I wanted to bring to your attention some important details about the recently announced Home Affordable Foreclosure Alternatives program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP).
HAFA helps standardize the short sale and deed-in-lieu process by creating an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP.
Although not perfect, the program reflects C.A.R.’s efforts in the federal arena to standardize the short sale process, protect your business, and safeguard commissions. It also makes clear the timeframes by which servicers must respond to an offer on a short sale.
The HAFA program will permit pre-approved short sale terms before a property is listed; prevent servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval; release borrowers from future liability for the debt; and provide financial incentives to borrowers, servicers, and investors.
Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the servicer has 10 business days to respond to an executed purchase offer. The servicer may negotiate the real estate commission prior to the listing of the property, not to exceed 6 percent, but once this has been agreed to the commission may not be reduced at a later date.
The servicer also will determine the minimum net proceeds for a short sale; if an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it.
Each participating servicer also must develop a written policy that describes the basis on which the servicer will offer the HAFA program to borrowers. All borrowers must be evaluated for a loan modification prior to going to HAFA. For additional information, please go to car.org at http://www.car.org/governmentalaffairs/federal/ustreasuryfap/.
HAFA is a step in the right direction toward helping distressed homeowners now, and is an effective tool to quickly move distressed properties through the market. Although HAFA goes into effect April 5, 2010, our expectation is that servicers may choose to implement it earlier. The program is available only for non-Fannie Mae- or Freddie Mac-owned loans up to $729,750. C.A.R. will continue to reach out to servicers and lenders to encourage their adoption of HAFA and other programs that will help California’s housing market continue to recover. We anticipate that Fannie and Freddie will release their own guidelines soon, and we will share details with you as soon as they are available.
Wednesday, December 16, 2009
Friday, December 11, 2009
Click here to view “Beyond the Headlines,” a version specifically formatted for consumers that you can print, share via e-mail, or post on your Web site.
Welcome to C.A.R.’s Market Matters, your weekly market response guide.
Los Angeles Times
Shaving real estate commissions can save sellers thousandsAs home values have declined, a recent Los Angeles Times article questioned the compensation a REALTOR® receives for his/her efforts. While REALTORS®’ compensation may be an important factor for sellers to consider, it should not be the deciding factor.
MAKING SENSE OF THE STORY FOR CONSUMERS
Rather than focusing on a REALTOR®’s compensation, consumers instead should focus on identifying and selecting a REALTOR® who best meets their needs and unique situation. The guidance and value a REALTOR® brings to the transaction cannot be determined by his or her commission rate alone. In this instance, the saying “you get what you pay for,” may ring true. Consumers should interview several REALTORS® to identify the best fit for them and their situation.
It’s critical to point out that although there are more than half a million licensed agents, not every real estate agent is a REALTOR® who voluntarily agrees to subscribe to a strict Code of Ethics. As members of their local, state, and national associations of REALTORS®, REALTORS® constantly receive updates on the latest housing legislation impacting them and their clients. Additionally, REALTORS® have access to the latest technologies for the real estate industry, including critical housing data, pricing trends, time on market, and historical sales activity in the neighborhood. These tools and resources enable REALTORS® to provide the highest level of service possible, including helping sellers determine the best price for their home in today’s market.
A REALTOR® also can assist with the critical negotiations included in every real estate transaction, and help both buyers and sellers finalize the many details that comprise a purchase agreement. For sellers, a REALTOR®’s role may include negotiating a sale price and other terms in this tough market. A REALTOR® also can help sellers determine what, if any, repairs may be the owner’s responsibility, and can help negotiate deadlines for their completion.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *FREE Social Media Marketing SystemMaximize business from the leading social networks online!Top Producer’s all-new Market Snapshot systemnow includes a FREE Social Media Marketing System>* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
In Other News
The New York Times
New rules for counselorsOlder homeowners who are considering a reverse mortgage can now get more help in the decision-making process. The Federal Housing Administration, which insures reverse mortgages, last month instituted new standards for the counselors who, according to federal law, must meet with prospective borrowers before a loan can be approved.
To read the full story, please click here.
Los Angeles Times
IRS to outline changes in the home buyer tax credit programIf you’re thinking about applying for the new $6,500 home buyer federal tax credit or the extended $8,000 version, the Internal Revenue Service has just issued its first formal guidelines for you.
To read the full story, please click here.
The Wall Street Journal
House flipping makes a comebackFour years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.
To read the full story, please click here.
San Francisco Chronicle
Less competition in the market over holidaysRecent good news about the housing market has many home buyers wondering whether now is a good time to buy. For example, home sales activity increased 9.4 percent nationally in September, a 26 percent increase from a low point in January, according to the NATIONAL ASSOCIATION OF REALTORS®.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Do your Clients think of You?Send them one of our cards... and they will.House of Cards Proudly Presents:Holiday & Prospecting Greeting Cards for REALTORS®* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The Mercury News
Now’s really the time to buy a home, many sayMortgage rates are hovering at historic lows, home prices are just starting to edge up from total collapse, and the government is offering tax breaks to first-time and move-up buyers.
To read the full story, please click here.
Los Angeles Times
Consumer borrowing falls for 9th straight monthThe Federal Reserve says consumers borrowed less for a record ninth straight month in October. It was another sign that consumer spending will remain weak, making it harder for the economy to mount a sustained rebound.
To read the full story, please click here.
Reuters
Quarter in U.S. foreclosure plan late on paymentsMore than one-quarter of homeowners receiving help under a U.S. government foreclosure prevention plan are behind on their new mortgage payments, a Treasury Dept. survey has found.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Bank of America and C.A.R. team up to bring you theC.A.R. WorldPoints MasterCard® credit card: Enjoy the rewards!Earn points and get the rewards you want with no annual fee. Showthe card that shows you’re a REALTOR®! Click here to learn more!* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Talking PointsHere’s what to tell consumers...
Many homeowners have been enticed lately by mortgage interest rates hovering near 5 percent, leading some to think about refinancing their home. The first step owners should take is to have their property’s value assessed and to contact a REALTOR® to find out what similar homes are selling for in the area, as opposed to their listing prices. If there have been a high number of foreclosures in the neighborhood, chances are property values have declined.
Most lenders today will not complete a home loan refinance unless the owner has at least 20 percent equity in the property and proof of income. However, homeowners who are underwater—those who owe more on the mortgage than the home is worth—still may qualify for a home refinance. Some federal programs allow homeowners to refinance their mortgage up to 125 percent of the home’s value.
Some home loans include prepayment penalties, meaning the homeowner has to pay a penalty for paying the loan off earlier than the original loan terms. Prepayment includes refinancing, as the original loan is paid off through the refinance. If the fees are equal or close to the amount the owner would save with a refinance, then refinancing the home may not be the best option.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *TransUnion SmartMove gives C.A.R.'s independent landlords all thescreening tools they need, with none of the hassle. Click here tocreate an account and get 20% off. Credit, criminal and a leasingrecommendation in minutes. No approval process. No minimums.* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This message was sent to bmcgarvin@cox.net. Visit your subscription management page to modify your e-mail communication preferences or unsubscribe.
Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide. Edited by: Mark Giberson, (markg@car.org) and Mary Burroughs, (maryb@car.org) Executive offices:525 South Virgil Ave., Los Angeles CA 90020phone (213) 739-8200; fax (213) 480-7724 Legislative offices:980 Ninth Street #1430, Sacramento CA 95814phone (916) 492-5200; fax (916) 444-2033 To view C.A.R.'s Privacy Policy click on this link:http://www.car.org/aboutus/privacypolicyTo contact C.A.R., click on this link:http://www.car.org/?view=ContactUs Written inquiries regarding Market Matters should be directed to Mary Burroughs, (maryb@car.org).
Welcome to C.A.R.’s Market Matters, your weekly market response guide.
Los Angeles Times
Shaving real estate commissions can save sellers thousandsAs home values have declined, a recent Los Angeles Times article questioned the compensation a REALTOR® receives for his/her efforts. While REALTORS®’ compensation may be an important factor for sellers to consider, it should not be the deciding factor.
MAKING SENSE OF THE STORY FOR CONSUMERS
Rather than focusing on a REALTOR®’s compensation, consumers instead should focus on identifying and selecting a REALTOR® who best meets their needs and unique situation. The guidance and value a REALTOR® brings to the transaction cannot be determined by his or her commission rate alone. In this instance, the saying “you get what you pay for,” may ring true. Consumers should interview several REALTORS® to identify the best fit for them and their situation.
It’s critical to point out that although there are more than half a million licensed agents, not every real estate agent is a REALTOR® who voluntarily agrees to subscribe to a strict Code of Ethics. As members of their local, state, and national associations of REALTORS®, REALTORS® constantly receive updates on the latest housing legislation impacting them and their clients. Additionally, REALTORS® have access to the latest technologies for the real estate industry, including critical housing data, pricing trends, time on market, and historical sales activity in the neighborhood. These tools and resources enable REALTORS® to provide the highest level of service possible, including helping sellers determine the best price for their home in today’s market.
