So I buckled myself up, and sat in front of the computer for a few hours to extrapolate some of the data from the Multiple Listing Service (MLS).  For a numbers geek like me, it’s pretty interesting stuff. And if you’re not a numbers geek…you might be surprised to find, it’s not entirely boring.  Work with me here…

The Good

There is no doubt that certain communities have been more resilient over the course of this housing crisis than others.  In my recent post discussing the  product profile for new residential construction in Orange County, I discussed the uniqueness of the Irvine market.  It has some of the lowest distress numbers in South County and a buyer demand that is consistently selling out the newest construction projects.  Year-to-date they have had less than 7% of all closings listed as bank owned (foreclosed) property and 22% short sales.  With less than a combined total of 29% for properties closed that were ‘distress’ so far this year, Irvine is one of the strongest cities in the county.

The strength of the Irvine buyer demand may be attributed to the nationally renowned schools, the proximity to Chapman University and University of Irvine, and the attractive commute to many Orange County employers.

My suspicion is also that the buyer profile may have been stronger.  I’d need to do further research, but given the large amount of new construction sold during the boom years, I’m a little surprised to still see a relatively low default rate, or distress market, as compared to other areas in South County that grew up in the boom.

The Bad…Or At Least ‘Not So Good’

Some of the other cities have seen significantly higher numbers of distress sales – bank owned properties and short sales closed.

Lake Forest has seen some fairly dismal numbers at nearly 60% of their closings either bank owned or short sales, with a slight improvement this year so far at 55.9%.  It’s also interesting to note that while some cities (Mission Viejo and Rancho Santa Margarita) seem to be seeing a slight improvement in the percentage of equity sales (owners can sell for a price that covers mortgages and costs of sale) this year, Laguna Niguel and Aliso Viejo have seen decreases. Why?

We’ve seen that some of the higher price points have been stronger for longer.  In other words, it’s only been more recently that we’ve seen short sales or bank foreclosures to any great extent in the higher price points.  These neighborhoods may now be feeling that pinch.

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The Really Ugly

It’s interesting to examine the nature of the neighborhoods that have the highest number of distress inventories.  Upon examining a couple of the neighborhoods, it’s clear to me there are some very real reasons for the challenges some of these neighborhoods are facing.

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It’s important to know the following about the this chart – Ladera Ranch numbers include their gated community of Covenant Hills, and San Clemente’s overall numbers include their newest addition of Talega in their calculations.  For discussion, I’ve pulled out the specifics for both Covenant Hills and Talega.

It’s hard to ignore, out of the cities I profiled, the only one that didn’t have a lower percentage of bank owned homes (foreclosures) was Lake Forest, and certainly Lake Forest has really struggled with high numbers of distress throughout this market as well.

Growing Up In The Boom

I’m particularly interested in the makeup of Ladera Ranch, Covenant Hills, and Talega in this crisis, however.  These are neighborhoods that experienced unprecedented demand, and in the early years, unprecedented appreciation.  The product was new, architecture was unique, planning was exceptional, and it was highly appealing to the buyer profile of the day.  But the one commonality these neighborhoods also face is the fact that they literally grew up in the boom.

And in the case of Covenant Hills (which I intend to explore further in a future post) you have a community, a luxury one at that, that was just in the beginning stages of it’s launch.  And while the construction of the planned community, high-end tract homes, has nearly completed at this point, the high number of available empty lots slated for luxury custom builds, remains vast.

And when you have entire communities that are built in a boom, the overall impact of that bust can be devastating.    For a small community like Covenant Hills – the high end of Ladera Ranch – to see nearly 64% of it’s year-to-date sales as distress, the impact cannot be overstated. With Talega suffering over 60% of it’s closed inventory year-to-date as distress sales, there can be no question that this has dramatic impact on value.

Is There a ‘Good Deal’ for a Buyer Here?

Without a doubt, there are opportunities to get a ‘good deal’ in these neighborhoods.  In some of the hardest hit neighborhoods, prices have fallen and distress inventory is high.  So if a ‘deal’ is the goal, they are certainly here.

But I’m curious about your perspective as a buyer – and I’m interested in your feedback.  If you find a property that is 50% off it’s peak in Covenant how do you respond to that?  Do you feel like it’s a better deal than the property that is only 30% off the peak in another neighborhood – some parts of Irvine for example.

