[ocrenter]

first, you live in South OC, you need to read this to understand mortgage fraud was part of the price build-up and it will accelerate the price decline: Fraudera Ranch: It’s a Family Affair!

second, you are thinking of moving to Temecula Valley. You need to read this to understand that current Temecula housing prices are build on very very shaky foundations that’s about to crumble: Isn’t A $1.2 Billion Fraud Case Big Enough?

My friend that bought in Temecula last June thought he was getting a good bargain. He already lost $100,000 to date. And things haven’t even started to truly unravel! Remember, the center will feel the impact, but the outskirt will be blown to oblivion.

[ocrenter]

The big problem comes with the 2% property tax/mello roos you are committing to. what you are really looking at is 1% mello roos on $500,000 = $5000/year or $400/month. That realistically bring the real cost of the home up by $50,000. so if you are successful in getting that $450,000 accepted, you’re really still paying for a $500,000 home.

I think the $350,000 mentioned earlier is really more of the true worth of these homes. 2007 is a critical year, the foreclosures are shooting up, the subprime lenders are dropping like flies, I know you are not looking for THE bottom, but waiting out 2007 will be very rewarding financially.

[ocrenter]

PC, this one was featured on my blog in November.

http://bubbletracking.blogspot.com/2006/11/premier-expression-of-flippers-greed.html

the owner was asking for $2.3 mil to $2.6 mil at the time. purchase price was $2.275 mil, with 90% loan at $2 mil in 11/05. it became a REO in early January.

the bank is only taking a $100,000 hit on this one if it sells for $1.9 mil as the prior owner had 10% down on this thing.

[ocrenter]

I agree with the prior comment. that bridge can’t be expanded. One lane on each side? what were they thinking??? most of the traffic will have to go to camino del norte.

that 1.9% mello roos is a real killer. there’s absolutely no reason why it had to be so expensive. it is purely the builder passing the buck to the consumer.

just remember this when you consider Del Sur:

–in 2002 a 3000 sqft home in 4S ranch was $450,000, mello roos rate was 1.5%, or $2200/year.

–in 2006 a 3000 sqft home in Del Sur was $900,000, mello roos rate now 1.9%, or $8100/year.

the house is now 100% more pricier, but the mello roos is now 270% pricier. what gives? next time you’re at del sur, ask them if the price of asphalt got 270% higher over the last 4-5 years.

[ocrenter]

thank you jjgittes, I posted an update on that property. I think it is still with the bank as a REO. I don’t think the bank is going to take a $271,000 haircut this early in the game.

See Link to BMIT

[ocrenter]

this thing is huge, 412 investors? assuming an average of 5 properties each, that’s 2000 homes. The newest update from nctimes reports $1.2 billion dollars worth of mortgage fraud. $1.2 billion/2000 homes = average price of $600,000 per home, that makes sense. 2000 homes and each overappraised for a $80,000 profit, that’s $160 million dollar of profit from this fraud case alone.

you would think UT or LA Times would be breaking this, but instead is a little regional paper?

it is just mortgage fraud… if FBI doesn’t care, why should we…

can you publish the link to the story, btw?

[ocrenter]

It isn’t schadenfreude. Seriously, why did buyers ACCEPT a 666% increase in mello roos over a 5 year period? They didn’t just take it, they said thank you and let me refer my friends and family.

same with San Elijo Hills. The mello roos + property tax was a flat 1.75% of the purchase price in 2002. But in 2006 when prices of homes tripled, the mello roos + property tax was STILL 1.75%. San Marcos property base tax is 1.25%, so let’s just look at the mello roos of 0.5%. In 2002 a 2500 sqft home went for $300,000, meaning a mello roos of $1500/year or $45,000 in 30 years. In 2005 that same 2500 sqft home went for $800,000, meaning the mello roos became $4000/year or $120,000 in 30 years. If mello roos TRULY was meant to pay for infrustructures and schools, that price SHOULD NOT CHANGE between 2002 and 2005. But it did. In this case a 266% increase in price tag within 3 years.

There is really never in history where folks were willing to sit down and agree to such DRAMATIC increases in taxation over such short amount of time.

By virtue of the builders having the ability to just take these mello roos away just like that, you know these DRAMATIC price increases in mello roos over the last few years were simply builders taking advantage of the buying frenzy.

Ionegarm, if you sit down and look at things from this prospective, this is not schadenfreude at all.

[ocrenter]

I’ve always felt the builders have abused the concept of mello roos thru this housing boom. And I hate to say this Bill, you and your fellow buyers allowed the builder to abuse it and took it as a previlige.