A REALTOR® also can assist with the critical negotiations included in every real estate transaction, and help both buyers and sellers finalize the many details that comprise a purchase agreement. For sellers, a REALTOR®’s role may include negotiating a sale price and other terms in this tough market. A REALTOR® also can help sellers determine what, if any, repairs may be the owner’s responsibility, and can help negotiate deadlines for their completion.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *FREE Social Media Marketing SystemMaximize business from the leading social networks online!Top Producer’s all-new Market Snapshot systemnow includes a FREE Social Media Marketing System>* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
In Other News
The New York Times
New rules for counselorsOlder homeowners who are considering a reverse mortgage can now get more help in the decision-making process. The Federal Housing Administration, which insures reverse mortgages, last month instituted new standards for the counselors who, according to federal law, must meet with prospective borrowers before a loan can be approved.
To read the full story, please click here.
Los Angeles Times
IRS to outline changes in the home buyer tax credit programIf you’re thinking about applying for the new $6,500 home buyer federal tax credit or the extended $8,000 version, the Internal Revenue Service has just issued its first formal guidelines for you.
To read the full story, please click here.
The Wall Street Journal
House flipping makes a comebackFour years after the collapse of the U.S. housing bubble, flipping homes is back in fashion.
To read the full story, please click here.
San Francisco Chronicle
Less competition in the market over holidaysRecent good news about the housing market has many home buyers wondering whether now is a good time to buy. For example, home sales activity increased 9.4 percent nationally in September, a 26 percent increase from a low point in January, according to the NATIONAL ASSOCIATION OF REALTORS®.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Do your Clients think of You?Send them one of our cards... and they will.House of Cards Proudly Presents:Holiday & Prospecting Greeting Cards for REALTORS®* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
The Mercury News
Now’s really the time to buy a home, many sayMortgage rates are hovering at historic lows, home prices are just starting to edge up from total collapse, and the government is offering tax breaks to first-time and move-up buyers.
To read the full story, please click here.
Los Angeles Times
Consumer borrowing falls for 9th straight monthThe Federal Reserve says consumers borrowed less for a record ninth straight month in October. It was another sign that consumer spending will remain weak, making it harder for the economy to mount a sustained rebound.
To read the full story, please click here.
Reuters
Quarter in U.S. foreclosure plan late on paymentsMore than one-quarter of homeowners receiving help under a U.S. government foreclosure prevention plan are behind on their new mortgage payments, a Treasury Dept. survey has found.
To read the full story, please click here.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *Bank of America and C.A.R. team up to bring you theC.A.R. WorldPoints MasterCard® credit card: Enjoy the rewards!Earn points and get the rewards you want with no annual fee. Showthe card that shows you’re a REALTOR®! Click here to learn more!* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Talking PointsHere’s what to tell consumers...
Many homeowners have been enticed lately by mortgage interest rates hovering near 5 percent, leading some to think about refinancing their home. The first step owners should take is to have their property’s value assessed and to contact a REALTOR® to find out what similar homes are selling for in the area, as opposed to their listing prices. If there have been a high number of foreclosures in the neighborhood, chances are property values have declined.
Most lenders today will not complete a home loan refinance unless the owner has at least 20 percent equity in the property and proof of income. However, homeowners who are underwater—those who owe more on the mortgage than the home is worth—still may qualify for a home refinance. Some federal programs allow homeowners to refinance their mortgage up to 125 percent of the home’s value.
Some home loans include prepayment penalties, meaning the homeowner has to pay a penalty for paying the loan off earlier than the original loan terms. Prepayment includes refinancing, as the original loan is paid off through the refinance. If the fees are equal or close to the amount the owner would save with a refinance, then refinancing the home may not be the best option.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *TransUnion SmartMove gives C.A.R.'s independent landlords all thescreening tools they need, with none of the hassle. Click here tocreate an account and get 20% off. Credit, criminal and a leasingrecommendation in minutes. No approval process. No minimums.* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This message was sent to bmcgarvin@cox.net. Visit your subscription management page to modify your e-mail communication preferences or unsubscribe.
Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide. Edited by: Mark Giberson, (markg@car.org) and Mary Burroughs, (maryb@car.org) Executive offices:525 South Virgil Ave., Los Angeles CA 90020phone (213) 739-8200; fax (213) 480-7724 Legislative offices:980 Ninth Street #1430, Sacramento CA 95814phone (916) 492-5200; fax (916) 444-2033 To view C.A.R.'s Privacy Policy click on this link:http://www.car.org/aboutus/privacypolicyTo contact C.A.R., click on this link:http://www.car.org/?view=ContactUs Written inquiries regarding Market Matters should be directed to Mary Burroughs, (maryb@car.org).
Wednesday, November 18, 2009
Shore Sales Are A Nightmare
Orange County Housing Report: Short Sales are a Nightmare
November 12, 2009
Good Afternoon!
Have you ever pedalled up a steep hill on your bicycle as a kid only to wonder if you were going to ever make it? That’s the same feeling that buyers, sellers and agents get in trying to arrive at a successful close date. Short sales are homes where the asking price is less than the outstanding loan amounts. These are subject to the lender’s approval. This takes anywhere from weeks to months. There is nothing short about a short sale. About a year ago, it was just about impossible for agents to show a short sale to a prospective buyer. Nine times out of ten, the short sale already had at least one offer on the home and submitted to the lender for approval. However, the home remained on the market as an active listing until the approval was received. So, agents would show their buyers home after home only to find out that most short sales already had an offer submitted, which amounted to a giant waste of everybody’s time. Agents then would contact every short sale to see if it was “really” available. This stemmed from the fact that an escrow is not opened until after lender approval. Escrow is not opened so that expenses are not incurred for any work completed. Inspections, homeowner association documentation, appraisals, etcetera, are all fee based and time sensitive and nobody is going to want to pick up the tab if a lender does not approve a file or if there are significant delays. The short sale data has been cleaned up over the course of the last year. It is mandatory for all offers that are submitted to a lender to be placed in “Backup Offer” status or “Pending Sale” status within the Multiple Listing Service. I used to reference the overstated active listing inventory and the understated pending sale statistics last year at this time. The data is still not perfect, but is much improved and easier for agents and buyers to look at homes. In response to so many short sales no longer counted as a part of the active listing inventory, the total pending sale inventory has blossomed. There are currently 6,838 total pending sales. 58% are short sales, only 8% are foreclosures and 33% are homeowners with equity. There are 3,703 pending sales that have been pending for more than one month. 76% are short sales, 5% are foreclosures and 19% are homeowners with equity. There are 2,132 pending sales that are have been pending for more than two months. A stunning 91% are short sales, 1% are foreclosures and 8% are homeowners with equity. Almost a third of the total pending sales count has been pending for more than two months and most are short sales. Even though more and more homeowners have defaulted on loans, lenders have not been foreclosing. As a result, the market has grown much hotter with an increase in successful short sales and a shift to more equity sellers. Here’s a breakdown:
The huge increase in pending short sales has not materialized as a huge increase in closed short sales. All of these numbers illustrate that dealing with short sales is like bicycling up a steep hill as a kid. Just because a buyer’s offers is accepted, if it is a short sale, it is going to take a long time to close escrow. Since short sales are distressed, their pricing attracts a lot of attention from buyers. Buyers can expect multiple offers in dealing with short sales. In the end, buyers have to move quickly and compete with other offers only to wait for a long period of time for the seller to obtain lender approval. Sometimes the process takes such a long time that the buyer walks away and looks for something else. Many move onto equity sellers. The Orange County real estate market and the entire state of California are at the mercy of lenders. The bottom line, the market is full of challenges and the short sale process makes the current real estate landscape even more challenging.
So, how do the rest of the numbers look? The market has continued to not change much over the past few months. Once again, the past two weeks are no exception. The active listing inventory decreased slightly by 30 homes over the past two weeks, totaling 7,719. That’s 5,539 fewer than last year and 9,514 fewer than two years ago. The inventory has dropped by 4,123 homes so far this year, a 35% drop. We can expect the active listing inventory to drop slightly for the remainder of the year. Demand, the number of new pending sales within the past month, increased by 75 in the past couple of weeks to 3,241, a 2% increase. Last year’s demand was 684 fewer and two years ago was 1,946 fewer. The expected market time for all of Orange County decreased in the past couple of weeks from 2.48 to 2.38 months. The expected market time last year was at 5.18 months and two years ago it was at 13.31 months. For homes priced below $1 million, the expected market time is 1.87 months. For homes priced above $1 million, the expected market time is 8.79 months. That range represents 27% of the active listing inventory, but just 7% of demand. For only the second time this year, the number of distressed properties on the market increased. The distressed inventory increased by 73 homes, or 3%. 32% of the active inventory is distressed compared to 44% last year. There are currently only 339 foreclosures in all of Orange County, an increase of 25 in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.82 months. Last year the expected market time was at 1.22 months. Foreclosures continue to be exceptionally HOT and are, on average, selling for 3% above their asking prices. There are currently 2,123 short sales on the active market, an increase of 48 in the past two weeks. Short sales currently represent 28% of the active listing inventory. The expected market time for short sales is currently at 1.72 month versus 7.08 months one year ago (this number was grossly overstated as illustrated earlier). Homeowners with equity in their home now account for 68% of the current active inventory. If a buyer wants to avoid the many pitfalls of dealing with short sales and foreclosures, they should turn their attention to equity sellers.