It’s an interesting concept to consider.  Every buyer I talk to has one request in common – a good deal.  I think that’s an important thing to define in your search for a home.  Is the ‘deal’ the predominant factor, really?  Is the long term value of the community a consideration?  Do the amenities impact your decision?

However, one may consider the long term prospective recovery in Covenant Hills as a real opportunity.

It really begs the question – from a buyer perspective, what do you consider a ‘good deal’ in this environment?

Short Sales and Volume

Some things to note from the above numbers, in 2008 the foreclosed/bank owned homes were the more common distressed property available.  In 2009 the tide shifted and short sales played a much more significant role, one which grew further this year.

Also, it’s interesting to note volume.  Nearly across the board, the number of sales increased from 2008 to 2009.  Jury is out for 2010 – but my personal opinion, given the expiration of the Housing Tax Credit, things may be fairly quiet for the 4th quarter of this year.

Jon Lanser with the Orange County Register recently did a post breaking down the number of sales and the change in median price per zip code that might be interesting to check out.

I’ve been somewhat reluctant to participate so I’ll start with this disclosure:  Until recently, I have followed politics superficially at best, I have limited understanding of how housing policy is decided upon, and I generally think Hahn derives some pleasure from his consistent ‘sky is falling’ outlook.  That being said, I will credit Hahn with a breadth of understanding on the topic, and a careful consideration of the political underpinnings.  He inspires me to become significantly more aware of the way the political environment impacts the industry and overall economy.  Clearly, in today’s environment, a superficial understanding falls far short.

And while I try to avoid politics here, the current market environment makes it unavoidable.  The current administration policies have pushed us closer to Socialism than we’ve seen before in our history -  whether it’s Wall Street, the automobile industry, or health care.  The housing market appears to be next.

Much of what I deal with on this blog tends to be local market considerations.  Yet, there is no question that the changes that are clearly coming down the pike have the potential to have a massive impact on the housing market – nationally, and locally, so I feel like it certainly has a home here.

Housing Policy Changes in the Air

July’s housing numbers rocked the nation.  They had been expected to be low given the expiration of the home buyer tax credit, but sales down 27%…that was a little steeper than had been anticipated.  In the days following, it created a tidal wave of response. I saw articles come out on, and offline, both indicating this was nothing to worry too much about, as well as those that would make one decide not to get out of bed again…ever.

There’s no question, housing policy is one of the most important matters impacting our economy today.  And certainly significant change is coming.  As Treasury Secretary Timothy Geithner states, “This administration will side with those who want fundamental change. It is not tenable to leave in place the system we have today.“  It’s the specifics of that change that are of interest and of concern to me.

‘Fundamental change’ is too ambiguous at this stage.  I’m interested in seeing change that reflects a solution to the existing problems.  What parts of the ‘system’ that got us here – are not ‘tenable’?  Let’s come from the three C’s of home ownership perspective:

1. Capacity – the ability to repay the loan (employment history, salary)
2. Credit – the history of how one has paid back debt
3. Collateral – the value of your home (recently justified by overbloated appraisals brought about by easy lending practices)

What if we simply embrace these simple tenants:  make quality loans, with credit worthy individuals, on quality property.  In the past decade, had we not swayed from that simple idea, it’s highly likely, we wouldn’t be here.

No More Mortgage Interest Deduction?

Since Hahn has one more of the dismal outlooks, I think it’s interesting to examine it from his ‘worst case scenario’ environment.  In a recent post, he speculated on some of the possibilities:

1- The mortgage interest deduction will be eliminated, or at least sharply scaled back
2 – Fannie/Freddie will wind down participation in the single family residential market, and raise participation in multifamily housing (aka, rentals)
3- The 30-year fixed rate mortgage is headed to the ash bin of history; I rather expect the “new normal” will be something closer to a 10-15 year adjustable rate mortgages that adjust every year or even every quarter.
4 – Down payments are headed up, up, up from its current levels (some FHA loans are still requiring only 2-3% down); Bill Gross of PIMCO has said that if he were funding mortgages, he’d require a minimum of 30% down payment.  I think that’s where we’re headed.
5 – Some form of national regulation for rentals, in order to (a) encourage rentals by those who would otherwise be first-time homebuyers, and (b) protect renters from eeeeevil landlordz.  It may be as heavy handed as a national rent control regime, or (more likely) an expansion of Section 8 to include far more “middle-income” units.

