Fortune Magazine has the IE at number 3, and 8 of their worst 10 markets in California. Miami and Washington DC were the only markets out side of Ca to make the list.
2008 median house price: $256,540
2009 projected change: -23.3%
2010 projected change: -4.8%
A popular boom earlier this decade fueled runaway prices for single-family homes in this market, which includes San Bernardino and Ontario, outside Los Angeles. Median prices are expected to fall to $197,000 in 2009, down nearly $60,000 from 2008.
Obviously their data is old. Currently Riversides median is $220k and San Berdu is at $185k. So the median for the entire IE is probably just a smidge over $200k. I think their projected change is about right though. Another 20% should put the IE back in the ball park.
Now if your really want to read a depressing (but mildly amusing) article check out this one from GQ. It's about foreclosure ally (The 15-fwy from Corona to Temecula), Lake Elsinore in particular.
"These houses are seventy-five miles from jobs in a world where oil gets ever scarcer. They are large and thus expensive to heat and cool. And forgive me, Southern California contractors, but they are junk. The market for $450,000 houses with ARMs waiting like assassins in the financial tall grass is over for good. It is quite possible that we have built and financed houses, developments, whole towns, without futures, that will collapse and become curious ruins."
20 comments:
I remember commenting about this on an earlier blog...L.E. has some great ginormus homes for
$170k...but they are to far from good paying jobs, are expensive to maintain AND - let's address the elephant in the room as well...there is also that "nasty little secret" well kept in L.E. to Temecula and that is there are a fair amount of registered(andddd not so many registered) Pedifilers out there.
Please folks - don't take this the wrong way - please don't blog me and say that there are Pedi's everywhere - I am aware of this - but a few months back my two little great nieces who live in Canyon Hills (nicer homes in L.E.)were almost abducted walking home from school....and let's not forget Samantha Runuion - her abductor lived in the I.E.
The IE out in foreclosure alley was and still will be the "BFE" that holds a different breed of people - people who want to lay-low and not be seen (to some degree)...take a drive through Bundy Canyon up there one day - the hair on the back of your neck will stand up....it's like you are waiting for a kid with a banjo sitting on a bridge to appear...
All developers did out there was build around the crap -
Why does the GQ writer live there anyway? Sounds like he let his heater run while he was on vacation. Why would some idiot rent a 3000+ sq ft home while being single? Sounds like he's trying to be edgy in order to pay his rent. Freelance, after all. OK, enough about him...
What about those that don't have to drive to LA? I've looked at those homes, and others nearby. If you don't have a hellish commute every day, there are some incredible deals. Sure, lots of foreclosure, but surely a lot of people will eat up the deals when it's time.
Spoke about the area at length with a nice couple at the Coffee Bean. Gave them the 3rd degree (while being nice!) and I wasn't convinced that it was a bad place to be...at all.
I'd like to ask him where 10-20 million Californian's are going to live in the next 20-30 years????
Orange county 30-40 years ago was BFE as well. It didn't have well paying jobs and everyone commuted to LA.
My parents bought in Yorba Linda in the late '70s and everyone asked why the heck did they buy a house out in the boonies?
We are not going to be an oil based transportation economy forever. Has anyone heard of the Chevy Volt? That's the future and it is right around the corner.
I live and work in the I.E and have a 10 minute commute to a well paying job so not everyone in the I.E. drives 60 miles to work.
I read the GQ article and thought it was pretty well written from a main stream point of view. It reminded me of the public televesion special "foreclosure alley".
I am new to So Cal only having moved out here in late 2005. I work in the IE and have a good paying job. My commute is about 10 minutes. So, no not everyone has to commute 100 miles each day. But I think that the majority of the people in IE commute to the OC or LA. And I can say from personal experiance that 80% of my patients are commuting.
I was looking at some houses in Lake Elsinore in mid 2006, just exploring the area and all of my collegues said "stay away".
Now I don't want to disrespect anyone, but after having lived in the IE for a couple of years there are some places that are better to raise a family than others and are more respectable. I currently rent in Norco Hills and really like it here.
As the saying goes "location is everything". I think everyone got brain washed into thinking they needed at least 3000 sq ft and were willing to move where ever they needed to.
I personally think it will be a very, very long time before places like LE, Perris, Hemet start seeing action again.
If housing is affordable close to where you work than why would you want to commute. And yes, prices are coming down in the OC and LA areas.