November 12, 2009
Good Afternoon!
Have you ever pedalled up a steep hill on your bicycle as a kid only to wonder if you were going to ever make it? That’s the same feeling that buyers, sellers and agents get in trying to arrive at a successful close date. Short sales are homes where the asking price is less than the outstanding loan amounts. These are subject to the lender’s approval. This takes anywhere from weeks to months. There is nothing short about a short sale. About a year ago, it was just about impossible for agents to show a short sale to a prospective buyer. Nine times out of ten, the short sale already had at least one offer on the home and submitted to the lender for approval. However, the home remained on the market as an active listing until the approval was received. So, agents would show their buyers home after home only to find out that most short sales already had an offer submitted, which amounted to a giant waste of everybody’s time. Agents then would contact every short sale to see if it was “really” available. This stemmed from the fact that an escrow is not opened until after lender approval. Escrow is not opened so that expenses are not incurred for any work completed. Inspections, homeowner association documentation, appraisals, etcetera, are all fee based and time sensitive and nobody is going to want to pick up the tab if a lender does not approve a file or if there are significant delays. The short sale data has been cleaned up over the course of the last year. It is mandatory for all offers that are submitted to a lender to be placed in “Backup Offer” status or “Pending Sale” status within the Multiple Listing Service. I used to reference the overstated active listing inventory and the understated pending sale statistics last year at this time. The data is still not perfect, but is much improved and easier for agents and buyers to look at homes. In response to so many short sales no longer counted as a part of the active listing inventory, the total pending sale inventory has blossomed. There are currently 6,838 total pending sales. 58% are short sales, only 8% are foreclosures and 33% are homeowners with equity. There are 3,703 pending sales that have been pending for more than one month. 76% are short sales, 5% are foreclosures and 19% are homeowners with equity. There are 2,132 pending sales that are have been pending for more than two months. A stunning 91% are short sales, 1% are foreclosures and 8% are homeowners with equity. Almost a third of the total pending sales count has been pending for more than two months and most are short sales. Even though more and more homeowners have defaulted on loans, lenders have not been foreclosing. As a result, the market has grown much hotter with an increase in successful short sales and a shift to more equity sellers. Here’s a breakdown:
The huge increase in pending short sales has not materialized as a huge increase in closed short sales. All of these numbers illustrate that dealing with short sales is like bicycling up a steep hill as a kid. Just because a buyer’s offers is accepted, if it is a short sale, it is going to take a long time to close escrow. Since short sales are distressed, their pricing attracts a lot of attention from buyers. Buyers can expect multiple offers in dealing with short sales. In the end, buyers have to move quickly and compete with other offers only to wait for a long period of time for the seller to obtain lender approval. Sometimes the process takes such a long time that the buyer walks away and looks for something else. Many move onto equity sellers. The Orange County real estate market and the entire state of California are at the mercy of lenders. The bottom line, the market is full of challenges and the short sale process makes the current real estate landscape even more challenging.
So, how do the rest of the numbers look? The market has continued to not change much over the past few months. Once again, the past two weeks are no exception. The active listing inventory decreased slightly by 30 homes over the past two weeks, totaling 7,719. That’s 5,539 fewer than last year and 9,514 fewer than two years ago. The inventory has dropped by 4,123 homes so far this year, a 35% drop. We can expect the active listing inventory to drop slightly for the remainder of the year. Demand, the number of new pending sales within the past month, increased by 75 in the past couple of weeks to 3,241, a 2% increase. Last year’s demand was 684 fewer and two years ago was 1,946 fewer. The expected market time for all of Orange County decreased in the past couple of weeks from 2.48 to 2.38 months. The expected market time last year was at 5.18 months and two years ago it was at 13.31 months. For homes priced below $1 million, the expected market time is 1.87 months. For homes priced above $1 million, the expected market time is 8.79 months. That range represents 27% of the active listing inventory, but just 7% of demand. For only the second time this year, the number of distressed properties on the market increased. The distressed inventory increased by 73 homes, or 3%. 32% of the active inventory is distressed compared to 44% last year. There are currently only 339 foreclosures in all of Orange County, an increase of 25 in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.82 months. Last year the expected market time was at 1.22 months. Foreclosures continue to be exceptionally HOT and are, on average, selling for 3% above their asking prices. There are currently 2,123 short sales on the active market, an increase of 48 in the past two weeks. Short sales currently represent 28% of the active listing inventory. The expected market time for short sales is currently at 1.72 month versus 7.08 months one year ago (this number was grossly overstated as illustrated earlier). Homeowners with equity in their home now account for 68% of the current active inventory. If a buyer wants to avoid the many pitfalls of dealing with short sales and foreclosures, they should turn their attention to equity sellers.
Thursday, October 29, 2009
Orange County Homes Gain Value
House prices projected to jump 7.9% in a year
October 25, 2009
California may end up with third-highest appreciation rate in the nation.
By JEFF COLLINS
U.S. house prices will stop falling in March and are projected to be up 4.6 percent by
August 2010, Santa Ana-based data cruncher First American CoreLogic is predicting.
In California, the rate of appreciation will be even higher: up 7.9 percent from this
August. If true, California will have the nation’s third-highest appreciation rate, trailing
Maine (projected to be up 12.1 percent) and New Hampshire (up 11.6 percent).
Florida’s rate is projected to be fourth at 7.3 percent next August.
In addition, First American reported:
U.S. house prices dropped 10.1 percent this August compared with a year earlier.
California ranked fourth in price drops with a year-over-year decline of 12.9 percent in
August.
The biggest drops occurred in Nevada (down 24.4 percent), Arizona (down 19.5 percent)
and Florida (down 16.8 percent).
Excluding the sale of bank-owned homes and short sales, price drops were less severe.
U.S. prices for non-distressed homes were down just 6.2 percent.
In California non-distressed home prices were down 7.9 percent from August 2008.
October 25, 2009
California may end up with third-highest appreciation rate in the nation.
By JEFF COLLINS
U.S. house prices will stop falling in March and are projected to be up 4.6 percent by
August 2010, Santa Ana-based data cruncher First American CoreLogic is predicting.
In California, the rate of appreciation will be even higher: up 7.9 percent from this
August. If true, California will have the nation’s third-highest appreciation rate, trailing
Maine (projected to be up 12.1 percent) and New Hampshire (up 11.6 percent).
Florida’s rate is projected to be fourth at 7.3 percent next August.
In addition, First American reported:
U.S. house prices dropped 10.1 percent this August compared with a year earlier.
California ranked fourth in price drops with a year-over-year decline of 12.9 percent in
August.
The biggest drops occurred in Nevada (down 24.4 percent), Arizona (down 19.5 percent)
and Florida (down 16.8 percent).
Excluding the sale of bank-owned homes and short sales, price drops were less severe.
U.S. prices for non-distressed homes were down just 6.2 percent.
In California non-distressed home prices were down 7.9 percent from August 2008.
Tuesday, October 20, 2009
Orange County Housing Report: Two Polar Opposite Markets
October 15, 2009
With Halloween fast approaching, the differences between the lower end and higher end Orange County housing market are SPOOKY. It is extremely ironic that the general public expects a really soft real estate market with a lot of inventory and that buyers get to call all of the shots. That is entirely not true for homes priced below $1 million with an expected market time of only 1.88 months. That translates to an incredibly HOT seller’s market. That range represents 71% of the current active listing inventory. The upper range, homes priced above $1 million, represents 29% of the active listing inventory, but has an expected market time of 10.37 months. Anything over 10 months is basically an almost frozen market, a deep buyer’s market. So, today’s Orange County buyers need to know that the lower the range, the hotter the market. From $750,000 to $1 million, the expected market time is 3.76 months, not incredibly hot, but not incredibly slow either. The word on the street is that there is not that much new, fresh inventory hitting the market, so if a great property comes on the market that is priced right, don’t expect it to last very long. Below $750,000 is crazy, and below $500,000 is just NUTS. That’s right, N-U-T-S!!! Tremendous competition, multiple offers, and selling prices close to or above the asking prices are the norm. This is where many who have not experienced the Orange County housing market by sitting in a car and touring the few homes on the market within their areas of interest simply will not believe me. So, if you are in doubt, take a look around for homes in the lower ranges. The hot market is a reality. The homes that do not sell are overpriced, in poor condition or are in a poor location. It is not just distressed homes that are selling. 50% of demand, the number of new pending sales during the past month, is sellers with equity in their homes. Homes that are priced right are selling and selling fast. The sales to list price ratio for homes priced below $1 million is 99%. That means that on average, homes are discounted by only 1% off of their asking prices. For homes priced below $500,000, the sales to list price ratio is 100%, meaning that, on average, they are selling for their full asking price. That should be the headline in local newspapers and the topic for the nightly news: “Most homes in Orange County are selling for their asking prices and they are selling fast!” Let me clarify one important point though, the lower ranges are experiencing a seller’s market, but are not experiencing appreciation. Prices have stabilized because there is just too much demand. But, with so many distressed properties still in the mix and many appraisal issues, prices are not going up. With the government’s changes to the appraisal process, known as “The Home Valuation Code of Conduct,” more and more homes are not appraising for the agreed upon purchase prices. The government had the right intention, but I can write a book as to how the code of conduct has made the housing recovery process much more challenging. When an appraisal comes in too low, the buyer, the seller, or a combination of the two, makes up the difference, OR the pending sale falls apart and the home is placed back on the market.