Are These the Changes That Repair Housing?

There are some valid arguments for some of the preceding speculations.  As  Hahn states, “…the overall impact is to decrease the pool of buyers, drive housing prices lower, and have fewer transactions.“  This may in fact be a requirement of the overall recovery.  There were less buyers, lower prices, and less transactions when stronger lending practices were in place.

However, when the Housing Policy changes are considered I wonder about this simple statement of fact from Mark Zandi, Chief Economist for Moody’s Analytics, “…when housing values are falling, nothing really works all that well in our economy.“  Our economy cannot possible heal with a crippled housing market.  And some of these speculations from Hahn only seem to me as the types of things that can only further cripple the housing market, in an extreme way.

While Hahn is rather fluent in politics and rather adept at speculation, one area of expertise I have is in understanding the profile of today’s distressed homeowner.  I know what it’s like to sit across the kitchen table from someone that is faced with these very real and personal set of circumstances.

Lest the Pendulum Swing Too Far in the Other Direction

I will grant you, in the early days of this crisis, those faced with short sale scenarios or potential foreclosure, might have been the higher risk buyer profile.  They may have been the 100% down buyer.  They may have had the ‘Neg-am loan’ or some other questionable loan program.  They may have been the buyer that had borderline qualifications coming into this game.

However, the Orange County homeowner of today that sits across from me at the kitchen table is often the one that put a fair amount of money down, they may have been highly qualified, excellent credit, documented income sources, and yet, with the decline in values, personal circumstances (divorce, long term unemployment, relocation) they are forced into a financially devastating course they couldn’t have anticipated.  And these homeowners ask the same question nearly every time:  ‘How long do you think it will be before I will recover enough to be able to buy a home again?‘  They ask this because they value home ownership.  Remember, they were not in this market for a quick turn on their money.  While some bought houses, the short sale/foreclosures we are seeing today are the buyers that bought homes.

These individuals consider home ownership as part of their claim to middle class.  They certainly consider it part of their ‘American Dream’ and they fully anticipate their ability to reestablish that claim.   They are voters.  They have historically been high income earners.  And I highly doubt they will be interested in satisfying themselves with long term rentals as their housing solution.

And why, in the course of establishing a National Housing Policy, would we take measures that serve to cripple the ability for those individuals to own again, cripple the potential recovery, and cripple our ability to recover some economic stability – because clearly, they go hand-in-hand.

The Meaning of Home Ownership in The United States

It’s interesting to look at the psychology of home ownership in this country.  The big land rushes of the late 1800′s illustrate the deeply ingrained desire to own a chunk of dirt to call your own.  That desire is something you can’t simply legislate away, and I really believe voters’ voices will be heard when you start hacking away at their long term ability to grab that golden ring once again.  I think it will take more than a Time Magazine article to convince them that home ownership is not all it’s cracked up to be.

There was a time when home ownership was valued for the sake of owning a home, and not much more.  Then came the profit taking in the later 80′s as home prices soared with the onslaught of dual income families.  The late 90′s and early 2000′s brought easy money and get-rich-quick buying, leading to our current collapse.

But I still believe, most folks want to own their home, they will take a mortgage to buy it – maybe even without a mortgage interest deduction.  Prices may fall.  Maybe we’ll adjust our expectations.  Maybe we’ll begin to be satisfied with a slow appreciation over the life of a homeowner, rather than the promise of a lifetimes wages in a year or two of owning a home.

Kicking the Dog While It’s Down…

Some of the things Hahn is speculating may indeed come to pass, in one form or another.  But, I think there is value in considering the fact that kicking the proverbial dog while it’s down, may not be the answer.  Bill Gross, with PIMCO, states, “Policymakers should quickly re-engineer a refinancing opportunity for all mortgagees that are current on payments and are included in GSE securitized mortgages.“  There are some solutions that could be examined that help sustain those that are currently impacted and in turn further housing and economic recovery.

The pendulum may have swung too far in encouraging home ownership, but it would seem a mistake to me to have it swing so far the other way that we eliminate the ability for our middle class to recover and reclaim their ability to own once again.

BTW Rob – it may satisfy you to know, this may be one of the longest posts I’ve ever written.

Who Is Building My House?

