This is a buyer’s market so obviously the numbers are encouraging to them, not sellers.But, if you think the market is stagnant, if you think people are sitting around waiting, you would be wrong.It is not unusual for any property under $600,000, but especially for a bank owned one to have 6 to 12 offers or more. Orange County had 1,184 bank owned properties in the MLS as of July 11.How many were bought in May? Just about half of them sold with a total of 570.Time needed to sell all foreclosed homes?That was a low number of 44 days.We are nearing the end of loan adjustments for sub-prime loans, which means we are nearing the foreclosure peak and the end all at the same time.Please feel free to call my office at any time and I will let you know current listing counts and the total number of listings that are bank owned.Remember, no one can predict the bottom.People need to decide based on their own circumstance if it is time for them to act.But what is really happening in the market is a far cry from what you read.Affordability increases every day.Congress has passed the “Homeowner Rescue.”Fannie Mae and Freddie Mac are stable and FHA is a phenomenal opportunity, all made permanent with the new $625,500 loan limits.Expect real estate to be what it has always been: a cornerstone of our local economy, for better or worse.But you can bet on this; there is opportunity here right now that may never be here again.There is no question that investors are eyeing the market very carefully.If you need information, look no further as it is my pleasure to serve you.
This is probably the biggest hurdle the real estate industry has to get over in the minds of consumers.Unfortunately a lot of the news out there is the dismal outlook for national housing.Regions such as the mid-west, specific cities such as Detroit, or sub-prime havens such as Riverside and San Bernardino or even Las Vegas and Phoenix, have many more problems than we do here in Orange County and Los Angeles.
That is not to say that prices are not poised for a further drop, because they are.There is more on that in the next section.But it does mean that when you try to apprise yourself of what the facts are, in order to make a decision as to whether right now, is a good time for you to sell or buy, you should compare apples to apples.For example, if you have a compelling reason to sell your home, i.e. a job transfer, divorce, a health issue, than now is definitely the right time because experts agree, there is more loss on the way before we are done.But if selling is optional, consider your benefits.If you want to sell and capitalize on a move up, then maybe now is good.You need to talk to an expert and gather all the facts.If you are looking to buy, what are your financing needs?Will what you need in a loan program be there in 12 months to make waiting worth while.Is the price drop of 10% worth waiting for over the need for a place to live, especially if you have found the “right house” as a 25% decrease over its high?After all, houses are not meant to be day traded.That was a bad habit that most of the country and certainly Californians partook of for a few years. Read on to see why regional knowledge is good when it comes to real estate.
Every cloud has a silver lining and the real estate market is no different.Sales volume took a jump in May (the latest full month available) over April, although sales were still off approximately 10% from May of ’07.However, most agents who are actively working the foreclosure market will tell you that 8 to 20 offers is not unusual for any house priced under $500,000.The papers will tell you the market is dead, the economists are predicting doom and gloom for another 18 months.I’m here to tell you, don’t believe everything you read.Having said that, yes this is a market to approach with caution.You should know exactly what you want, and what you can afford.But, there are definitely deals out there.You need a real estate professional to help you.There is definite navigation required and you will need negotiating power.I am here to help you.This is a radical market full of possibilities.
Well, we got here in a variety of ways.First and foremost the way was paved with cheap and available money.The blame for this goes all the way to Greenspan, Wall Street and the White House.Without getting into the fray, let it be known that the Associated Press reported on June 19th that more than 400 real estate industry players have been indicted since March, in a Justice Department sting dubbed, “Operation Malicious Mortgage.”It is believed that mortgage mishandling, at best, and fraud at worst, is responsible for most of the nation’s housing crisis.
Economists’ views seem to be two-fold.First off is the belief that housing prices had to fall because they ran up so much faster than income.Obviously incomes were left in the dust, particularly in Southern California.Economist Chris Thornberg has said, “Southern California home prices likely will continue falling until mid-to-late 2009… The reason prices are falling is because of gravity.The run-up in home prices over the past decade was ludicrous and wasn’t accompanied by a comparable increase in income.” Thornberg’s estimate of a 50% decline was different than that of the Chapman economists who predict 16% in ’08 and then another 9% in ’09. Many industry insiders blame the stark decline in prices on foreclosures.Well yeah.But you cannot exclude them from the housing mix to create a different percentile.That would be voo doo math.Excluding the foreclosures from any statistic is like saying if you hadn’t gone swimming, you wouldn’t be wet.
Bottom Line:No one can predict the bottom of the market.But the edict BUY LOW would seem to be in operation here.Just make sure you consult your own advisors as to what is best for you.
There was an Associated Press article whose headline read, “US Housing Slump a Prelude to Recession“. It was a brief article and had 3 main points: 1) if history is any guide, a recession is most likely around the corner because a recession followed 6 of the last 7 housing downturns. 2) Housing stats are at all-time lows since after WW II. 3) After the recession ended, housing starts typically rebounded strongly after inventory fell and home sales picked up.
What I would add to this equation for Southern California in general and Orange County specifically should inspire hope.I’m not trying to be naïve.I know we are months from a full recovery.Obviously we have economic woes beyond housing, i.e. food and gas, to name just two.However, let me add that the Associated Press also noted that immigration growth would be a key factor in rejuvenating the market.We also have tremendous economic diversity that is currently being overshadowed by the mortgage meltdown but won’t be forever.Prices falling every month mean more buyers that can enter the market each month.All these first time buyers are planting the seeds for the first true move up market in almost a generation.We need these buyers to start the cycle in a recovering housing market.Finally, generation “Y” is the first generation to be as big as the boomers.Expect them to fuel a housing market as they turn 25 to 35 in the coming years.With mortgage practices returning to normal, money should be available to those who qualify and expect a return to normal appreciation.With as much trepidation as the next year may bring, it will also bring the same level of opportunity for many.I am always here to answer any questions you may have.