Now, let’s take a closer look at the upper ranges. Homes above $1 million may represent 29% of the active listing inventory, but they only represent 7% of demand. As is customary, the higher the range, the slower the market. In this downturn it is even more pronounced. The sales to list price ratio in the upper range is 92%. That takes into account the LAST list price after many price reductions. The sales to ORIGINAL list price ratio is 85%. This vast discrepancy is due to unrealistic expectations on the part of sellers within the higher ranges and illustrates the need to carefully price a home based upon recent sales activity, 90 days or sooner is preferable, and all pending activity. Sellers in the upper ranges should not fall into the trap of giving too much weight to active listings. In this market, a buyer is not going to take into consideration another active listing that has sat on the market for months in coming up with an offering price. Appraisers are not going to give active listings much credence either. The market is so slow in the upper ranges that a great price, super condition and a great location still may equate to a long market time. Demand is just too low, so sellers need to pack their patience and enjoy the ride; this may take a while.
So, how do the rest of the numbers look? So, how do the rest of the numbers look? The active listing inventory increased by just six homes within the past couple of weeks, remaining under the 8,000 mark and totaling 7,923. That’s 4,799 fewer than last year and 9,836 fewer than two years ago. Ask any agent and their number one complaint is a lack of inventory in the lower ranges. Demand, the number of new pending sales within the past month, dropped by 73 in the past couple of weeks to 3,197. Last year’s demand was 524 fewer and two years ago was 2,022 fewer. The expected market time for all of Orange County increased slightly in the past couple of weeks from 2.42 to 2.48 months. The expected market time last year was at 4.77 months and two years ago it was at 14.73 months.
The number of distress properties on the market increased for the first time since November of 2008. Within the past couple of weeks the number of foreclosures and short sales increased by 52, now totaling 2,398, returning to early September 2009 numbers. 30.3% of the active inventory is distressed compared to 42.9% last year. There are currently only 322 foreclosures in all of Orange County, an increase of two in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.67 months. Foreclosures are HOT and are, on average, selling for 4% above their asking prices. There are currently 2,076 short sales on the active market, an increase of 77 over the past two weeks. Short sales currently represent 26% of the active listing inventory, a major player in today’s marketplace. The expected market time for short sales is currently at 1.82 month versus 6.08 months one year ago. Short sales are also a hot segment within the marketplace; however, buyers should not expect instantaneous results and quick closings. Short sales must wait for “lender approval,” which can take anywhere from weeks to months.
Copyright 2009 - Steven Thomas, Altera Real Estate - All Rights Reserved. This report may not be reproduced in whole or part without express written permission by author.
With Halloween fast approaching, the differences between the lower end and higher end Orange County housing market are SPOOKY. It is extremely ironic that the general public expects a really soft real estate market with a lot of inventory and that buyers get to call all of the shots. That is entirely not true for homes priced below $1 million with an expected market time of only 1.88 months. That translates to an incredibly HOT seller’s market. That range represents 71% of the current active listing inventory. The upper range, homes priced above $1 million, represents 29% of the active listing inventory, but has an expected market time of 10.37 months. Anything over 10 months is basically an almost frozen market, a deep buyer’s market. So, today’s Orange County buyers need to know that the lower the range, the hotter the market. From $750,000 to $1 million, the expected market time is 3.76 months, not incredibly hot, but not incredibly slow either. The word on the street is that there is not that much new, fresh inventory hitting the market, so if a great property comes on the market that is priced right, don’t expect it to last very long. Below $750,000 is crazy, and below $500,000 is just NUTS. That’s right, N-U-T-S!!! Tremendous competition, multiple offers, and selling prices close to or above the asking prices are the norm. This is where many who have not experienced the Orange County housing market by sitting in a car and touring the few homes on the market within their areas of interest simply will not believe me. So, if you are in doubt, take a look around for homes in the lower ranges. The hot market is a reality. The homes that do not sell are overpriced, in poor condition or are in a poor location. It is not just distressed homes that are selling. 50% of demand, the number of new pending sales during the past month, is sellers with equity in their homes. Homes that are priced right are selling and selling fast. The sales to list price ratio for homes priced below $1 million is 99%. That means that on average, homes are discounted by only 1% off of their asking prices. For homes priced below $500,000, the sales to list price ratio is 100%, meaning that, on average, they are selling for their full asking price. That should be the headline in local newspapers and the topic for the nightly news: “Most homes in Orange County are selling for their asking prices and they are selling fast!” Let me clarify one important point though, the lower ranges are experiencing a seller’s market, but are not experiencing appreciation. Prices have stabilized because there is just too much demand. But, with so many distressed properties still in the mix and many appraisal issues, prices are not going up. With the government’s changes to the appraisal process, known as “The Home Valuation Code of Conduct,” more and more homes are not appraising for the agreed upon purchase prices. The government had the right intention, but I can write a book as to how the code of conduct has made the housing recovery process much more challenging. When an appraisal comes in too low, the buyer, the seller, or a combination of the two, makes up the difference, OR the pending sale falls apart and the home is placed back on the market.
Now, let’s take a closer look at the upper ranges. Homes above $1 million may represent 29% of the active listing inventory, but they only represent 7% of demand. As is customary, the higher the range, the slower the market. In this downturn it is even more pronounced. The sales to list price ratio in the upper range is 92%. That takes into account the LAST list price after many price reductions. The sales to ORIGINAL list price ratio is 85%. This vast discrepancy is due to unrealistic expectations on the part of sellers within the higher ranges and illustrates the need to carefully price a home based upon recent sales activity, 90 days or sooner is preferable, and all pending activity. Sellers in the upper ranges should not fall into the trap of giving too much weight to active listings. In this market, a buyer is not going to take into consideration another active listing that has sat on the market for months in coming up with an offering price. Appraisers are not going to give active listings much credence either. The market is so slow in the upper ranges that a great price, super condition and a great location still may equate to a long market time. Demand is just too low, so sellers need to pack their patience and enjoy the ride; this may take a while.
So, how do the rest of the numbers look? So, how do the rest of the numbers look? The active listing inventory increased by just six homes within the past couple of weeks, remaining under the 8,000 mark and totaling 7,923. That’s 4,799 fewer than last year and 9,836 fewer than two years ago. Ask any agent and their number one complaint is a lack of inventory in the lower ranges. Demand, the number of new pending sales within the past month, dropped by 73 in the past couple of weeks to 3,197. Last year’s demand was 524 fewer and two years ago was 2,022 fewer. The expected market time for all of Orange County increased slightly in the past couple of weeks from 2.42 to 2.48 months. The expected market time last year was at 4.77 months and two years ago it was at 14.73 months.
The number of distress properties on the market increased for the first time since November of 2008. Within the past couple of weeks the number of foreclosures and short sales increased by 52, now totaling 2,398, returning to early September 2009 numbers. 30.3% of the active inventory is distressed compared to 42.9% last year. There are currently only 322 foreclosures in all of Orange County, an increase of two in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.67 months. Foreclosures are HOT and are, on average, selling for 4% above their asking prices. There are currently 2,076 short sales on the active market, an increase of 77 over the past two weeks. Short sales currently represent 26% of the active listing inventory, a major player in today’s marketplace. The expected market time for short sales is currently at 1.82 month versus 6.08 months one year ago. Short sales are also a hot segment within the marketplace; however, buyers should not expect instantaneous results and quick closings. Short sales must wait for “lender approval,” which can take anywhere from weeks to months.
Copyright 2009 - Steven Thomas, Altera Real Estate - All Rights Reserved. This report may not be reproduced in whole or part without express written permission by author.
Monday, September 21, 2009
Orange County Housing Report: Top 10 OC Housing Trends
September 17, 2009
Even though the kids have gone back to school, the Orange County housing market has not really changed much over the course of the past several weeks. It is a good time to take a look at the broader market and pinpoint the latest trends. Here’s a breakdown of the top 10 current Orange County housing market trends (in no particular order):
1. Below $750,000 is technically a seller’s market with an expected market time of approximately two months or less. The activity below $500,000 is incredibly hot. However, this is not a conventional seller’s market as values are not appreciating. The sheer numbers of distressed properties, mainly short sales, is keeping a lid on any appreciation. Buyers can expect multiple offers, a tremendous amount of competition, and the need to write offers to purchase on more than one property (often times several).
2. The listing inventory has been dropping all year and is now just above the 8,000 mark at 8,064. We started the year at 11,842 active homes on the market. One year ago there were 5,110 additional homes on the market and two years ago there was more than double today’s numbers. In the lower price ranges there is not a lot of new inventory coming on the market.
3. Cash is king and so are buyers with larger down payments. With so much competition in the lower ranges, buyers with very little down are having a hard time purchasing. They are losing out to buyers that can afford larger down payments. Many first time home buyers who are relying on the low down payments allowed by FHA financing simply cannot compete with more qualified buyers and investors. That’s right. Investors are back and taking away the ability for a lot of buyers to purchase.