It’s not exactly a coup for the home building industry.  The big beneficiary of this new construction will rest squarely with the land owner, The Irvine Company, or Donald Bren. Of course, we understand that one of the biggest land owners in Orange County would have a good deal to gain, so how is this different?

Normally a home builder ‘takes down’, or buys the land and they develop that housing project.  Today, the builder’s inability to secure financing has forced home builders out of the role of developer.  Instead, in the most recent, and upcoming projects you see in Irvine, The Irvine Company has decided to step back into the role as developer.  They are responsible for sales, marketing, warranty, design, options, etc.

And the home builders they have hired for the construction process are in essence, simply acting as general contractors.  The home builders are taking what they can to stay afloat and finding new ways to adapt their company skill set in this economic environment.

It helps to illustrate the pains that the builder Lennar is experiencing as land owner for the languishing Great Park.  Without the ability to finance, development continues to be at a standstill.

No More McMansions – Today’s Housing Product

The Irvine Company has been around the proverbial block once or twice.  Their development plans have been well thought out.  They’ve carefully crafted a plan based on solid consumer research, a real understanding of the local economy, and I suspect, a fair amount of insight into the National Housing Policy.

The emphasis is clearly on higher density product – apartments, condos, and high density single family housing with nothing over 2500 square feet.  Long gone are the days of the McMansion development.

The Characteristics of Today’s Orange County New Home

• Open floor plans – big windows, great rooms tied to the kitchen.  Great rooms are genius – space where we live!
• Granite is standard – we love our granite for some reason
• Goodbye to formal areas – don’t pretend you are disappointed.  I sit in my formal living room once a week, just to say “See, I use it”.  My husband would rather move the furniture out and use it as an indoor football field.
• Pre-wired for plasma television – sorry, I just can’t relate to our love affair with the idiot box, but there it is….and standard no less.
• Big fireplaces – slightly confused here, but they didn’t call me for this one.  It can’t possibly be those harsh cold winters…maybe we’re just romantics.
• California Rooms – now this, I like.  They are stucco covered patios with ceiling fans in the backyard – it’s a form of extending the living space.  The downside, when you have little or no yard (as these developments surely do), it pretty much takes up what little yard space you have.
• Smaller homes – no more sprawling floor plans and massive square footage.  Very little is over 2500 square feet.

But Is Anyone Buying? Actually, They Are …In Irvine

There’s an interesting phenomenon happening in Irvine.  Demand has remainded strong throughout this bubble burst, and interestingly enough, Irvine has one of the lowest percentages of distress inventory in South Orange County.  It appears to be it’s own micro-economy supported by local industry, UCI, and the long-standing desire that consumers have had to own within Irvine.

The premium location, the highly ranked school district, the low crime rate, and the ease of commute, keep Irvine highly sought after.   Recently, the KB Home’s Southern California president stated that the KB Coronado development in Irvine, was their best selling product in the nation.

By creating lower price points with some of the new high density product, those that have wanted to live in Irvine, but previously may have found it out of reach, are finally finding their way in.  This type of product has never been available on the ‘ranch’.  Homes are selling same day as release and people are on a waiting lists.

The upcoming projects will continue to be in Irvine and some development is slated for the Laguna Audubon area.  Although the original product was to be luxury, large homes, those projects have again been scaled back to high density product as well.

Interesting conversation, but not particularly uplifting.  Simonsen indicates that it

“…could be a decade of recovery.  Banks have tons of homes on their books and they are reluctant to let them go at all because they have to then start doing things like ‘marking to market’ if they sell them at depressed prices.  So they dribble them out, and they may be dribbling them out for 10 years.”

For a long time I’ve felt as if we kicking the proverbial can down the road with band-aid loan modifications (that continue to have high default rates) and artificial stimulus like the Housing Tax Credit.  None of these things solve the larger issues of high unemployment, negative equity homeowners, the outstanding loans that are still resetting, and overall poor economic conditions.

When Sanders is asked what do we do to help the housing market, he mentions fixing unemployment, keeping the Bush tax cuts in effect, and

“Government’s got to pull back out of the housing market and let the private sector work.  They have done no good whatsoever.  Like the ‘Midas Touch’, it’s just the opposite.  They’ve got the ‘Medusa Touch’; they touch the housing market and it turns to stone.”

