Housing Market Meltdown Hits Home

The relatively new Stone Canyon Preserve homes in Northeast Claremont made headlines last month. ABC News ran a story about the problems created by the mortgage crisis hitting upscale McMansion owners, and they focused on several homeowners in the Stone Canyon homes.

No demographic, it seems, is immune to the wave of foreclosures and short sales hitting the real estate market. The ABC story, appropriately filed under "Reality Check" on ABC's news site, paints a grim picture:

Losing an Investment

People once had to place their names on a waiting list to buy a luxury home, but now owners trying to sell compete with new homes offered at lower prices, bank-owned properties and so-called "short sales," in which a home sells for less than the value of the mortgage.

Compounding the problem, buyers have disappeared because the subprime and 100 percent loans that made so much growth possible are gone.

"The people who qualified for the kinds of loans that bought these houses no longer qualify," said Char Constantino, a broker with Century 21.

Not only do those people no longer qualify, but many who did take risky financing are losing their homes. Foreclosures in Los Angeles were up 381 percent in the last quarter of 2007 from the same period the previous year.

This marks the second time a housing market crash has hit the north Claremont Stone Canyon land hard. The first occasion was back in the early 1990's. At that time, the city of Claremont had worked out a complicated deal with Pomona College wherein the city would purchase the land that would become the Claremont Wilderness Park as well as the land that later became Stone Canyon.

The plan was for the City to then develop the land and be left with the Wilderness Park. Yes folks, Claremont, under then-City Manager Glenn Southard, was going into the home building business.

However, the development plans fell through because Southard, with that golden touch that only he had, managed to pick the worst of possible times (a recession and real estate crash) to become a housing speculator.

The city had paid some $1.2 million in option payments to Pomona College over two or three years, but stopped making those payments and negotiated an exit strategy. In exchange for the option payments made, and the commitment to fast-track the specific plan that allowed Pomona College to sell the developable property, wrapped up and tied with a bow, to Centex Homes, the City could have the 1220-acre Wilderness Park property, stripped of its development credits.

The Claremont 400 would have you forget that one reason the Stone Canyon Preserve homes are the boxy McMansions you see now is that the City and Southard were forced to make developer-driven concessions (more homes per acre, for instance) to satisfy their creditor, Pomona College, in order to maximize Pomona's value in the land and to ease the eventual sale of the property.

Really, Pomona College, together with Centex and the city of Claremont, are responsible for the paving over of Chicken Creek, an area that had a much higher ecological significance in terms of native plant and animal life than Johnson's Pasture. Many of the folks at the Claremont Wildlands Conservancy, which includes a good number of employees from the Claremont Colleges, ignore this part of the history of the land when they rail against developers.

The other forgotten part of this episode is that Southard had to scramble around to put together the money lost in his failed development scheme, and he borrowed that money from the city's sewer fund with the promise that it would be paid back. There's still some debate in some circles in town as to whether or not that promise was ever kept.

Like a lot of Claremont stories, things got muddled with time. The 400 always points to Centex's Stone Canyon Preserve, which destroyed the Chicken Creek riparian habitat, and says that was the price we had to pay to get the Wilderness Park. It's a pleasant fiction, but it's far from the whole story.

The 400's axiom still holds true: wait long enough, and a lie becomes a truth. Oh, and no need to dedicate a plaque to this one. No word on how this affects Claremont's 5th Best Place to Live status.

So here we are again. This time it's individual homeowners, rather than the city of Claremont, who've overextended themselves at the risk of their investment. People (and cities) never learn that there is a law of gravity to markets. We want to believe things go ever upward, but then reality hits.

Chalk it up to the price of forgetting history. We're feeling that downward pull again, to no one's, and to everyone's, surprise.

Still #5

The Claremont Chamber of Commerce is selling t-shirts with the phrase, "We're Number 5!" in honor of Claremont's recent 5th place ranking by Money Magazine as one of the top 5 places in the nation to live.