4. Foreclosures are EXTREMELY hot. There are currently only 334 active listings that are foreclosures in all of Orange County, representing 4.1% of the total inventory. The expected market time for foreclosures is 0.66 months, or between two and three weeks.
5. The average sale to list price ratio for foreclosures over the past three months is 103%. That means that, on average, foreclosures are selling for 3% above the list price. The sale to list price ratio for short sales and equity sellers is 98%. And, if there weren’t so many appraisal issues, those numbers would be even higher. Buyers in the lower ranges should not expect to offer that much less than the asking price.
6. Prices are not dropping in the lower ranges, but they are in the upper ranges above $1 million. The higher the price range, the higher the expected market time with less and less demand. 30% of the active inventory can be found above $1 million, yet the higher end represents only 7% of demand.
7. The rumors of a foreclosure moratorium have been rampant all year long. There is truth to the moratorium, but it does not look like there will be a substantial increase in the number of foreclosures to hit the market until the first quarter of 2010. Also, there is a tremendous amount of pent up demand where just about every agent has pockets filled with buyers who are actively looking, but, surprisingly, there just is not a lot of fresh inventory. Any increase in foreclosures will most likely be offset by pent up demand.
8. With pressure from the federal government, lenders are moving more and more towards short sales. We can expect within the coming weeks for the Obama administration to announce something along these lines. Currently most short sales, where home owners owe more than their homes are worth, take a very long time to obtain lender approval, delaying the ultimate close of escrow. Lenders are creating procedures to speed up the process. Short sales are a better route than foreclosures because they are in much better condition and save the lenders a lot on repairing and carrying costs. There are currently 2,050 short sales on the market with an expected market time of 1.58 months, much different than just one year ago when there were 4,422 short sales with an expected market time of 6.2 months.
9. There are currently more distressed sales within the upper ranges. Last year only 6.5% of all distressed properties were above $750,000. Today, 11.4% of all distressed properties are above that mark. The upper ranges are not immune to distressed sales. More and more prime borrowers are having trouble paying their mortgages. A contributing factor to this trend is the increase in unemployment and the falling of property values where more and more borrowers are upside down in their homes.
10. The total pending sale count , not just a snapshot of the past month (what I refer to as demand), has steadily increased by 56% over the last year. It is taking longer to close pending sales primarily because there are a large number of short sales that are waiting on lender approval; thus, the count has really blossomed. There are now 6,851 total pending sale versus 4,393 one year ago.
Here’s a breakdown of how the numbers look this week: the active listing inventory dropped by 298 homes in the past two weeks to 8,064, its lowest level since January of 2006. Demand, the number of new pending deals over the prior month, increased by 61 in the past two weeks to 3,464. Last year’s demand was at 2,974, 490 fewer than today, and two years ago, it was at 1,180, 2,284 fewer than today. The expected market time is currently at 2.33 months, a slight change from the 2.46 month mark two weeks ago. The number of distress properties on the market dropped by 132 homes in the past two weeks, now totaling 2,384. 29% of the active inventory is distressed compared to 43% last year. There are currently 2,050 short sales on the active market, a drop of 134 over the past two weeks. The expected market time for short sales is currently at 1.58 months.
Even though the kids have gone back to school, the Orange County housing market has not really changed much over the course of the past several weeks. It is a good time to take a look at the broader market and pinpoint the latest trends. Here’s a breakdown of the top 10 current Orange County housing market trends (in no particular order):
1. Below $750,000 is technically a seller’s market with an expected market time of approximately two months or less. The activity below $500,000 is incredibly hot. However, this is not a conventional seller’s market as values are not appreciating. The sheer numbers of distressed properties, mainly short sales, is keeping a lid on any appreciation. Buyers can expect multiple offers, a tremendous amount of competition, and the need to write offers to purchase on more than one property (often times several).
2. The listing inventory has been dropping all year and is now just above the 8,000 mark at 8,064. We started the year at 11,842 active homes on the market. One year ago there were 5,110 additional homes on the market and two years ago there was more than double today’s numbers. In the lower price ranges there is not a lot of new inventory coming on the market.
3. Cash is king and so are buyers with larger down payments. With so much competition in the lower ranges, buyers with very little down are having a hard time purchasing. They are losing out to buyers that can afford larger down payments. Many first time home buyers who are relying on the low down payments allowed by FHA financing simply cannot compete with more qualified buyers and investors. That’s right. Investors are back and taking away the ability for a lot of buyers to purchase.
4. Foreclosures are EXTREMELY hot. There are currently only 334 active listings that are foreclosures in all of Orange County, representing 4.1% of the total inventory. The expected market time for foreclosures is 0.66 months, or between two and three weeks.
5. The average sale to list price ratio for foreclosures over the past three months is 103%. That means that, on average, foreclosures are selling for 3% above the list price. The sale to list price ratio for short sales and equity sellers is 98%. And, if there weren’t so many appraisal issues, those numbers would be even higher. Buyers in the lower ranges should not expect to offer that much less than the asking price.
6. Prices are not dropping in the lower ranges, but they are in the upper ranges above $1 million. The higher the price range, the higher the expected market time with less and less demand. 30% of the active inventory can be found above $1 million, yet the higher end represents only 7% of demand.
7. The rumors of a foreclosure moratorium have been rampant all year long. There is truth to the moratorium, but it does not look like there will be a substantial increase in the number of foreclosures to hit the market until the first quarter of 2010. Also, there is a tremendous amount of pent up demand where just about every agent has pockets filled with buyers who are actively looking, but, surprisingly, there just is not a lot of fresh inventory. Any increase in foreclosures will most likely be offset by pent up demand.
8. With pressure from the federal government, lenders are moving more and more towards short sales. We can expect within the coming weeks for the Obama administration to announce something along these lines. Currently most short sales, where home owners owe more than their homes are worth, take a very long time to obtain lender approval, delaying the ultimate close of escrow. Lenders are creating procedures to speed up the process. Short sales are a better route than foreclosures because they are in much better condition and save the lenders a lot on repairing and carrying costs. There are currently 2,050 short sales on the market with an expected market time of 1.58 months, much different than just one year ago when there were 4,422 short sales with an expected market time of 6.2 months.
9. There are currently more distressed sales within the upper ranges. Last year only 6.5% of all distressed properties were above $750,000. Today, 11.4% of all distressed properties are above that mark. The upper ranges are not immune to distressed sales. More and more prime borrowers are having trouble paying their mortgages. A contributing factor to this trend is the increase in unemployment and the falling of property values where more and more borrowers are upside down in their homes.
10. The total pending sale count , not just a snapshot of the past month (what I refer to as demand), has steadily increased by 56% over the last year. It is taking longer to close pending sales primarily because there are a large number of short sales that are waiting on lender approval; thus, the count has really blossomed. There are now 6,851 total pending sale versus 4,393 one year ago.
Here’s a breakdown of how the numbers look this week: the active listing inventory dropped by 298 homes in the past two weeks to 8,064, its lowest level since January of 2006. Demand, the number of new pending deals over the prior month, increased by 61 in the past two weeks to 3,464. Last year’s demand was at 2,974, 490 fewer than today, and two years ago, it was at 1,180, 2,284 fewer than today. The expected market time is currently at 2.33 months, a slight change from the 2.46 month mark two weeks ago. The number of distress properties on the market dropped by 132 homes in the past two weeks, now totaling 2,384. 29% of the active inventory is distressed compared to 43% last year. There are currently 2,050 short sales on the active market, a drop of 134 over the past two weeks. The expected market time for short sales is currently at 1.58 months.
Friday, September 11, 2009
Orange County Housing Report: End of Summer Cycle
September 3, 2009
As the end of summer fast approaches, the Orange County real estate market continues to follow its normal, cyclical path. The active listing inventory continues to drop, demand drops slightly and the expected market time has very little movement. This is typical for this time of year.
Here’s a breakdown of how the numbers look this week:
· Active listing inventory dropped by 169 homes in the past two weeks to 8,362, its lowest level since the beginning of 2006.
· The active inventory last year was at 13,582, 5,220 additional homes.
· The active inventory two years ago was at 17,760, 9,398 additional homes.
· Demand, the number of new pending deals over the prior month, dropped by 103 in the past two weeks to 3,403.
· Last year’s demand was at 2,847, 556 fewer than today.
· Two years ago, demand was at 1,206, 2,197 fewer than today.
· The expected market time is currently at 2.46 months, a slight change from the 2.43 month mark posted two weeks ago.
· The current expected market time is within the definition of a seller’s market, below five months. There is tremendous demand for homes priced below $750,000. Below $500,000, the market is extremely hot. Homes are receiving tremendous activity with multiple offers and an average list to sales price ratio of 100%. Even though we are currently experiencing a seller’s market, property values are not appreciating. This is primarily due to the number of distressed properties on the market that continue to suppress values.
· The expected market time for properties priced between $250,000 and $500,000 is currently at 1.33 months, levels not seen since the incredible days of 2005. Ask any buyer looking for a home priced below $500,000 just how crazy the market has been and you will quickly find that they are writing offer after offer. Last week, one of our agents stated that his buyer was finally in escrow after writing their fifth offer.