Back in 2000-2001 mello roos were uniformly 0.1 to 0.2% on top of the property tax. what was the price of homes then? 50% of what it is currently. So Bill, assuming your Moorpark home was purchased for $1 million. Back in 2001, your mello roos would have been 0.2% of $500,000 = $1,000 per year, or $30,000 over 30 years.

By 2005, all of the mello roos out there in SoCal jumped to .5% or even .8% of the purchase price. Assuming your $1 million dollar home had a .65% mello roos rate, that gets you $6500/year and $200,000 over 30 years.

Did the price of asphalt, power lines, sewage pipes, and illegal Mexican construction workers increase by 666% over 5 years? NO. So why did the mello roos rate increase by 666% over 5 years? And why did homeowners allow the builders to do this to them and say “thank you for the previlige of paying for this, may I have another?”

things for you and your fellow picketters to ponder this upcoming weekend.

[ocrenter]

I’ve always felt the builders have abused the concept of mello roos thru this housing boom. And I hate to say this Bill, you and your fellow buyers allowed the builder to abuse it and took it as a previlige.

Back in 2000-2001 mello roos were uniformly 0.1 to 0.2% on top of the property tax. what was the price of homes then? 50% of what it is currently. So Bill, assuming your Moorpark home was purchased for $1 million. Back in 2001, your mello roos would have been 0.2% of $500,000 = $1,000 per year, or $30,000 over 30 years.

By 2005, all of the mello roos out there in SoCal jumped to .5% or even .8% of the purchase price. Assuming your $1 million dollar home had a .65% mello roos rate, that gets you $6500/year and $200,000 over 30 years.

Did the price of asphalt, power lines, sewage pipes, and illegal Mexican construction workers increase by 666% over 5 years? NO. So why did the mello roos rate increase by 666% over 5 years? And why did homeowners allow the builders to do this to them and say “thank you for the previlige of paying for this, may I have another?”

things for you and your fellow picketters to ponder this upcoming weekend.

[ocrenter]

why am I not surprised at this find? this is so common place it is sickening. keep this address handy, I’m pretty sure we’ll find it on the NOD roll in 6 months.

[ocrenter]

new posting on 4Closure Ranch Part VI is now out. enjoy!

[ocrenter]

nesting, you got to realize ARM’s, no money down loans, are really tools for the high income folks to maximize their tax deductions and redirect their cash money for properly thought out investments, real estate or otherwise.

these tools are supposed to be earned, thru high FICO’s and high earning power. these loans were not designed to be readily given out to joe q public making the median income. but in the last 5 years they became that way. did you read the 4Closure Ranch Part V? that guy’s ‘supersize my jumbo loan’ package allowed for any guy with a 600 FICO to get over a million dollar loan. this is what drove the bubble and this will also lead to the bust.

I’m very bullish on real estate. long term! but there is no reason to buy near the speculative top when the slide is just getting started.

[ocrenter]

oh, one more thing. assuming I’m wrong and the price remain the same next year, you resume your original plan. One firm thing I’m sure of, the best case senario for the home builders is if the prices stay flat. there’s almost zero chance you are going to see appreciation over the next year. so you have nothing to lose waiting for another year but plenty to gain.

[ocrenter]

perrychase, you are very welcome.

nestingcouple,

your calculations are correct. I know exactly the homes you guys are looking at. we did the same calculations and it was very similar. let me put in this senario.

same time next year, these homes are $600,000. assuming all other variables are the same, you can go in zero down and pay the same monthly. in fact, with your income bracket, you want to go in zero down.

at the same time, you still have $140,000 + in the bank. you wait until the true bottom in 2009-2010 and use that $140,000, split into 2, and purchase 2 $350,000 properties at 20% down. $350,000 at that time would probably get you a detached condo ~1,500 sqft, which would get ~$2,400/month in rent each. you can probably brake even or be a bit positive depending on interst rate.

So now you have 3 properties, one the same SFR you are considering, and 2 rental properties to own long term.

[ocrenter]

nestingcouple,

there are a lot of neestingcouples like yourself, some make upward of $2-300,000/year combined, most are all holding off because we know the credit bubble is bursting. don’t jump until you read these:

4Closure Ranch Part I
4Closure Ranch Part II: Don’t Catch the Falling Knife
4Closure Ranch Part III: I Think I Smell a Rat
4Closure Ranch Part IV: What’s a Motivated Seller To Do?
Update: 4Closure Ranch Rat on Auction
4Closure Ranch Part V: Flip to Flop in 5 months

[Author]

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