Via Lomas: Street in despair

You may remember the OC Register report on Camile Street in Santa Ana. That neighborhood was doomed by the very subprime loans that once helped fuel the real estate boom that propelled prices to beyond-belief levels.

Camile is not the only Orange County street that's now full of broken real estate dreams, though.

Via Lomas in Laguna Hills also is suffering immensely from the real estate downturn. The homes in this area (highlighted in blue in the image above) are modest condos built in the early 1980s, and are of the typical starter-condo variety.

In 1999, you could buy one of these properties for about $100,000-$125,000. By 2002, homes were selling for closer to $200,000. In 2003-2006, prices continued to climb at a startling rate. For instance,25791 Via Lomas #183 (pictured at the left), a 3-bed, 2-bath, 1,173 sq-ft home sold for $410,000 in 2005. That signaled an 87% appreciation from the 2003 price of $219,000, and a 329% gain from the 1999 price of $95,500.

Obviously, these kind of prices were not sustainable in the least, and when the market did inevitably turn, it caused buyers to become scarce and financing to tighten. Values on this street predictably came crashing down.

There are 16 properties showing up as actively for sale today, according to ZipRealty. Below is a Redfin map of the street. The properties for sale show up as green dots:
Now, here is the ForeclosureRadar map of properties that are in some stage of foreclosure on Via Lomas:

There are currently 28 properties - yes, on this one street alone - that are working through the foreclosure process.

We (predictably) noticed some overlap between the properties are for sale and the ones that are in some stage of foreclosure. Properties for sale today include:

• 25812 Via Lomas # 68 - 2 beds, 2 baths, 897 sq ft. Asking $320,000. Preforeclosure that the seller purchased for $379,000 in 2005 using 100% financing from First Franklin.
• 25752 Via Lomas #103 - 3 beds, 2 baths, 1,357 sq ft. REO asking $230,000. Peak purchase made in 2006 for $425,000 using 100% financing from Resmae. A sale at full asking price would be 46% off peak price.
• 25775 Via Lomas #166 - 2 beds, 1 bath, 896 sq ft, sold for $338,000 in 2006. Buyer used 100% financing from Resmae and later took out a new, bigger loan for $355,500; it's now an REO.
• 25896 Via Lomas #6 - 2 beds, 2 baths, 897 sq ft. Asking $190,000. Preforeclosure the seller purchased for $330,000 in 2004 using 100% financing from BNC. New loan for $334,000 in 2006. Additional lines of credit established in 2006 and 2007 totaling $151,000 from First Source Funding and BofA. If sold for asking price, loss of 42% from previous sale, not including sales costs.
• 25886 Via Lomas #23 - 2 beds, 2 baths, 897 sq ft. Asking $279,000. Not in foreclosure. Zillow shows the owner purchased in 2001.
  

What is there to say about a street like this - one that's being decimated by declining values, foreclosures and properties in various stages of distress? It is hard not to feel sorry for many of the residents who purchased before the boom and are now living amongst the carnage.

Fortunately, many purchase transactions here during the bubble were completed with financing that used little or no money down from the buyer, so the bulk of the losses are falling to the lenders as opposed to the borrowers. The lenders acted as enablers by allowing people to take out the loans that are now exploding.

We're sure many who purchased properties during the boom who are now facing foreclosure were only doing what they thought was best at the time, so it's hard to find fault with them, either. They must have believed the notion that "investing" in real estate was their key to wealth and financial security. Sadly, that is not how things played out.