· Buyers today do not know how crazy the market is until they lose out on a property or two, learning from the good ol’ school of hard knocks. This is contrary to their perception of the housing market out of the gates due to the constant stream of press on the recession, unemployment and distressed homeowners.
· The current Orange County housing market is controlled by lenders, where just about half of all pending deals are either a short sale or foreclosure.
· The number of distress properties on the market dropped by 43 homes in the past two weeks, now totaling 2,516. The total had stopped its drop two weeks ago. I thought that the number would increase today. The pace in the drop has slowed over the past month, so it will be interesting to see where we go from here.
· 30.1% of the active inventory is distressed. That’s far different compared to last year when 42.3% of the inventory was distressed.
· There are currently only 332 foreclosures on the active market, an increase of 13 over the past two weeks.
· The expected market time for foreclosures is currently at 0.71 months, a deep seller’s market.
· There are 2,184 short sales on the active market, a drop of 56 over the past two weeks.
· The expected market time for short sales is currently at 1.80 months.
What can buyers expect going into the Autumn Market? Interest rates dropped and remain extremely low. Demand is still extremely hot for homes priced below $750,000. There has been a lot of news regarding the end of the $8,000 first time tax credit, which currently ends with sales on November 30th. However, we can expect an extension to that program coming soon. We can also expect a second extension to the increased conventional loan limit, for Orange County it is $729,750. The government does not want to see a decrease in the current real estate market momentum, and these two programs have helped immensely. So, even though we are entering a cyclically slower time of year, do not expect that much of a change in the current market. There are still droves of buyers still looking for homes. The word out on the street is that agents have pockets filled with buyers and not enough new inventory coming on the market. Any increase in fresh inventory would be welcomed by buyers and their agents alike. However, there just won’t be a lot of new inventory to hit the market until after the New Year. The upper price ranges are experiencing less demand. Lack of financing and the recession are not helping. But, the distressed inventory within the upper ranges is definitely fueling some demand.
As the end of summer fast approaches, the Orange County real estate market continues to follow its normal, cyclical path. The active listing inventory continues to drop, demand drops slightly and the expected market time has very little movement. This is typical for this time of year.
Here’s a breakdown of how the numbers look this week:
· Active listing inventory dropped by 169 homes in the past two weeks to 8,362, its lowest level since the beginning of 2006.
· The active inventory last year was at 13,582, 5,220 additional homes.
· The active inventory two years ago was at 17,760, 9,398 additional homes.
· Demand, the number of new pending deals over the prior month, dropped by 103 in the past two weeks to 3,403.
· Last year’s demand was at 2,847, 556 fewer than today.
· Two years ago, demand was at 1,206, 2,197 fewer than today.
· The expected market time is currently at 2.46 months, a slight change from the 2.43 month mark posted two weeks ago.
· The current expected market time is within the definition of a seller’s market, below five months. There is tremendous demand for homes priced below $750,000. Below $500,000, the market is extremely hot. Homes are receiving tremendous activity with multiple offers and an average list to sales price ratio of 100%. Even though we are currently experiencing a seller’s market, property values are not appreciating. This is primarily due to the number of distressed properties on the market that continue to suppress values.
· The expected market time for properties priced between $250,000 and $500,000 is currently at 1.33 months, levels not seen since the incredible days of 2005. Ask any buyer looking for a home priced below $500,000 just how crazy the market has been and you will quickly find that they are writing offer after offer. Last week, one of our agents stated that his buyer was finally in escrow after writing their fifth offer.
· Buyers today do not know how crazy the market is until they lose out on a property or two, learning from the good ol’ school of hard knocks. This is contrary to their perception of the housing market out of the gates due to the constant stream of press on the recession, unemployment and distressed homeowners.
· The current Orange County housing market is controlled by lenders, where just about half of all pending deals are either a short sale or foreclosure.
· The number of distress properties on the market dropped by 43 homes in the past two weeks, now totaling 2,516. The total had stopped its drop two weeks ago. I thought that the number would increase today. The pace in the drop has slowed over the past month, so it will be interesting to see where we go from here.
· 30.1% of the active inventory is distressed. That’s far different compared to last year when 42.3% of the inventory was distressed.
· There are currently only 332 foreclosures on the active market, an increase of 13 over the past two weeks.
· The expected market time for foreclosures is currently at 0.71 months, a deep seller’s market.
· There are 2,184 short sales on the active market, a drop of 56 over the past two weeks.
· The expected market time for short sales is currently at 1.80 months.
What can buyers expect going into the Autumn Market? Interest rates dropped and remain extremely low. Demand is still extremely hot for homes priced below $750,000. There has been a lot of news regarding the end of the $8,000 first time tax credit, which currently ends with sales on November 30th. However, we can expect an extension to that program coming soon. We can also expect a second extension to the increased conventional loan limit, for Orange County it is $729,750. The government does not want to see a decrease in the current real estate market momentum, and these two programs have helped immensely. So, even though we are entering a cyclically slower time of year, do not expect that much of a change in the current market. There are still droves of buyers still looking for homes. The word out on the street is that agents have pockets filled with buyers and not enough new inventory coming on the market. Any increase in fresh inventory would be welcomed by buyers and their agents alike. However, there just won’t be a lot of new inventory to hit the market until after the New Year. The upper price ranges are experiencing less demand. Lack of financing and the recession are not helping. But, the distressed inventory within the upper ranges is definitely fueling some demand.
Monday, August 24, 2009
Orange County Housing Report: A Normal Summer Cycle
August 20, 2009
As summer winds down, not much has changed in the past two weeks in terms of the Orange County real estate market. The active inventory continued its drop since March of this year by shedding an additional 150 homes, bringing the total number of homes on the active market to 8,531, a 2% drop. It is hard to believe that just two years ago the inventory had swollen to 17,881, more than double today’s count. The active market has been dropping because there is tremendous demand in the lower ranges. The expected market time has dropped from 2.50 months two weeks ago to 2.43 months. That means that the average home in Orange County is expected to change to a pending status in less than 2.5 months. In my last report two weeks ago I referred to the market as a seller’s market within the lower ranges. I had radio and newspaper reporters calling me because I stated that we are in a seller’s market, sort of. As I pointed out in the last report, even though we are experiencing a seller’s market, meaning buyers can expect a lot of competition and sellers that price their homes appropriately will sell their homes quickly with multiple offers to choose from, prices are NOT appreciating. Why not? Because we are currently experiencing a lender controlled seller’s market. Short sales, which are subject to lender approval, and foreclosures, which are lender owned properties, currently have a monopoly on the market. Typically distressed properties are not placed on the market higher than the last comparable sale. And, 54% of active listings below $500,000 are distressed properties. Besides distressed homes fueling demand in the lower ranges, the ability to obtain financing under the conventional loan limit of $729,750 also pumps up demand. Everything above that limit is considered a jumbo loan where tighter financing requirements and higher interest rates keep a lid on demand within the upper ranges. Until the requirements ease, the upper ranges will continue to experience a sluggish market. The higher the price range, the slower the market. Just take a look at homes priced above $4 million. There are 407 homes on the market with demand, the number of new pending sales within the last month, at only 8 homes. At that pace, it would take a very long time to exhaust the current inventory. Compare that to homes priced from $250,000 to $500,000, where there are 2,031 homes on the market and demand is at 1,522. At the current pace, it would take only 1.3 months to exhaust the current supply. Yes, the market is hot in the lower ranges and buyers that just enter the market are consistently dumbfounded with all of the competition and the need to write offer after offer. No, values are not on the rise, even with incredible demand. Buyers just don’t yet want to pay more than the last buyer that did one month ago. Values are also not falling within the lower ranges like they have in the past as well, there’s just too much competition. The average sales to list price ratio for homes priced below $500,000 is 100%, meaning that sellers (and many of them are lenders) are obtaining their full asking prices.
So, how do the rest of the numbers look? Orange County total demand is currently at 3,506, an increase of 35 pending sales within the last two weeks. Last year demand was at 2,991. Cyclically, demand is hottest in June, drops in July, and resurges a bit in August. This year is no exception. From here, we enter the Autumn market where kids go back to school and demand tends to slowly drift downward. It will slow to its lowest levels of the year during the Holiday market, from Halloween through the first few weeks of the New Year.
