In the OC, a symbol of housing boom goes bust

What if you could tell the story of the housing boom and bust through a single house?

The Orange County Register wrote the first half of the story in July 2005, when it reported that median home prices had topped $600,000, and highlighted 484 Traverse Drive in Costa Mesa. Three-bedroom, two bath house had just sold for $600,000.

The must-read blog Calculated Risk went back to Traverse Drive this week to write the second half of the story. It's a story than can be told in six words: "From Front Page to Short sale."

Here's the short history of 484 Traverse Drive:
--Sept. 7, 1994: Sold for $177,500
--June 9, 2005: Sold for $600,000
--July 19, 2005: Featured on the front page of the OC Register
--April 26, 2008: Listed for sale as a short sale, asking $559,000
--May 2, 2008: Price reduced to $439,000

Exactly how overextended were the 2005 buyers? Here's how the Register described their purchase: "Sergio and Monica Anaya and their two children left their rental and bought this three-bedroom Costa Mesa home after signing two loans (including an interest-only mortgage) and taking on two boarders who occupy one of the bedrooms."

What does Calculated Risk say? "Yes, nominal prices in Orange County are off about 22% from the peak, and real prices (inflation adjusted) are off about 26% from the peak - but prices will probably fall significantly from here."

Your thoughts? Comments?  E-mail story tips to peter.viles@latimes.com
Hat tip: JB via e-mail
Photo Credit: Sunset in Newport Beach, submitted to Your Scene at LATimes.com by BrianC6234.

Comments

[sunsetbeachguy]

Never miss a chance to take a swipe at the other local fishwrap business.

I found the over the top boosterism of Real Estate in the OC Register to be bad form.

As a matter of fact Jon Lansner made a cameo appearance at the Housing Bubble Blog to quiet some of the blogosphere's criticism of the OC Register.

[peteviles]

sunsetbeachguy wrote, "Never miss a chance to take a swipe at the other local fishwrap business."

Thanks, sunset. Hey, no offense intended. No swipe. By my reckoning most big media outlets had the same kind of coverage.

[peter m]

baffling locational problem on this property, which is jammed in an alcove between two busy freeways, but is within walking distance of south coast plaza and the costa mesa upscale commercial hi-rise district. It is not the best quietest most desirable locale for a residentail property in CM, which i rate as a better than average community overall, as the jobs base is diversified and it has a variety and good mix of commercoal,light industrial, malls, shops,residential,parks ect.
Problem is property dropping to $439,000 is not at all suprprising as OC is about as overpriced as West LA. Prediction: CM will drop down to about $350,000 for average sHF prices at bottom. Long tern after the bubble bust has cleared out CM will fare better than most due mainly to location: it is centrally located and a critical hub city on border between NW and SE OC. Plus it has good breezy year- round weather like santa monica and the beach is close.

[Kathy]

How do you get a loan that is dependent on your taking in two boarders to make the payment? Oh wait, I think that's called "stated income"...I hope we get to find out who lied. So many stories coming out now feature borrowers who say they were hoodwinked, but unless these people are very bad at math, it seems like they must have lied about their income, at the very least. That used to be called fraud.

[sunsetbeachguy]

I disagree.

I read both paper's websites and the breathlessly positive RE coverage of the OCR was irresponsible and disgusting.

Much more so than the LA Times coverage.

Lansner had some principled bubble calls but one journalist amongst a bunch of RE hacks doesn't buy much cover in my book.

[MyLessThanPrimeBeef]

For a typcial OC family to buy this $439K house, they would probably need to convert the garage into an indoor rock climbing gym without permit and then divert the cash flow to help pay for the mortgage.

[Truth2Pwr]

I'd certainly paint the L.A. Times with the same brush. I read their RE section like the 3rd section of the Comics. The way they manage to find virtually endless ways to not report the real news regarding SoCal RE and avoid talking about the 10,000 lb elephant in the room deserves some sort of reverse Pulitzer prize for shameless and absurdly obvious pandering to advertisers. For the record Pete, you can tell your colleagues that the readership all sees that the Emperor has no clothes, and that they can give up the sham BS they are foisting upon us and get down to some serious reportage of the market and an analysis of its past, present, and future now.

[campechano]

It's as if the housing market had a fever and just now we're beginning to see some relief. No need for antibiotics here though, the bubble was just a virus...some would argue brought buy the stress of the buying frenzy...it's all over folks....things are gonna get better now...the worst is over....
By 2010-12 we will begin to resemble a healthy economy again...

[shockg]

Calculated Risk like many of the other fantasy bubble blogs is full of cherry picked listings. I wouldn't read into to this one distressed listing. Next.

[Dean Plassaras]

I recent graph I saw re:OC housing prices, points to a 2012-2014 bottom. One might call it a long way to go. Hope that a reversal materializes much sooner.

