My first post.

After several material threats from my wife to “get involved” with the blog, I want to state for the record that I was planning on “getting involved” before I was lovingly coerced into participation. With that said, I love you honey!

Most of my posts will probably focus on the economy and the financial aspects of life. For some weird reason I naturally gravitate to these subjects and can talk for hours about something most find extremely boring. So feel free to skip right over my posts, and enjoy Mikelle’s, she’s the one with the real writing talent.

As Mikelle can attest, I am somewhat obsessed with getting into a home. One of my favorite things to do is to just drive around and look at homes. I find it very relaxing and could spend hours on end just “window shopping”. I’m sure this tendency has nothing to do with the hours of regular Sunday drives my parents subjected me to when I was younger. By the way Mom and Dad, Mikelle can’t thank you enough for engraining this quality in me.

The good news is that for the time being I think we have focused our search on a little town called Ladera Ranch. This town is about 15 minutes southeast of where we currently live. As you can image, this will lengthen my commute to work, which is a huge negative, however the prices in Ladera are significantly more affordable then here in Aliso Viejo and especially as we get closer to Irvine, the epicenter of the business district for the O.C. Prices all over have fallen, but in Irvine the prices are still $350-north of $400 sq ft. As would be expected, these prices gradually taper off the farther we get from Irvine. Ladera Ranch, which has been hit particularly hard by the credit crunch and plunging home values currently range from $275 sq ft to an average of around $325 sq ft. These are deep discounts. There are certain homes in Ladera Ranch which have even begun to fall below the $275 sq ft range into the $250 sq ft range. For example, a typically 1,600 sq ft 3 br - 3 ba town home in Irvine would run about $640,000 ($400 sq ft), while the same 1,600 sq ft home in Ladera Ranch would run $440,000 ($275 sq ft). That is a $200,000 dollar discount. The cost of that kind of savings can be directly attributed to the 40-50 minute commute.

Prices here in the O.C. are rapidly falling. How low prices will actually go is anyone’s guess. My best guess is that the O.C. will see a price correction of around 30%. Most economists peg the peak of the housing bubble around the summer of 2005, with prices remaining flat in 2006 and ultimately the gradual decline which began in the summer of 2007 when the credit crunch really began to rear its ugly head. Fraudulent activity, loose lending standards, catastrophic failures from the rating agencies to correctly rate mortgage securities, very sketchy corporate accounting practices, and ultimately consumer greed fueled the major correction we are just beginning to see. Most “experts” have stated that this down turn will be short and soft. I will go on the record to say that we have not seen the worst of the credit crunch and the effects it will have on the economy and housing as a whole. So much fear and uncertainly still remain in the market and this fear will continue to cause irrational behavior and cause the capital markets to remain very volatile. I do not believe that we will see the bottom of the barrell, so to speak, until something catastrophic happens. Then and only then will investors’ mindsets begin to change and will people begin again to take rational steps. The impact of this will spill over into every industry. How long will this take? When will this happen? Good question. It is the one thing that stops us from buying a home right this minute. I don’t think anyone wants to buy a home, put down a down payment, and watch that hard earned equity evaporate. I am no different then most home buyers right now who are content to sit on the side lines and watch and wait. If a deal comes along that is a crazy steal, then we’ll pull the trigger. Otherwise, I’m afraid that we will have to be content to keep driving and “window shop.” Sorry Mikelle.