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Postcards From The Recession

Mining foreclosure gold

June 08, 2009|Joel Sappell | Joel Sappell, a former Times reporter and editor, is deputy for special projects for L.A. County Supervisor Zev Yaroslavsky.

Late last year, on a weekend afternoon, I spotted the husky teenager next door packing boxes in the garage.

I've known the kid, James, since he was 4. He was best friends with my son, Jesse. They were inseparable -- "Jesse James" is what I used to call them. When the two of them weren't having a sleepover at our house, they'd be camped out next door, where our little guy developed a taste for home-style Filipino cooking. In fact, our entire families seemed woven together. For years, James' two older sisters had tag-teamed as our baby-sitters.

So I asked James, now 18, what was up with all the boxes. He looked at me glumly and said, "We've got three days to get out."

James and his family had lost their Eagle Rock home to foreclosure.

I'm not sure exactly how this happened, but I do know that money had been tight ever since his dad was laid flat by a heart problem. An older brother, meanwhile, had gotten himself into some bad -- and probably costly -- legal problems.

The truth is that, in recent years, as Jesse and James grew older, they also grew distant, finding new friends and interests at different schools. His sisters moved away, and I rarely saw the mom and dad anymore.

But none of that mattered when I saw the sadness in James' face, a look I hadn't seen since those boyhood days of skinned knees and hurt feelings. Instantly, all those foreclosure stories I'd been reading meant a whole lot more to me. This wasn't about toxic assets. This was about a struggling family, which, after 14 years, would indeed vanish in three days.

Week after week, whenever I looked at that padlocked house, I wondered how James and his family were now faring in their Glendale apartment. And I thought about all the other young people who've been forced to make this same wrenching transition -- whether or not their folks recklessly gambled on subprime loans or drained their home's equity for big-screen TVs and big cars, or had a run of bad luck. Regardless of the reasons, I'd come to see the foreclosure mess as utterly depressing.

Then I met Hilary and Mark.

Engaged to be married, the young couple snapped up the house next door at a bargain price from an investment company that had bought it at a foreclosure auction.

"We never thought we'd be able to afford a house in L.A.," says Mark.

"I pinch myself every time I crawl into bed," says Hilary.

Both in their early 30s, Hilary and Mark were a revelation to me, a ray of sunlight in the foreclosure storm. Yes, a door has been slammed shut on many unfortunate homeowners. But it also has been flung open for thousands of first-time buyers like Hilary and Mark, who'd been locked out of the housing market by soaring prices.

The latest survey by the National Assn. of Realtors found that, in the first quarter of this year, first-time buyers accounted for nearly half of all purchases. Hilary and Mark, who were renting in Echo Park, say most of their apartment-dwelling friends are now searching, including one couple that has asked their wedding guests for one gift: a contribution to their house fund.

My new neighbors found the home on an Internet real estate site, where it had been listed for just three days. The investment company had made a few fixes, slapped on some paint and jacked up the price by more than $100,000, which was still a deal.

In the next couple of years, Hilary and Mark plan to bring another child into the home that once housed five of them. In the meantime, they spend weekends together planting flowers and entertaining friends on their patio. They've brought a new spirit to the home and to the neighborhood.

One of our community's most prolific real estate agents, Tracy King, tells me she sees a lot of buyers like my neighbors -- enthusiastic first-timers who spot the charm and potential in smaller homes that more experienced buyers reject. "After being in the business a long time," she says, "you forget how exciting it can be."

I remember that excitement. The Craftsman home where my wife and I live with our son and daughter is our first. And, like Hilary and Mark, we never thought we'd be able to swing homeownership -- until the market dropped in the late '80s and early '90s, leaving many mortgage casualties in its wake.

I first visited the place at sunset on a glorious day of Santa Ana breezes. A golden light poured through the wood-framed windows. I called my wife and said without a trace of doubt: "I've found our dream home." That was 15 years and a million cherished memories ago.

Whenever I half-jokingly suggest we trade it in for a little condo by the beach, my daughter gets playfully irate. She insists we pass it down to her like a family heirloom.

Who knows whether my children will ever be able to afford their own homes, or whether my wife and I will be able to scrape together enough cash to help them, as my parents did for us. But as I've watched the anguish and joy unfold next door, and reflected on my own experiences, I know there's no point in worrying now. For in real estate -- like life -- the future will always deliver the unexpected.

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