As I wrote in my last article “How I saved $55.13 today” on saving money, I went to look at houses yesterday. While I was driving, I took a picture that just shows how much trouble our real estate market is in. There were 9 open house signs in the same corner (2 were duplicates) and there were more in the opposite side corner on the other side of the road!
All these open houses are for the same community in Irvine, CA (Orange County) called Woodbury. This is actually a very nice community (see the link for a glimpse) so I went to look at two of the open houses. One of the owner did not even put in any landscaping (still dirt) after a 8 month move-in! Unfortunately for this owner that bought the house in 2005, he is probably waking up from his great American Dream and facing foreclosure soon. My friend once told me a few weeks ago that there were so many people that bought into this community last year hoping that the market is going to keep on going up forever. He also accurately predicted that starting this year, the many owners facing possible foreclosures will make this community?? nickname Bloodbury. The nickname was funny at the time but it is not so funny after looking at all these people in trouble. For those that are still thinking of buying a house soon, beware and make sure you can afford the payments! Just remember that the house should be thought of first as a lifestyle investment and second as a financial investment or else you might get in trouble.
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{ 6 comments… read them below or add one }
Yikes. More coming I bet. I’m in the housing bear camp.
I look at it as an opporunity. Be on the look out for a great buy.
-limeade
Yeah that’s what I’m thinking. I hope that prices drop further quick since I plan to buy a house hopefully by the end of this year.
If we end up moving to OH, I plan to look into foreclosures there.
myownmillions:
Look into measures of housing affordability for Orange County relative to the nation over time. California in general and Orange County in particular have shown a lot of volatility over the decades. In a nutshell, OC is characterized by asset bubbles where the value of residential real estate has greatly outstripped the value of real estate in the nation as a whole. Then there is a bust, where OC returns to earth and follows the nations general trendline. Right now we are in the largest bubble in history, so OC has a long way (perhaps 50% of value or more) to fall before it is again in line with the nations. The past is prologue, and what has happened before WILL happen again. I sold my house last year (missed the peak by a few months I think) and don’t plan to buy in OC again till probably 2010. I moved out of state for the time being.
The point of that is I would suggest you be very careful… lest you become a textbook knife catcher.
Thanks for the great advices! The reason why the “buying a house” thought even came to my mind was because my soon-to-be wife is pushing pretty hard for a home we can call “our own”.
As we looked more and more into one, I got to a point where I myself wanted one too. However, I believe everyone can agree that we are very much a down cycle of the market and it will be months, maybe years until it bottoms out.
We aren’t necessary trying to catch a bottom in the housing market. However, we obviously don’t want to buying a house that’s worth 50% less in 6 months either so it’s a tough decision for us right now.