That was the headline of the Orange County Register on Tuesday, May 20th 2008.The accompanying photo was a very crowded entry to an open house.What’s happening?The bottom of this market is approaching, that’s what.This is exactly what was reported in this newsletter last month.Prices have gone down so far, so fast, that it’s hard for waiting buyers to resist.We saw an upward trend in open escrows as mentioned last issue, but the main ingredient is the upward swing of the affordability index which is growing every month to a higher percentage of people who can now buy a home.This correction in the market was not only inevitable, it was necessary.When the market topped out in 2006, we were down to 11% affordability.When only 11 people out of 100 can afford to buy a home, that market is in trouble.According to Dataquick sales were still off 19% from the same period last year, but that is a lot better than 36% off the mark.But still, there is a long recovery period ahead.The OC Register reported, using Dataquick numbers, that April (the latest complete month stats available), was 46% below the average April since 1988.According to the article, “Sales for the January through April period were down 57% compared with the 20 year average.”
But the upward trend is significant.Both investors and homebuyers are on the hunt for the perfect deal.Certainly the raise in FHA loan limits has helped significantly as well as FNMA interest rates remaining at their near historic lows.Should you buy?That’s up to each individual to decide according to their need.But it should be mentioned that THE TODAY SHOW aired a segment on real estate the last week in May.Their conclusion: DON’T WAIT!BUY A HOUSE!This is the same morning show, viewed by millions that 2 years ago proclaimed, “Whatever you do, don’t buy a house right now.”So the fact that they are on board with a bottoming market, is at the very least, interesting.
Steve Stearns, Windsor Capital, discusses what underwriters are looking at in today’s market. He discusses the new Jumbo Light and other programs. Stacey Sloan interviewed Steve at Fish in a Bottle restaurant in Placentia.
The next paragraph will have the exact numbers of sales which will still be down from the previous year, but up from the previous month.The fact is sales are way up from February.March sales (the latest month available) in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties were up 19.8% from February.According once again to Dataquick, that’s still not great as the average increase from February to March for the previous 20 years has been 38%.Yet I think it’s a number worth looking at.Why?Because most brokers reported their highest monthly sales in 15 months, which means this March was a heck of a lot better than March of ’07.The current inventory levels have not only stabilized, but they have hit a neutral plateau meaning they don’t really favor sellers or buyers. According to the OC Register (April) supply is hovering at about 6.77 months, meaning if not another house was listed it would take 6.77 months to sell every home currently listed to reach 0% inventory.This is not a bad number considering the affordability index is rising monthly.In fact, it’s risen from a low of 11% at the height of the market to around 30%.That’s the number of people that can afford to buy a home at current prices.Even though the emotions of the market favor buyers and because of that supply favors buyers, activity is slowly growing.Are we out of the woods?No, let’s be realistic and truthful.But, investors are sneaking back in and there are some great deals out there.If you need to buy, you need to call me.There are not a lot of great reasons to wait because the single factor that should sway you is interest rates and they are still at near historic lows.
Sales data for the first quarter has arrived and for March specifically, prices have hit the 2004 watermark.That means the median price is down almost 20% from a year ago.Both the Los Angeles Times and the Orange County Register reported the Dataquick findings.Obviously a huge contributor to price adjustments is the absorption of bank owned properties that are finally matriculating into the general real estate population.The other factor is that sellers that previously were “testing” the market have wisely taken their homes off the market and only serious sellers remain.That means that motivated sellers realize that their home must be priced to sell and that it will have competition from the bank owned sector. According to Dataquick, the bank owned property typically sells at least 15% below “normal” market prices.Although it could be argued that the housing downturn is artificially deflated because of the bank owned properties, this writer does not agree.That’s like saying if you hadn’t driven the car, you wouldn’t have gotten in the accident.Bank owned properties are germane to this market and will be here for some time.This is not an overnight correction as people are beginning to realize.Don’t misunderstand, there is light at the end of the tunnel.These distressed properties are beginning to move.Read on for the optimist’s view…
The total number of sales was 1,663 which was up 13.1% from February (Orange County only). The new median price for the county is $506,000 down from a high of $673,000.That number includes single-family, condos and new homes.This is the first time since this newsletter’s history that more properties sold in the lowest category than the highest with 402 sales under $400,000 and 398 over $700,000.The average down payment stayed steady at 22% and the adjustable loan share is down to 34% after peaking well above 70% at the height of the market.The monthly payment index is 2,645 and that is 10% lower than the same time last year.That number should keep falling as prices continue to adjust.
current listing counts and the total number of listings that are bank owned. Remember, no one can predict the bottom. People need to decide based on their own circumstance if it is time for them to act. But what is really happening in the market is a far cry from what you read. Affordability increases every day. Congress has passed the “Homeowner Rescue.” Fannie Mae and Freddie Mac are stable and FHA is a phenomenal opportunity, all made permanent with the new $625,500 loan limits. Expect real estate to be what it has always been: a cornerstone of our local economy, for better or worse. But you can bet on this; there is opportunity here right now that may never be here again. There is no question that investors are eyeing the market very carefully. If you need information, look no further as it is my pleasure to serve you.
Get Our RSS FEED