How do the distressed numbers look? For the first time this year, the total number of distressed homes on the active market did not drop. It did not go up either. Instead, the distressed inventory remained unchanged over the past two weeks at 2,559. From here, as we enter into the slower seasons of the year, we can probably expect an increase in the distressed inventory. How much will it grow is anybody’s guess. All year we have been hearing about foreclosures moratoriums, moratoriums ending and a wave of foreclosures to come. However, the word on the street is that every agent has pockets filled with buyers waiting for new inventory to hit the market. So, there will still be plenty of demand even with an increase in foreclosure activity. Buyers should remember that interest rates are still at very low levels and that there is not going to be a lot more depreciation in the lower ranges. Higher rates are very likely to follow any sense of stabilization in the economy or if inflation gets out of hand. As rates rise, affordability drops. This fact is often ignored in the home buying process. We started off this decade with rates at 8%. Even if values dropped an additional 15%, at an 8% interest rate the payment would actually be more than purchasing at today’s values and interest rate. The total number of foreclosures on the active market has increased by 20 homes within the last two weeks and now totals 319. Demand for foreclosures is robust at 515 pending sales and the expected market time is only 0.62 months, still sizzling. The total number of short sales on the active market dropped by 20 homes to 2,240, with demand at 1,190 and an expected market time of 1.88 months.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
As summer winds down, not much has changed in the past two weeks in terms of the Orange County real estate market. The active inventory continued its drop since March of this year by shedding an additional 150 homes, bringing the total number of homes on the active market to 8,531, a 2% drop. It is hard to believe that just two years ago the inventory had swollen to 17,881, more than double today’s count. The active market has been dropping because there is tremendous demand in the lower ranges. The expected market time has dropped from 2.50 months two weeks ago to 2.43 months. That means that the average home in Orange County is expected to change to a pending status in less than 2.5 months. In my last report two weeks ago I referred to the market as a seller’s market within the lower ranges. I had radio and newspaper reporters calling me because I stated that we are in a seller’s market, sort of. As I pointed out in the last report, even though we are experiencing a seller’s market, meaning buyers can expect a lot of competition and sellers that price their homes appropriately will sell their homes quickly with multiple offers to choose from, prices are NOT appreciating. Why not? Because we are currently experiencing a lender controlled seller’s market. Short sales, which are subject to lender approval, and foreclosures, which are lender owned properties, currently have a monopoly on the market. Typically distressed properties are not placed on the market higher than the last comparable sale. And, 54% of active listings below $500,000 are distressed properties. Besides distressed homes fueling demand in the lower ranges, the ability to obtain financing under the conventional loan limit of $729,750 also pumps up demand. Everything above that limit is considered a jumbo loan where tighter financing requirements and higher interest rates keep a lid on demand within the upper ranges. Until the requirements ease, the upper ranges will continue to experience a sluggish market. The higher the price range, the slower the market. Just take a look at homes priced above $4 million. There are 407 homes on the market with demand, the number of new pending sales within the last month, at only 8 homes. At that pace, it would take a very long time to exhaust the current inventory. Compare that to homes priced from $250,000 to $500,000, where there are 2,031 homes on the market and demand is at 1,522. At the current pace, it would take only 1.3 months to exhaust the current supply. Yes, the market is hot in the lower ranges and buyers that just enter the market are consistently dumbfounded with all of the competition and the need to write offer after offer. No, values are not on the rise, even with incredible demand. Buyers just don’t yet want to pay more than the last buyer that did one month ago. Values are also not falling within the lower ranges like they have in the past as well, there’s just too much competition. The average sales to list price ratio for homes priced below $500,000 is 100%, meaning that sellers (and many of them are lenders) are obtaining their full asking prices.
So, how do the rest of the numbers look? Orange County total demand is currently at 3,506, an increase of 35 pending sales within the last two weeks. Last year demand was at 2,991. Cyclically, demand is hottest in June, drops in July, and resurges a bit in August. This year is no exception. From here, we enter the Autumn market where kids go back to school and demand tends to slowly drift downward. It will slow to its lowest levels of the year during the Holiday market, from Halloween through the first few weeks of the New Year.
How do the distressed numbers look? For the first time this year, the total number of distressed homes on the active market did not drop. It did not go up either. Instead, the distressed inventory remained unchanged over the past two weeks at 2,559. From here, as we enter into the slower seasons of the year, we can probably expect an increase in the distressed inventory. How much will it grow is anybody’s guess. All year we have been hearing about foreclosures moratoriums, moratoriums ending and a wave of foreclosures to come. However, the word on the street is that every agent has pockets filled with buyers waiting for new inventory to hit the market. So, there will still be plenty of demand even with an increase in foreclosure activity. Buyers should remember that interest rates are still at very low levels and that there is not going to be a lot more depreciation in the lower ranges. Higher rates are very likely to follow any sense of stabilization in the economy or if inflation gets out of hand. As rates rise, affordability drops. This fact is often ignored in the home buying process. We started off this decade with rates at 8%. Even if values dropped an additional 15%, at an 8% interest rate the payment would actually be more than purchasing at today’s values and interest rate. The total number of foreclosures on the active market has increased by 20 homes within the last two weeks and now totals 319. Demand for foreclosures is robust at 515 pending sales and the expected market time is only 0.62 months, still sizzling. The total number of short sales on the active market dropped by 20 homes to 2,240, with demand at 1,190 and an expected market time of 1.88 months.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Monday, August 10, 2009
Orange County Housing Report: Demand is Up and Supply is Down
August 6, 2009
As is typical for this time of year, demand increased a bit at the beginning of August; however, the continuous drop in the active listing inventory is far from ordinary. Inventories have been dropping across the nation and Orange County is no exception. Since March of this year, the active inventory has been steadily dropping. The inventory has shed 2,925 homes since then, a 25% drop. Currently at 8,681 homes, that is far fewer than the 14,348 last year or 17,611 two years ago. So, what’s going on? Prices are down, interest rates are down, affordability is up and demand is up. All of these forces together have been pulling the inventory down. Throw in the fact that discretionary homeowners are only placing their homes on the market if they have to and are motivated to do what it takes to compete in this market. Demand, the number o f new pending sales within the past month, is currently at 3,481, an increase of 165 pending sales within the last two weeks. Last year demand was at 2,940. So, with an increase in demand and a lower inventory, the market has heated up. The expected market time for all of Orange County is currently at 2.5 months, technically a seller’s market. The lower the range, the hotter the market. All ranges below $1 million are pretty hot, but homes priced below $500,000 are sizzling. The expected market time for homes priced between $250,000 and $500,000 is currently at 1.30 months. For detached homes within that range, the expected market time is only 1.02 months. When the expected market time drops to such low levels, sellers are busy sorting through multiple offers and buyers are writing offer after offer with no luck. I have been asked many times why the market is not appreciating given all of the activity. The devil is in the details. Even though the distressed inventory has been dropping and now represents 29.5% of the current active inventory, 50% of current demand is distressed properties. With so many short sales and foreclosures driving demand, these distressed sellers are keeping a lid on any price appreciation. But, don’t misinterpret me. There may be a lid on appreciation, but in the hotter areas and price ranges there is also a lid on price depreciation. Values have fallen significantly since the start of this downturn, fueled by a consistent supply of distressed properties. So, current values have reached affordable levels where it makes sense again to own versus rent. First time home buyer activity has returned with a vengeance as well. Throw in the return of investor activity and it is no wonder that demand has increased this year.
How do the distressed numbers look? First off, the “next wave” of foreclosures that we have been hearing about since the beginning of the year still has not materialized. I have been hearing from industry experts and agents alike that the next wave is still coming. I am certain that they are right to a degree, that the distressed numbers will increase, just not at the great numbers that they are anticipating. The agents on the streets are telling me that they all have pockets full of buyers waiting for the right property to come onto the market and they all would love a “foreclosure deal.” This is where pent up demand really does exist. Any surge in foreclosures would be met with buyers in waiting. We can expect a lot of competition and continued multiple offers for some time to come. There are currently only 2,559 distressed homes on the market, a drop of 57 in the past two weeks. This is the lowest drop in the distressed inventory since February of this year. Could we be reaching a plateau before the overly predicted wave to come? Only time will tell. There are only 299 foreclosures currently on the active market with demand at 590, representing an expected market time of .51 months. That’s correct, two weeks. Foreclosures are so incredibly hot that they can generate 20 plus offers. Yet, only one gets the property. Demand is plentiful, there just is not enough supply. There are 2,260 short sales on the active market with demand at 1,145 and an expected market time of 1.97 months.
If you are a buyer, how should you respond to this market? First, please throw out the notion that there is no competition and that you can write an offer for thousands less than the asking price. The sales to list price ratio for homes priced below $500,000 is 100%. That means that, on average, homes are selling for their full asking price. For all homes in Orange County, the sales to list price ratio is 98%. Remember, homes have already dropped 30% or more in value. As a buyer, do NOT write an offer for 10% or more off of the asking price with a letter detailing that the housing market is currently in a declining market. These buyers feel that the ultimate sales price should reflect a future drop in values. That notion of purchasing is ludicrous. Industry experts and economists cannot accurately determine future prices and are constantly revising their estimates. The values are already highly discounted over the past few years. Arriving at the fair market value includes taking into consideration pending activity, recent sales (within the prior 90 days), property condition, seller motivation and circumstances, location, upgrades, lot size and amenities. To rely on Zillow.com or other online valuation tools is also absurd. These tools only take into consideration property size and sales price, ignoring all of the other factors that are used to arrive at price. There has been a lot of pressure on interest rates to move higher. Gone are the days of interest rates below 5%. As interest rates rise, affordability drops. In purchasing today, the monthly payment is approximately the same as a home purchased later with a drop of 10% in value and a 1% rise in interest rates. These historically low interest rates are not here to stay. How long they remain low is anybody’s guess. Last, buyers should only purchase in today’s market if and only if they plan on living in their home for years to come. In the long run, Orange County housing has proven to be an excellent long term investment. It is also a great place to call “home.”