I do think his take on the quality of the construction was right, though, from the little I've seen.
Will these houses still be standing in 20 years when there are actually enough jobs out on the 15? Particularly with 5 or more years of low/no maintainence?
FreedomCM
Wupnerpit, The guy does not live there. He only rented the house so he could write the article. He wuz undercover....
Jeff, You're right on about everyone thinking there's no decent jobs in the IE. It seems to be a very common perception that there's no decent paying positions out here. In many industries that's true. There are very little if any in what I do so I drive to the OC. But my wife works near downtown Riverside and is paid very well. It's true that she would probably make more in the OC but the delta does not even begin to cover the cost of living difference.
As far as the quality of the construction goes that has very little to do with the area. It's much more dependent on the builder and the contractors he used. Some of the worst constructed houses I ever saw were down in south OC. They looked great with the fancy lipstick they threw on them. But if you looked at the quality of the build they were awful. If you think they are bad now, wait until you see what they start throwing up over the next few years as they try to get building costs down to compete with the REO and resale markets.
I think the new homes in the I.E., at least in my area (Eastvale), are built way better than what was built in the '70s and '80s in the OC.
OC back then had aluminum windows, we have vinyl. Vinyl does not corrode like aluminum. They are dual paned and energy efficient. I will not have to replace windows like they are currently doing in the OC.
All new homes now have concrete tile roofs. OC had wood shake and composite. Concrete tiles will probably last longer than the house will. I will never have to replace the roof.
Building codes are more strict today compared to the '80s.
Many homes built in the '70s and '80s in the OC are damn ugly and the floorplans make the house feel like a dungeon with the lack of natural lighting.
I chose Eastvale (in 2003) because it was affordable and is centrally located to 4 major job centers (LA, OC, Ontario, Riverside). I have access to the 91 or 60 for the OC and the 60 or 10 for LA. Luckily I work 10 minutes away in Ontario which is the main reason I chose Eastvale.
Golfer, didn't realize that you commute. What is your one-way? 50 miles?
My commute each way is around 40 miles. I carpool with 3 other co-workers so we each drive on week per month. It's not bad. My 40 mile commute is often faster than my wifes 10 mile commute since I start work at 6am.
According to Wiki, the author is also an editor for the socialist oriented Mother Jones mag, which explains his gratuitous hits on conservative radio and the GOP. He's also been taken to task for some articles in National Geographic on abandoned towns in the mid west by the local inhabitants.
I also call BS on walking into an abandoned house there and finding a bunch of personal belongings. I've spent a lot of time in the area investigating those houses and never saw the like.
I'm telling you, shock value stories go a long way. Just watch the daily news...always gloom & doom.
I have gone into abandoned houses and found LOTS of personal belongings - computers, printers, food, furniture, even baby photos (that struck me as the saddest). My husband and I have been looking at foreclosures and frequently find houses full of stuff but have been sitting empty for months and months.
The people born in California over the next 20 years will live somewhere, but mostly not in the bubble houses. The bubble houses have a lot of problems as ordinary housing:
1) The big mismatch between jobs and housing. *If* gas stays cheap (unlikely IMO) jobs will eventually move out here. Eventually. But that brings us to:
2) The volume of foreclosures is destroying these neighborhoods, which will bring in vagrants, deadbeats, and yes, pedophiles (who for the most part can't live legally in traditional communities because of all the residency restrictions.) And once these people move in you have a "bad" neighborhood and nobody wants to live there.
3) The houses are poorly suited to most people. They're far too big for any but large and fairly well-off families. For anybody else to use them will require awkward make-do arrangements like boarding houses or ad hoc duplexing/triplexing. And it's made much worse by the fact that whole communities have nothing but this kind of house. It's not just a comparative excess; there are whole cities with no place for singles, starter families, single moms, retirees, low-pay gruntworkers, etc.
So basically, if they get used they'll be mostly slums. And anybody who thinks spectacular houses can't become slums should go visit old Rustbelt cities, which are full of slummified mansions.
I also expect as a result of all this mess that we'll see a big change in fashion and big suburban houses will become despised much as Victorians did around 1900. (I've said this before, so apologies to those who've seen it.) There was a big boom in housing in the late 1800's with similar motivations - a desire for big showy houses - leading to a similar crash - lots of unoccupied foreclosed hard-to-use mansions. When so many ended up deserted or trashed, people came to associate them with emptiness, financial failure, etc. and even the ones with favorable demographics became undesirable. It took almost eighty years for them to become desirable again. I don't think these houses will last that long, not that any of use will be around to care.
