; it’s a deal!

[FormerOwner]

OK; it’s a deal!

[FormerOwner]

I hear about friends of friends that made a killing day-trading during the dot-com boom but I haven’t heard of anyone making any money at it in the last few years. One of my buddies went to a seminar and dropped $3,000 for a computer program that tells him what/when to buy/sell. It was worthless! He might as well have have used a random number generator to make his picks. Total loss of 3K. I think he roughly broke even on his day trading – some gains, some losses but the software was a total loss.

[FormerOwner]

I hear about friends of friends that made a killing day-trading during the dot-com boom but I haven’t heard of anyone making any money at it in the last few years. One of my buddies went to a seminar and dropped $3,000 for a computer program that tells him what/when to buy/sell. It was worthless! He might as well have have used a random number generator to make his picks. Total loss of 3K. I think he roughly broke even on his day trading – some gains, some losses but the software was a total loss.

[FormerOwner]

Not long, waiting hawk; 12-15 months at most – That would be the end of next year’s spring/summer selling season.

I’ve been watching the local market pretty closely and here’s my take on the progression of the slow motion train wreck:

In 2006, homes sat on the market longer and there were a lot of choices for buyers, sellers had to pay closing costs, etc. volumes were way down, but houses priced right did sell (like mine).

In 2007, there are almost no resales at all except short sales and foreclosures and some suspicious looking flips and inflated prices. The builders are selling some houses but at lower prices and even they are struggling, getting desperate with 100K price cuts in some cases and still sales are S L O W. We’re just now seeing huge price reductions in bank repos and they’re not selling either. Resales are now competing with bank repos and they’re both in a death spiral – I’ve just noticed this in the last couple of weeks.

By this time next year, total panic will have set in among sellers, inventory will have piled up even more, more bank repos will come on the market, and it will be the Sacramento of the South down here in Temecula. Maybe it will happen sooner than 12-15 months but things are deteriorating so quickly that it’s hard to see it going on much longer than that.

Things are much much worse than most people could imagine. Another thing is that all these houses being rented out at a loss or where the “investors” have neg-am loans (like the one I’m living in right now) are going to crash and burn over the next few years so that will prolong the crash even longer. I don’t think many people are aware of just how many of the tract homes around here are rentals. On my street I think 6 out of 6 houses will foreclose within the next few years:
4 out of 6 are rentals at huge losses
1 is a failed flip that has relatives living in it
1 is owned by a R/E “investor” that lives in the house but owns 4 other houses in Riverside and San Bernardino counties

[FormerOwner]

Not long, waiting hawk; 12-15 months at most – That would be the end of next year’s spring/summer selling season.

I’ve been watching the local market pretty closely and here’s my take on the progression of the slow motion train wreck:

In 2006, homes sat on the market longer and there were a lot of choices for buyers, sellers had to pay closing costs, etc. volumes were way down, but houses priced right did sell (like mine).

In 2007, there are almost no resales at all except short sales and foreclosures and some suspicious looking flips and inflated prices. The builders are selling some houses but at lower prices and even they are struggling, getting desperate with 100K price cuts in some cases and still sales are S L O W. We’re just now seeing huge price reductions in bank repos and they’re not selling either. Resales are now competing with bank repos and they’re both in a death spiral – I’ve just noticed this in the last couple of weeks.

By this time next year, total panic will have set in among sellers, inventory will have piled up even more, more bank repos will come on the market, and it will be the Sacramento of the South down here in Temecula. Maybe it will happen sooner than 12-15 months but things are deteriorating so quickly that it’s hard to see it going on much longer than that.

Things are much much worse than most people could imagine. Another thing is that all these houses being rented out at a loss or where the “investors” have neg-am loans (like the one I’m living in right now) are going to crash and burn over the next few years so that will prolong the crash even longer. I don’t think many people are aware of just how many of the tract homes around here are rentals. On my street I think 6 out of 6 houses will foreclose within the next few years:
4 out of 6 are rentals at huge losses
1 is a failed flip that has relatives living in it
1 is owned by a R/E “investor” that lives in the house but owns 4 other houses in Riverside and San Bernardino counties

[FormerOwner]

Speaking of Harveston, this bank repo just popped up on ZipRealty:
xx096 PASADENA DR, Temecula, CA 92591
List Price: $419,900
1991 sq ft

That list price is 231K below the last sale – a 36% drop! I think the 650K must have involved some cash back (this house was NEVER worth 650K IMHO) – another example of a house flipped at an inflated price in a declining market. I think the 517K was a legit sale – that would still be a 100K loss though! Egad!
Check out the sales history (per CyberHomes.com – Zillow seems to be on the fritz lately):
6/30/2006 Sale Price: $650,000
3/24/2006 Sale Price: $517,000

[FormerOwner]

Speaking of Harveston, this bank repo just popped up on ZipRealty:
xx096 PASADENA DR, Temecula, CA 92591
List Price: $419,900
1991 sq ft

That list price is 231K below the last sale – a 36% drop! I think the 650K must have involved some cash back (this house was NEVER worth 650K IMHO) – another example of a house flipped at an inflated price in a declining market. I think the 517K was a legit sale – that would still be a 100K loss though! Egad!
Check out the sales history (per CyberHomes.com – Zillow seems to be on the fritz lately):
6/30/2006 Sale Price: $650,000
3/24/2006 Sale Price: $517,000

[FormerOwner]

Thanks for all the input everyone. I’ve cashed out of my investment in GLD at a decent profit and I’m just going to put that money into my ING Direct savings account while I formulate further plans for it.

[FormerOwner]

Thanks for all the input everyone. I’ve cashed out of my investment in GLD at a decent profit and I’m just going to put that money into my ING Direct savings account while I formulate further plans for it.

[FormerOwner]

23109VC,

I agree with your views on French Valley. If/when I buy a house in the Temecula Valley again (not anytime soon!) it will be in location like Harveston that at least has some amenities and decent proximity to freeway access and stores. Temecula is already an exurb on San Diego and French Valley is a suburb of that exurb. I wouldn’t buy out there at any price; I wouldn’t even rent there.

[FormerOwner]

23109VC,

I agree with your views on French Valley. If/when I buy a house in the Temecula Valley again (not anytime soon!) it will be in location like Harveston that at least has some amenities and decent proximity to freeway access and stores. Temecula is already an exurb on San Diego and French Valley is a suburb of that exurb. I wouldn’t buy out there at any price; I wouldn’t even rent there.

[FormerOwner]

What I did was that I paid some of the buyer’s closing costs in exchange for staying in the house for 2 weeks after the close of escrow. I actually waited until the day escrow closed to sign the rental agreement for my new rental house. That way I had no risk of having to pay for 2 residences. It was well worth it to me to buy this little bit of “insurance” even though it was expensive.

[FormerOwner]

What I did was that I paid some of the buyer’s closing costs in exchange for staying in the house for 2 weeks after the close of escrow. I actually waited until the day escrow closed to sign the rental agreement for my new rental house. That way I had no risk of having to pay for 2 residences. It was well worth it to me to buy this little bit of “insurance” even though it was expensive.

[Author]

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