Last week, the local KCLA Channel 5 morning television show was in Claremont visiting with Claremont Chamber of Commerce CEO Maureen Aldridge, the town's official though somewhat dowdy cheerleader. (Dowdy seems to be a requirement for our town mothers.)

Here are links to the two segments that aired on Channel 5 last week:

1. Maureen and reporter Gayle Anderson noshing outside the Village Grille in downtown Claremont.
   


2. Maureen and friend on the campus of Pomona College.
   
   (Maureen really wants to remind viewers that Pomona College is not in the city of Pomona.)

Affordable Housing?

More from CNNMoney on the #5 Best Place to Live. Money had photos of houses for sale in the top 10 Best Places, including this one from Claremont:

At a modest $2,675,000, the perfect starter home for your typical Los Angeles County family with a median yearly income of $43,518 (2004).

This was the most expensive, by several hundred thousand dollars, of all the example houses in the top 10. The asking price, by the way, was more than the combined prices for the houses shown from the top 3 Best Places.

Money, ironically, had listed "relative affordability" as one reasons for ranking Claremont #5. The magazine also overlooked air quality, in which they ranked Claremont low, and traffic, which apparently will get much worse now that the 210 Fwy. extension to San Bernardino is open.

According to a 7/23/07 LA Times article, since 2001 when segment through Claremont opened, the average daily vehicle count in both directions of the 210 at San Dimas Ave. went from 67,000 to 177,000. As a result of the added cars, the San Gabriel Valley sections of the 210 have filled with frustrated rush-hour drivers who spill over onto the surface streets of cities like Arcadia, causing headaches all around.

The Times article observed:

Some San Gabriel Valley officials are surprised at how much the 210's eastward march is congesting their cities.

John Mayberry, a former San Marino traffic commissioner, said that if he was told five years ago that the opening of the 210 east of Claremont would hit San Marino, "I'd say you're crazy. But it did. I think we took our hit, and I'd suspect somebody, whether it's in La Verne or Claremont or Upland, they're going to get nailed too."

More on Claremont as the Fifth Best Place to Live

We don't really understand Money magazine's methodology. If any reader can fathom it, an explanation would be very much appreciated. In all, it seems to be a list of towns you never heard of.

The Insider can read the Money FAQ as well as the next guy. Here is Money's explanation with our comments:

First, "start with places that have populations above 7,500 and under 50,000."

[OK, that may give us the "best places" with populations between these somewhat arbitrary and capricious limits. You now have 2,876 towns]

Next, "screen out retirement-oriented communities, places where income is less than 90% or more than 180% of the state median and towns that are more than 95% white."

[How did Claremont make this cut with Pilgrim Place, the Gardens, the Manor, Sunrise, and the Village? The Insider isn't going to touch the racial bit. Now we have 974 towns.]

Third, "eliminate towns with low education scores, high crime rates, declines or sharp increases in population, projected job losses or lack of access to airports or teaching hospitals."

[OK, now we have a more or less mainline stable population of smart working non-criminals at least 6% of color who either take airplane trips or frequent nearby teaching hospitals...that must be us alright. Well, there are 678 total towns now.]

From these towns, "rank remaining places based on job, income and cost-of-living data; housing affordability; school quality; arts and leisure opportunities; ease of living; health-care access; and racial diversity."

[These all sound good. It would be interesting to compare Claremont's housing affordability with that of others on the list. "Ease of Living"? Sounds like Peter Yao's first campaign with the "good life"--notably absent from his second. And the Insider is beginning to think this "racial diversity" thing is a surrogate for "lots of nearby ethnic restaurants." Now we have 466 towns; must've lost a few in the ranking.]

From here, the researchers "gather more data on job markets, housing prices, schools and ambience. Interview community leaders and residents by phone."

[Here's where the "Kentucky windage" is put in. We wonder what data are available on "ambience". Did you get a phone interview? The Insider regrets to report he is "out of the loop." Now they have 70 towns.]

