Talk about picture perfect. During a mid-day stroll down one of the meticulously pre-plotted thoroughfares, one sees a nanny taking a child for a leisurely afternoon walk, an unattended little girl pushing along a scooter with a mini Coach purse dangling from her wrist, a trio of sloppily dressed teenage boys marching over to the nearest public skate park, a croaking frog, a jogger. Manicured lawns, infant trees, rose bushes and weed-free flowerbeds abound, while green belts line the roads and roundabouts. A public tennis court sits empty, as a group of technicians unload a home theater system from a delivery truck. Numerous American flags hang in the doorways of elaborate, two-story front porches.
This is the quiet neighborhood scene that unfolds from a superficial peek into Ladera Ranch. The 4,000-acre, master-planned community of 7,000 homes, complete with public pools, water parks, playgrounds, tennis courts, skate parks, sporting fields, hiking trails, clubhouses, and free wireless Internet access, greets any growing family with all the amenities and comforts the Southern California suburban lifestyle can possibly conjure.
But there's one glitch in this sunny scenario: in uncertain times like these, even a whole lot of money can't buy you the security you seek. When these homes first hit the market in 1999, they were priced at a hefty $750,000 or so. As the community continued to grow and real estate burgeoned in value, prices doubled to as much $1.5 million. Many Ladera residents, floated by paper wealth, used their swollen equity to upgrade and increase their debt.
Enter the economic recession and the national credit crisis. The million-dollar or more price tag on most of these homes took a deep dive. In the span of just a decade, what was a stable, postcard community of the upper middle-class has unraveled into a troubled hot spot of foreclosures, short sales and rentals. The situation is so bad that the locals, with a nervous laugh, joke that they now live in "Foreclosure Ranch."
"This entire development was built on a recession," says the owner of a local real estate company, who wishes to remain nameless to protect her business. "And nobody knew it or wanted to know it."
When she first moved to Ladera in 2003, she said demand was so high that prospective, frenzied buyers left notes on the door of her realty office inquiring about listed properties. Tour buses of interested lookers buzzed through town, the passengers pointing and cooing at the mini-mansions along the way.
"The developers could not build fast enough. It was such a happy time," she says. "But that's not the case now. There's an underlying sadness that runs through Ladera."
Presently, there are about 100 homes for sale in Ladera Ranch. That is, in fact, a positive indicator of a market that's recovering. It's much less than the amount of inventory that hit the market when things bottomed out last year. Yet, half of these listed homes are distressed sales, meaning they are either bank-owned or short sales. And as many as 200 homes are currently in pre-foreclosure status, about to go under, according to local realtors. On the surface, the housing crisis may have quieted a bit in Ladera, but there's still an ominous rumbling brewing underneath its streets.
"Real estate analysts say Ladera is 70 percent underwater," the real estate company owner says while shaking her head. "That's simply not true right now. We're bouncing back. But do I think there are people sitting behind their doors sweating bullets at the moment? Absolutely."
Economists project that a second wave of mortgage defaults will hit the country, primarily here in California, sometime this year when tens of billions in 2004 and 2005 Alt-A and Option ARM (Adjustable Rate Mortgage) loans are scheduled to reset to higher payment rates. Ladera Ranch is precisely the sort of enclave that could be drenched by the next high tide of red ink.
When asked about this potential second wave of home foreclosures, the real estate company owner shrugs and says, "You never know."
Behind her, a sign reading, "Short sale? Loan modification? Foreclosure? You've got questions? We've got answers! We are Ladera's short sale specialists" sits propped up against a wall.
"There have been a lot of counseling sessions in here," she adds. "I've seen it all. So many people have come in here crying and saying, 'Oh my God, I thought I did everything right!'"
One cruel irony is that Ladera Ranch excluded psychiatrists from setting up shop in its commercial district for fear that their businesses would bring mentally unstable people in close proximity to the well-adjusted families living nearby.
But instability, if not a mass neurosis, has nevertheless hit home in Ladera Ranch. And people are scrambling.
Some, like Karen Brown, have put their houses up for sale at prices that are $250,000 less than the prices they bought them for five years ago. Brown's home has been sitting on the market for four months, and in that time, she's received around ten offers to lease the property.
"These people want to stay in Ladera, but don't have the down payment to buy my house," she said. "They want us to keep the title, while they rent and wait for the property to go up in value."
The housing crisis has consumed nearly two-thirds of Ladera's rental market, meaning leases are hard to come by these days. Apparently, people still want the good life, even if they can't own it. They'll just rent it for the time being.
"For the most part, the yuppie money has moved out," says Mark Tacconelli, a Ladera resident of 10 years. He's watched a number of homes on his street change ownership over the past couple years, and the buyers now seem more stable.
"Good times hide our problems," he says, "while bad times flush out the problems that were never dealt with in the first place."