Moreno Valley story: One buyer, two cycles, three foreclosures
Interesting portrait of the economic cycle of boom and bust in Moreno Valley in today's L.A. Times. It goes kind of like this: Buy a house in the '80s boom, lose it to foreclosure; buy another house in the post-2000 boom, refinance it twice, lose it to foreclosure. Then buy a third house -- a foreclosed house -- in 2008.
That's the story in three acts (three houses) of Bob Chiordi, as told in today's paper by Peter King.
Act 1, the first house:
Chiordi first heard about Moreno Valley from a friend in the mid-'80s. Priced out of the red-hot Los Angeles and Orange County housing markets, he joined the caravans of first-time home buyers rushing east into the so-called Inland Empire.
... And then, with recession and base closures, California fell into hard times. Moreno Valley, and Bob Chiordi, fell harder. ... Chiordi soon discovered he owed far more on his house than what it was worth, and so, he said, "I just walked away."
Act 2, the second house:
By 2002 the Riverside Press-Enterprise was editorializing about the "Moreno Valley Comeback."
Chiordi rode this tide up. He sold his business, went to work as a branch manager at an auto dealership, bought a new house and, as real estate values soared, refinanced it twice, taking out money to pay down old debts and for a family vacation. He had purchased the house for $160,000. It was now worth $420,000, at least on paper.
... In June (2008), with the bank moving to seize his home, Chiordi filed for bankruptcy.
Act 3, the third house:
With financial help from his extended family, Chiordi will be moving this month with his wife, two grown children and two grandchildren into a house they've bought on a hill in the eastern corner of town. It's a tidy beige structure, built only four years ago, with a terra cotta roof and a backyard view of Moreno Valley spread out below. It had fallen into foreclosure last April, and the price was right
Analysis/bloviation: This is the third or fourth anecdote I've heard from the Inland Empire about a person who was losing a house to foreclosure, and then turned around and bought a less expensive foreclosed house. As a personal economic strategy, it has a certain logic: why struggle to keep paying an inflated 2005 price for a house when you can give it back to the bank and get something similar at a discount? As a broader trend -- if in fact it is a trend -- it could encourage "voluntary" foreclosures, because it sends a message to the 2005 buyers that they are throwing their money away.
--Peter Viles
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Photo Credit: L.A. Times