K, the abandoned house full of stuff ain't BS. It happened right next door to me. The house next door was sold near the peak (Dec 06) and the family lost it about 18 months later. When they split they left all kinds of stuff. Toy, some furniture and lots of other crap. And yes they left the house open. I walked in and took a look around. I finally locked the place because the neighborhood kids were using it as a playhouse (little kids, 10 yr olds). I got lucky the realtor with the listing had the sprinklers fixed and the pool cleaned and now the place looks better than it ever did. Still empty though, although it's in escrow now.
I have also walked through abandoned homes left full of stuff. It's common, in my experience. One family left a toolshed full of stuff I would have liked to have but didn't take - it felt too much like stealing. Another in my neighborhood left boxes of clothes, luggage, toys, trash everywhere, even in the driveway.
"Fair-E" - I am hip on what you are saying - all these first time homebuyers wanted to have the ginormus house with all the bells and whistles and basically they bought themselves out of a home.
The IE has to many people that suffer from Orange County idus. They want to have the huge brand spaken new house with the brand new cars and the rec. toys. These folks did not care how much it cost - they wanted to keep up with Mr. & Mrs. O.C....they forgot that Mr. & Mrs. O.C. make on the average twice what they make and many were already home owners who bought and sold and the right time....what the heck ever happened to buying a small affordable home your first time out and living it for awhile - gaining some equity and THEN buying up?
Again - I'm going for the old established community with low tax rate, no HOA's, no Mello-Rues and though it may be a smaller home...I won't have to deal with potential ghetto rama drama and my mortgage will be enough to handle even in the event I loose my job or something happens.
Wow, lots of negativity here about the prospects for the IE. I'll take the counter-point.
The IE has been the fastest growing part of Southern California for a couple of decades. It will be that for the next couple of decades. When the economy periodically ebbs, it will hurt more in the IE because a big chunk of its economy is tied to growth (e.g. how many roofers live in Lake Elsinore versus Pacific Palisades). The hard crash of the IE economy today is the flip-side of its strong growth trajectory - not an omen that its future has suddenly turned bleak.
To appreciate the IE's growth trajectory, look West (or Southwest from San Berdu). If Southern California were completely undeveloped (as it was in the late 1800s), settlers would not, and did not stop in the IE. It's desert and hills.
SoCal has millions of families. Most every one would love to at a beach if all else was equal. But it's not equal. There are the matters of price, where you derive income, etc. that drive housing (think about where you'd live if you owned gas stations or McDonald's franchises in Riverside County).
As people continue to pack into SoCal, even small houses in gang-filled areas draw bids. I wouldn't live there, but even to rent a dilapidated one-bedroom apartment in South Central, you'll pay $700/month. Contrast this with Detroit and Cleveland, where rents don't cover basic ownership costs (heat, insurance and taxes) and apartments and homes are abandoned in droves.
Given the cost of renting, paying $140K for a small, 70-year-old house with less transient neighbors is not a bad deal in Huntington Park or South Gate - even if the schools suck and you still hear gunfire at night. And if you make a little more money over time, you can move up to Garden Grove or Cerritos (cost of entry, circa 1995 was still +/- $200K).
This gets us back to why the IE draws people. With cheap land, developers can deliver large, nice, new homes for $200-$300K. Sure, they might be 40 miles from jobs in El Monte, but they beat the alternatives.
Fortune Mag also once proclaimed that Enron was a well-managed company. So much for well-researched info from them.
Old Timer said "To appreciate the IE's growth trajectory, look West (or Southwest from San Berdu). If Southern California were completely undeveloped (as it was in the late 1800s), settlers would not, and did not stop in the IE. It's desert and hills."
While I agree with much you said, the settlers did stop in the IE if you look at the history of San Berdoo and other communities. Many of these areas have been farming/ranching/town type communities in the 1800s.
"Oldtimer" - I'm not so sure it's negativity as much as it is cold hard facts.
I've read what you have read - the IE has been the fasted growing area - but it also got hit the haardest with the housing crash.So while all these folks came out here to buy homes because they were more affordable than the O.C. - they were certainly not more affordable to keep...thus - parts of the IE have become areas once again what they were once before - desolet.
Don't get me wrong - I love the IE but it will never have the same influence - posperity or stablization that the O.C. tends to have.
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