Here’s the full interview. Well done Mike – love the purple tie trio.

As I’ve said before, there are several things that have me concerned about the housing market in Orange County.

1. The large number of negative equity homeowners
2. The disproportionate number of homeowners that qualified for their loans with adherence to minimal guidelines
3. The number of homeowners that have negotiated short term solutions to long term loans problems
4. The lack of solid and accessible financing for current buyer demand
5. The long process for handling the abundance of short sale inventory

Some of those concerns, and others, are voiced by Stan Humphries, Zillow’s Chief Economist, in this recent article in the Orange County Register.  According to Humphries, we are looking at 3rd quarter for the ‘bottom’ of this year and a long, flat recovery that will take us into 2013.  His view was one of a national market, and given the magnitude of our housing crisis, I believe it may very well take at least that long.

If you are a seller: consider your options carefully.  Can you hold on for the next few years?  Can you lease the property?  And if you are hanging on to it, think seriously about that decision if you are holding out for growth – that won’t be happening any time soon.

If you are a buyer: Lending will be one of your primary concerns.  Investigate your options carefully and know what you can qualify for before you shop.  Opportunities will be out there, but don’t buy unless you plan on owning for at least 5 years right now.

Wagon Wheel is small community in Trabuco Canyon located off Oso Parkway not far from the south gate of Coto de Caza.  The homes were built in the mid 90′s by Kaufman & Broad who subsidized the original mello roos bonds making it known in part, for it’s very reasonable tax rate.

Homes range in size from the condos in the Dakotas (835 to 1,117 square feet) to the gated community of Stonecliff (up to just over 3,000 square feet).

Current market conditions in Wagon Wheel are not dissimilar to Orange County as a whole.  The upper price points remain very slow and the lower price points are plagued by distress inventory.

Market Conditions

Note that there is very little bank owned inventory on the market currently, but given the recent completion of the moratorium on foreclosures, we are seeing Notice of Defaults on the rise again and in the coming months, I expect to see bank owned homes back on the rise in Wagon Wheel and all over Orange County.

The highest sale year to date is in the California Laredo tract at $725,000 in February.  The next closest sale was $600,000.  The poor sale history for the upper price points is  not isolated to Wagon Wheel and is seen across the market due to the lack of available financing and buyer cautiousness.

The highest sale in the last 30 days was in the California Landmark tract, a traditional sale for $556,000.  Between $500,001 and $750,000, there are 5 available properties and 3 in escrow.

Under $500,000 is plagued by distress sales.  Currently 4 out of 5 active listings are short sales, yet the 4 equity sellers currently in escrow reflect the buyer demand – buyers are often reluctant to wait out the lengthy short sale process and opt for a traditional sale.

Questions?

If you are wondering how these statistics and trends impact your buying, or selling process, please don’t hesitate to let me know.  I’m always happy to help.  No pressure and no obligations.  I can be reached at (949) 939-2514 or emailed at linsey@ocrealestatevoice.com.

This information and stats are from SoCalMLS and are deemed reliable but not guaranteed.

During the final months of 2008, many lending institutions participated in a voluntary moratorium on foreclosures.  Notice of Defaults (NOD’s), the first step in the foreclosure process in California, plummeted.   The final days on the moratoriums have just passed.  Fannie Mae and Freddie Mac’s were lifted as of March 31.

And if you’ve been paying attention to my ‘Microscope on the Market’ series, you’ve noticed the drop in bank owned homes on the market – hence the second half of that headline, ‘Foreclosure Sales Drop’.  Without the new NOD’s, there’s been a dramatic reduction in bank owned homes.

Notice the following chart that tracks Notice of Defaults and Foreclosure sales.  The green line represents California’s NOD filings.  Notice the arrows – the dramatic dip in September and the sharp rise as of March ’09.

With the rise in filings, we can expect the foreclosures to rise.  Will Obama’s plan help?  My guess is no for Orange County.  Why?  The loan modifications the banks are offering, by and large, don’t change the significant negative equity that many of these homeowners are facing.  Without a substantial equity reduction, many sellers (who’ve already seen their credit damaged) will opt to walk away from the property.

What does this mean for buyers and sellers?  If we see a large rise in distress inventory, this market may see some downward pressure on pricing – although in some of the lower price points, overall inventory is still low (especially if you remove the difficult short sales).  I would expect that demand for this inventory will remain high – as we have seen in recent months.

