Looking back now it seems so easy to slap your forehead and say "Of, course", but not so long ago it would have taken a real gut-check to open your eyes and ask "Why is all of this here?"
Look around out here in the IE, every boarded-up commercial space covers a storefronts dedicated to filling homes up with superfluous brick-a-brak to fill all that extra space and toys for all those spots in the multi-bay garage.
All those families that escaped the tight confines of rental units in Orange, LA and San Diego, burst upon the IE and into the spacious 3/2 homes with garages and yards needed to do something to keep from staring at all that extra drywall.
"Honey lets' toss out all that old furniture that we brought from Garbage Grove last year and take that 40 grand of equity and really do all the rooms right?"
"Wow, honey can we!!!!! YEAH!!!!!
"Honey, I'm bored"
"Well, No-Worries Lending called and said we can pull another $60K out of the guest bathroom, let's get matching jet skies for the whole family!!!!!!!!
"Honey, I'm bored"
"Hey, we just got a mailer from Grows on Trees Financial, the bede in the master bath get us another $45,000. What do you want to do?
"I don't know, let's be prudent this time."
"Start a college fund?"
"No silly, Phase 3 is opening behind us. We split that $45 as a down on two units and then we'll sell one when phase 4 finishes and drop the other one in two years so we can keep every dime of the $500,000 profit. Beatty next door told me that is what she and Frank are doing.
"That sounds like a great idea!"
It all made sense back then, life is good, I'm living the dream! I deserve the 7 piece mahogany bedroom set, 60" plasma, ATV, JetSki, and Jacuzzi tub.
And the housing industry obliged them. Making sure that everyone got a chance to live the good life and that was going to last forever. But everyone pushed it to far, and little by little, all of the little players who tried just a little bit harder to get their tiny percentage of the pie, pushed it just a little bit more. And that is why we are here today.
Everywhere along the line from the guy who owned that barren empty land to the loan originator who got that family to sign the papers for that tiny patch of former orange groves, only had to concern themselves with maxing out their random opportunities. "Everyone was getting rich, why can't I expect a little bit more." But all these little bits add up, and pretty soon you are going to run out of folks that can pay the monthly nut that finances all this good fortune.
Did you really think we were going to keep spending like crazy at the Lowes, Staples, B-B-Q City, Bob's Billards, ATV Town, Best Buy, Kohls and the like.
What happened when the big chain stores started seeing same store sales drop from the one year old stores sprinkled all over the IE like pixie dust. Those big shot CEO's started to shutter the under-performers. They have to prop up their falling stock values with big pronouncements on cut-backs and efficiencies. Wall Street wants answers, it doesn't matter if they are excuses.
The big chains retreated and forced everyone to travel farther to more established stores. This made traffic even worse in the IE. But the same store sales numbers looked better and Wall Street loves it when you lop off under-performing liabilities, take a one time $30 mil write down and promise better times ahead for your stock. Everyone should be really happy that they did this, right? Your Retirement depends on that 401 K ,don't it? It's bad enough that my home is not worth what I paid for it but now you tell me my retirement depends on Home Depot same store sales? Now my portfolio is racing my home to see which hits bottom first. Great! Dow 1400 in 07' and 8000 in 08'?
When the big anchors in the corner mall close, the little mom and pops and Quiznos next door will die a quick death. All of those folks in the service/retail market left out of work and not be able to pay the option ARM monster mortgage pushing foreclosures up even more.
Home prices sank and the commuters who were the only ones left with incomes ended up in a deeper funk. Driving in traffic longer, eating up that $6/gal gas. Getting home too late and too despondent to go out to the movies or the restaurant.
And "poof" even more places started closing down. No more Macaroni Grill in BFE Wildomar, you have to drive 8 miles into downtown Temecula for a meal or a movie.
To heck with that, they all said, and just got 50 .lbs frozen bags of stuff at Costco and went back home to watch on-demand movies.
And just like that, the service sector in the IE shrank back down to what it was in 1990's in terms of how many people were need to be employed to service a ghost town of commuters trapped in negative loan to value mortgages sprinkled in between all those empty homes.
How much longer will these poor souls languish in these ghost towns? How can they sleep at night wondering if tomorrow, another neighbors' driveway will have a U-haul truck parked and packed up for someplace else.
When will the good times come back to the Empire?
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