Bankruptcy filings skyrocket in O.C.
IRVINE, Calif. -- It's a sign of the times -- some very hard times. Bankruptcy filings are up, and in Orange County they are skyrocketing.
One development Eyewitness News visited in Orange County is supposed to be a sprawling collection of new houses and townhomes. But the only thing sprawling these days across the empty fields are the weeds.
The real estate market is withering.
"You can probably drive around most of Southern California and see real estate development projects that have, frankly, just stopped," said bankruptcy attorney Jim Bastian.
Bastian has been very busy lately. Bankruptcy filings in Southern California are skyrocketing. The latest year-to-year numbers for April show bankruptcies in L.A. County are up 92 percent. In Riverside County, they're even worse at 125 percent. In Orange County, statistics show bankruptcies are up a staggering 153 percent.
"It's going to get worse before it gets better," said Bastian. "Most of the people that I've talked to, and if you talk to experts in the industry, they'll tell you it might be 2010 or 2011 before we see prices get back to where they were even three or four years ago."
Rising fuel prices are rising up costs across the board, but Bastian says the subprime mortgage meltdown is the root of the bankruptcy problems. Real estate developers are the hardest hit on the commercial side. But Bastian says the saddest cases involve homeowners swept into the buying frenzy by unscrupulous lenders.
"People who should not have been in this situation, where they're buying a $400,000 or $500,000 house and having a mortgage payment of $4,000 or $5,000 per month, when they're only making $25,000 or $35,000 a year," said Bastian.
That ultimately leads to bankruptcy court. As visits to court add up, developers work on their subtraction. Earth movers are moving nothing, new streets have no cars and housing lots have lots of nothing. What was once a real estate boom is now an unnerving silence.
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