One interesting note in the Foreclosure Radar report:

The California Foreclosure Prevention Act, which goes into effect this summer, adds an additional 90 days to the foreclosure process if lenders fail to take certain actions.  It is quite possible that the dramatic rise in foreclosure notices occuring now is an attempt by lenders to process as many foreclosures as possible before this law takes affect.

If you are interested in viewing foreclosure data and bank owned homes don’t hesitate to contact me.

Today’s Microscope on the Market focuses on the Laguna Niguel real estate market.

Homes Under $500,000

In the under $500,000 market, Laguna Niguel does not vary from any of the cities I focused  on in South Orange County with a whopping 63.9% of the active properties in a short sale situation.  Couple of things to note – it would appear that there is significant movement with 71 properties in escrow.  Sadly, 38 of them are short sales and those can sit in escrow for 60 to 180 days and that can skew the perception of significant movement.  Notice only 18 have actually closed escrow in the last 30 days.

I want to also point out the very low number of bank owned inventory.  Pay close attention to this number in the coming months.  It will increase again based on the end of the moratorium on Notice of Defaults.  Filings are back up to levels prior to the moratorium so watch for this number to increase.

Also of note, despite the large supply of short sales, buyers still look to bank owned homes and equity sellers for their purchases by a significant degree in relation to the supply.

Homes $500,001 to $750,000

Again, despite the large number of short sales, buyers love bank owned inventory and it doesn’t last on the market and their is still a significant demand for reasonable equity sellers.

Homes Over $750,001

As I noted in Coto last week, there is just very little in the upper price points that is moving.  At this rate of consumption (12 homes a month), we have a 12.25 month supply of homes.  If nothing else were to list in this price range, it would take us over a year to consume the existing inventory with current buyer demand.

The good news in Laguna Niguel – there is very little bank owned inventory and very few short sale listings.  That can be good news for values in the coming year.  I’m not suggesting any appreciation guys – but even with slow sales, these folks may have the financial strength to hang on.

Today’s Microscope on the Market focuses on Coto de Caza.

If you aren’t from Orange County – yes this is the home of the infamous Real Housewives of Orange County, although I can’t say that the friends that I have living in Coto are anything like the woman as depicted on that show.  It’s really a beautiful gated community with homes in a wide variety of prices ranges.  But I won’t kid you – some of the highest priced homes in Orange County are behind these gates.

I toyed with varying the breakdown that I usually do (Under $500k, $500 to $750, and over $750), but I’ve decided for a number of reasons to leave them.  More later….

Homes Under $500,000

Although clearly, there is not a lot in Coto in the under $500 market, the buying behavior is similar to other parts of the county – all 5 that are in escrow and the 1 closed sale are all either bank owned properties or short sales.

Homes $500,001 to $750,000

This was one of the rare instances where current equity sellers in escrow actually exceeded the active listings that were equity sellers. I’m not ready to ready too much into it – we are only talking about 6 sellers.

Homes Over $750,001

Given the wide range of values in the upper end of the market in Coto, I think it’s important to take note of just a few things in the over $750,000 segment:

• The highest priced home currently in escrow is $1,099,000.
• The highest sale in the last 30 days is $1.6 million.
• The highest sale in the last 6 months per SocalMLS was $2.9 million.
• The only sale over $2.9 in the last 12 months was the record sale on Violeta for $19.5 million.  There have been no sales other sales over $2.9.
• In the preceding 12 months there were 7 sales over $2.9 million ranging from $3.2 million to as high as $6,643,750.  (Where did that buyer profile go?)
• Currently, there are 24 homes over $2.9 in Coto de Caza – 16% of the active inventory.

While the residents of Coto de Caza may be used to having a longer time on the market given the price point, there is no question that they are certainly feeling the shift in the market at the higher end as well.  We have seen the high end somewhat insulated until recently, but when you seen see such a significant drop in purchases at the highest end, you know that no one (not even the ‘Real OC Housewives’) is protected.

I’ve heard the term ‘Mark to Market’ before, but my understanding was loose at best.  It was a blog post written by Pasadena’s local expert, Irina Netchaev, that really broke it down in a way that was simple enough for me to get my head around.  Understanding this one facet of the crisis is really eye opening and definitely worth taking 5 minutes to read.