Flips, scams blamed in California housing decline
Mon Aug 27, 2007 3:08AM EDT
By Christelyn Karazin
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The Inland Empire, 50 miles east of Los Angeles, was a latecomer to the housing boom in California as buyers squeezed out of high-price coastal Los Angeles and Orange counties found large homes going up on the region’s vast supply of vacant land.
And it has been one of the most hard hit by foreclosures.
The Inland Empire’s combined Riverside and San Bernardino counties reported the fourth highest number of foreclosure filings of any of the nation’s 229 largest metro areas in July, behind Atlanta, Los Angeles and Detroit, according to market tracker RealtyTrac.
OWNERS GO ‘UPSIDE DOWN’
Survivors of Towne Square find themselves not only with unsightly, empty properties next door, but also with home values plummeting amid the fire sales on foreclosed homes.
So selling and moving to a better neighborhood is not much of an option because many owe more on their mortgage than they would get for the sale — what the industry calls “upside down.”
And real estate agents note that California’s market is likely to rebound as it has in the past, underpinned by high population growth.
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OK, the gooferment created the real estate problem with fiat currency that allowed artificially low interest rates to start with and followed it up by being up to its collective nose with “regulation” and interference the market.
Solution. The gooferment should exit stage left.
Tough, yes. But giving them a role in fixing it will bring even more “unanticipated consequences”. Some time it’s tough to take the right medicine but it’s better for us in the long run.
We know that the “tough love” solution isn’t going to work so what should we do?
* If you have an ARM, refi before you get ARM-twisted (i.e., have to refi when rates are “bad”).
* If you have property, consider refi in terms of your long term financial strategy. Rick Edelman makes a good case for having your estate pay of your mortgage so you have flexibility. Dave Ramsey makes a good case for being debt free. I won’t quibble with either one.
* If you are renting, look for “fire sale” bargains.
* If you are investor, look for absolute value bargains.
* Anticipate low rates for a while with tightening credit standards.
* Anticipate recession and declines in various markets.
imho
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Reinke Faces Life 