[adoptivefather]

Any chance they reported the income from the boarders to the IRS? Or was that just another lie told to illegally enrich themselves.

Can we deport these people?

[Arti]

"The way they manage to find virtually endless ways to not report the real news regarding SoCal RE and avoid talking about the 10,000 lb elephant in the room deserves some sort of reverse Pulitzer prize for shameless and absurdly "

As if it's any different now? When they write the story of the greatest housing bubble in US history and name the culprits (the Fed, government, regulators, rating agencies, realtors, mortgage brokers, wall street, foreign investors, appraisers, fraudsters, flippers, ignorant or greedy home buyers), the financial media will be front and center.

The financial media is financially illeterate--how many times did we read LA Times stories parroting some line from Lawrence Yun of the NAR, without so much as a warning or caveat that he is not an economist but an advocate? Before they were clueless about the bubble. Now are seem clueless about what has caused the current crisis! No wonder they have yet to wake up to what a disastrous idea these bailouts being discussed are. Do dome homework for once, those homeowners need to go back to renting and the bailout is going to deepen the crisis.

[peter m]

Sept. 7, 1994: Sold for $177,500
--June 9, 2005: Sold for $600,000
--July 19, 2005: Featured on the front page of the OC Register
--April 26, 2008: Listed for sale as a short sale, asking $559,000
--May 2, 2008: Price reduced to $439,000

Look at the house in the pic. Very Ordinary nondescripit 3/2 1300 sq ft starter sized home. To much yard and driveway, good if u are are a car nut or run a fleet out of your house, or keep a dog kennel, or run a boarding house like the couple was doing . Very typical OC type house bulit in the 50' and 60's. Lot of these types of homes are going for fire sale prices under $400,000, (soon to be around 300,000 by end of 08) all over the NW OC in areas such as garden grove, westminister, Anahein, fullerton, Buena park,ect.
also notice the freeway sigh in the background.
This was at the peak sold for $600,000 .At least it was not a fraudulently appraised seller- kickback pure out and out fraud deal such as was prevalent in ghetto LA areas where 3/1 80 yr old shacks were being sold, resold and resold repeatedly, each time being bumped up by $ 100,000-200,000 till you ended up with a $700,000 final sales price for a ghetto crapshack in pristine Ingle wood , Pacoima or Bell.

[Enlightenment]

Idiots and morons...it isn't about taking a swipe at the OCR, but instead the LATimes is referencing the OCR as a published reference. Too much reporting these days make statements without proof to back it up.

Whether you like it or not, the O.C. housing prices are crashing too, so quit whinning like a bunch of little school girls.

We aren't even close to the bottom. The Alt-A foreclosure wave is a coming your way soon!!!

[jaded]

agree with the criticism of the LA TImes RE section. Every week it's the same thing: the multimillion dollar fantasy property (with 3 tennis courts!), celebrities' RE transactions, and precious yuppies remodeling their decrepit houses with obscure handmade tiles.

Keep those blinders on!

[JohnnyB]

shockg, "Calculated Risk like many of the other fantasy bubble blogs is full of cherry picked listings. I wouldn't read into to this one distressed listing. Next."

This is just an early ripening/dropping cherry in the field of cherry trees that is OC. RE shills and bubble fools (still in the house) continue fantasizing that Ponzi's gravy train hasn't left the station. News flash (as your ostrich head is in the usual stressed position)… the caboose is far from sight and the conductor gave thousands and thousands of OC's resident fools the finger in it’s wake. No, that wasn’t the rock on sign.

Wake up and read into fundamental, economic reality. Your wishful thinking won't stop nature's cherries from ripening and dropping and it won't stop OC's cherries from that same fate. “Next” are all around you moron.

[C'mon!]

adoptive father - re "Can we deport these people?"

Did you know there are many US citizens with Hispanic names, Japanesse names, Irish names, Italian names... hey, wait a minute! Maybe we should deport everyone with a last name that is not Native American. That would certainly solve all the fraud that's been committed on this soil.

[Fourth Generation]

adoptivefather said; Can we deport these people?
T
hen should we start by deporting the descendants of Almirant Farragut of civil war heroics? For your information since you are such an ignorant bigot, Farragut was of hispanic origins.

[Ragnar]

I looked up that property on Google Maps. Looks like it's in a neighborhood triangulated by three major expressways and right next to the John Wayne Airport. Could be worse, but there are already similar houses listed for less money in more desireable areas of Costa Mesa right now.

Also, the Redfin comps and similar listings for the neighborhood look too high. Seems like there are people who still think it is 2006. Fortunately a quick look at Realtor.com shows that some reality is beginning to set in; it is fairly easy to find a decent 3-bedroom home in Costa Mesa for less than $425k right now. I was looking for a home in the area in 2006, and back then it did not seem like there was anything listed for less than $600k. Keep trickling down, down, down to planet earth.