Next, the protocol demanded that they "visit and do more interviews. Assess the sense of community, vibrancy of town center, natural surroundings, amenities, real estate and congestion."

[More subjectivity. All we can say is that they must not have visited during rush hour on the 10 or 210. And let's have a look at the "sense of community data". They are down to 25 towns now...]

Finally, "give [Potemkin Village] the nod, based on data and qualitative findings."

[More of those pesky subjective slippery squirmy qualitative findings. And now the towns are one...]

In all, we find the methodology pretty useless, but then we have never been accused of being the sharpest tool in the shed. Probably its as accurate as the apparently-spiked Forbes article on crime at Pomona College would have been. For your information and a little context, herewith the top 10 "Best Places to Live":

1. Potemkin Village

2. Stepford

3. Cudahy

4. Lumberton

5. CLAREMONT

6. Pleasantville

7. Oz

8. Greensburg, Kansas
9. Jonestown
10. Port Moresby

Claremont #5 Best Place to Live

Money magazine has named Claremont #5 on its list of top 100 U.S. cities to live in.

Money editor Jean Chatzky was interviewed on NBC's Today Show this morning and explained the criteria used. Money focused on towns with populations between 7,500 and 50,000, which eliminated cities like New York, Boston, Los Angeles, Chicago, San Diego, San Francisco, Seattle, Portland, and a host of others.

California had 9 cities in the top 100 with Claremont being the highest ranked in the state.

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So, how does this all square with a website like ours, where we've been very critical of the people in charge of running Claremont?

Oddly, it fits perfectly with what we've been saying. First, like most of our neighbors, we've chosen this place because it's a nice place to live. The weather's unbeatable, the Village shops and restaurants are great, and the colleges offer many cultural and educational opportunities.

We just don't happen to think that the Claremont 400, the group that runs the Claremont City Council, it's city commissions, and the local schools, deserve credit for all of that. Do they make the weather? And many of the good things would exist here without the 400. We also think that as long as they're taking credit for good things, they ought to take responsibility for the many and costly bad things that have happened. Instead, they run from those issues and refuse to even address them.

Take the trees here, for instance. Claremont's got 23,000 of them, most of them planted and maintained by the city. The trees are a great amenity. They create the shady walks that give Claremont a real college-town feel. Yet, homeowners have to foot the bills for damages caused by city-owned trees, the City Council routinely denies claims against them for those costly damages, and the city bars citizens from doing preventative maintenance on those same damage-causing trees.

People like Claremont 400 representative and current Councilperson Linda Elderkin apparently believe that if you can't afford to pay for the damages the city trees cause, you shouldn't be living here. We think that there could be better, more mature, more reasonable ways of working with citizens who have legitimate complaints. Instead, Claremonters like Councilmember Elderkin want them to take a hike if they don't like it.

So, Claremont's a great place to live as long as you don't have a run-in with the city and the Claremont 400, as Irvin Landrum and his family did in 1999.

Or as the residents of Palmer Canyon did in 2003.

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We expect there'll be a lot of gloating on the part of the 400 and their supporters over the Money ranking. We should be happy that our town ranks so high on the Money list. But we also ought to look more carefully at the information. If we don't we're likely to misinterpret the information, as the 400 will inevitably do when they use it as an endorsement of their ill-conceived actions.

The rankings really seemed geared towards retiring baby boomers. Money editor Chatzky noted, "The big trend is that people really want to stay...." People, she said, are "aging in place." That is, they're not retiring to Scottsdale, AZ; they're staying put in these top 100 places. That means that people are looking to places like Claremont for retirement opportunities, and one of the things the Money survey looked at was the availability of elder care facilities.

Of course, we've argued this before. The demographics show that Claremont is aging, and housing here is not really affordable for young families looking for starter homes. Don't believe us? Check out Money's data. The median price of a Claremont home is $643,549 - 179% higher than the average median home price for the Money top 100 list.

People are staying here longer, and new people moving in tend to be folks looking primarily for retirement advantages. But we don't seem to be realistically facing up to that reality.