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
As is typical for this time of year, demand increased a bit at the beginning of August; however, the continuous drop in the active listing inventory is far from ordinary. Inventories have been dropping across the nation and Orange County is no exception. Since March of this year, the active inventory has been steadily dropping. The inventory has shed 2,925 homes since then, a 25% drop. Currently at 8,681 homes, that is far fewer than the 14,348 last year or 17,611 two years ago. So, what’s going on? Prices are down, interest rates are down, affordability is up and demand is up. All of these forces together have been pulling the inventory down. Throw in the fact that discretionary homeowners are only placing their homes on the market if they have to and are motivated to do what it takes to compete in this market. Demand, the number o f new pending sales within the past month, is currently at 3,481, an increase of 165 pending sales within the last two weeks. Last year demand was at 2,940. So, with an increase in demand and a lower inventory, the market has heated up. The expected market time for all of Orange County is currently at 2.5 months, technically a seller’s market. The lower the range, the hotter the market. All ranges below $1 million are pretty hot, but homes priced below $500,000 are sizzling. The expected market time for homes priced between $250,000 and $500,000 is currently at 1.30 months. For detached homes within that range, the expected market time is only 1.02 months. When the expected market time drops to such low levels, sellers are busy sorting through multiple offers and buyers are writing offer after offer with no luck. I have been asked many times why the market is not appreciating given all of the activity. The devil is in the details. Even though the distressed inventory has been dropping and now represents 29.5% of the current active inventory, 50% of current demand is distressed properties. With so many short sales and foreclosures driving demand, these distressed sellers are keeping a lid on any price appreciation. But, don’t misinterpret me. There may be a lid on appreciation, but in the hotter areas and price ranges there is also a lid on price depreciation. Values have fallen significantly since the start of this downturn, fueled by a consistent supply of distressed properties. So, current values have reached affordable levels where it makes sense again to own versus rent. First time home buyer activity has returned with a vengeance as well. Throw in the return of investor activity and it is no wonder that demand has increased this year.
How do the distressed numbers look? First off, the “next wave” of foreclosures that we have been hearing about since the beginning of the year still has not materialized. I have been hearing from industry experts and agents alike that the next wave is still coming. I am certain that they are right to a degree, that the distressed numbers will increase, just not at the great numbers that they are anticipating. The agents on the streets are telling me that they all have pockets full of buyers waiting for the right property to come onto the market and they all would love a “foreclosure deal.” This is where pent up demand really does exist. Any surge in foreclosures would be met with buyers in waiting. We can expect a lot of competition and continued multiple offers for some time to come. There are currently only 2,559 distressed homes on the market, a drop of 57 in the past two weeks. This is the lowest drop in the distressed inventory since February of this year. Could we be reaching a plateau before the overly predicted wave to come? Only time will tell. There are only 299 foreclosures currently on the active market with demand at 590, representing an expected market time of .51 months. That’s correct, two weeks. Foreclosures are so incredibly hot that they can generate 20 plus offers. Yet, only one gets the property. Demand is plentiful, there just is not enough supply. There are 2,260 short sales on the active market with demand at 1,145 and an expected market time of 1.97 months.
If you are a buyer, how should you respond to this market? First, please throw out the notion that there is no competition and that you can write an offer for thousands less than the asking price. The sales to list price ratio for homes priced below $500,000 is 100%. That means that, on average, homes are selling for their full asking price. For all homes in Orange County, the sales to list price ratio is 98%. Remember, homes have already dropped 30% or more in value. As a buyer, do NOT write an offer for 10% or more off of the asking price with a letter detailing that the housing market is currently in a declining market. These buyers feel that the ultimate sales price should reflect a future drop in values. That notion of purchasing is ludicrous. Industry experts and economists cannot accurately determine future prices and are constantly revising their estimates. The values are already highly discounted over the past few years. Arriving at the fair market value includes taking into consideration pending activity, recent sales (within the prior 90 days), property condition, seller motivation and circumstances, location, upgrades, lot size and amenities. To rely on Zillow.com or other online valuation tools is also absurd. These tools only take into consideration property size and sales price, ignoring all of the other factors that are used to arrive at price. There has been a lot of pressure on interest rates to move higher. Gone are the days of interest rates below 5%. As interest rates rise, affordability drops. In purchasing today, the monthly payment is approximately the same as a home purchased later with a drop of 10% in value and a 1% rise in interest rates. These historically low interest rates are not here to stay. How long they remain low is anybody’s guess. Last, buyers should only purchase in today’s market if and only if they plan on living in their home for years to come. In the long run, Orange County housing has proven to be an excellent long term investment. It is also a great place to call “home.”
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Monday, July 27, 2009
Orange County Housing Report: Foreclosures and Short Sales are Still Dropping
July 23, 2009
The active distressed inventory, both foreclosures and short sales, has dropped by 56% since reaching its peak last summer. Based upon reports of the “next wave” of foreclosures, I have been expecting the distressed inventory to increase for the past couple of months. But, the wave just has not materialized yet. The distressed inventory dropped by another 150 homes in the past two weeks, bringing the total to 2,616 active on the market today. It now represents 29% of the overall active inventory versus 40% one year ago. It is 3,334 less than the peak of 5,950 on August 7, 2008. Back then there were 1,249 foreclosures within the active listing inventory. Today, that number has dropped to 331. Demand, the number of new pendings sales within the last month, for foreclosures is currently at 614, compared to 861 last year. The problem right now is that there is tremendous demand for foreclosures, just not enough new foreclosures hitting the market. The expected market time currently is .54 months, about two weeks, compared to 1.42 months last year. The rumor mill is rampant with reasons for the shortage of foreclosures: from lenders purposefully holding back their inventory to “it’s just a matter of time” to all of the new tenant foreclosure laws. The fact remains that the “next wave” just has not materialized. Another answer could lie in the fact that there are more short sales that are resulting in a pending sale. The active short sale inventory peaked in May of last year at 4,810. Today, there are 2,285 short sales within the active listing inventory, a 52% drop from its peak. The word on the street is that lenders are “just starting to get it.” That does not mean that all short sales result in a sale and that the process has been simplified. It indicates that a bit of the reluctance to put together a short sale, on the lender’s part, has been lifted. Demand for short sales is now at 1,139 pending sales compared to 549 one year ago. Expected market time has dropped from 8.52 one year ago to 2.01 months today. Clearly the market has changed considerably over the past year for both foreclosures and short sales.
How do the rest of the numbers look? Demand, the number of new pending sales over the past month, dropped by only 53 homes over the past two weeks to 3,306, a 2% drop. Last year demand totaled 2,743 pending sales, 563 fewer than today. Two years ago there were 1,822, 1,484 fewer than today. The active inventory dropped slightly by 51 homes in the past two weeks to 8,895, a 1% drop. Last year the active inventory totaled 14,746 homes, 5,851 additional homes on the market compared to today. Two years ago the active inventory reached 17,596 homes, 8,701 additional homes compared to today. The expected market time for all homes in Orange County increased slightly over the past two weeks from 2.66 to 2.69 months. Last year the expected market time was 5.38 months and two years ago the expected market time was at 9.66 months. The total pending count, different than demand in that demand only tracks new pending sales over the past month, increased by 116 homes over the past two weeks to 6,519, its highest level since I began tracking the statistic back in 2007. Last year at this time the total pending count was at 4,192, 2,211 fewer than today. Two years ago there were 2,575, 3,944 fewer than today.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
The active distressed inventory, both foreclosures and short sales, has dropped by 56% since reaching its peak last summer. Based upon reports of the “next wave” of foreclosures, I have been expecting the distressed inventory to increase for the past couple of months. But, the wave just has not materialized yet. The distressed inventory dropped by another 150 homes in the past two weeks, bringing the total to 2,616 active on the market today. It now represents 29% of the overall active inventory versus 40% one year ago. It is 3,334 less than the peak of 5,950 on August 7, 2008. Back then there were 1,249 foreclosures within the active listing inventory. Today, that number has dropped to 331. Demand, the number of new pendings sales within the last month, for foreclosures is currently at 614, compared to 861 last year. The problem right now is that there is tremendous demand for foreclosures, just not enough new foreclosures hitting the market. The expected market time currently is .54 months, about two weeks, compared to 1.42 months last year. The rumor mill is rampant with reasons for the shortage of foreclosures: from lenders purposefully holding back their inventory to “it’s just a matter of time” to all of the new tenant foreclosure laws. The fact remains that the “next wave” just has not materialized. Another answer could lie in the fact that there are more short sales that are resulting in a pending sale. The active short sale inventory peaked in May of last year at 4,810. Today, there are 2,285 short sales within the active listing inventory, a 52% drop from its peak. The word on the street is that lenders are “just starting to get it.” That does not mean that all short sales result in a sale and that the process has been simplified. It indicates that a bit of the reluctance to put together a short sale, on the lender’s part, has been lifted. Demand for short sales is now at 1,139 pending sales compared to 549 one year ago. Expected market time has dropped from 8.52 one year ago to 2.01 months today. Clearly the market has changed considerably over the past year for both foreclosures and short sales.
How do the rest of the numbers look? Demand, the number of new pending sales over the past month, dropped by only 53 homes over the past two weeks to 3,306, a 2% drop. Last year demand totaled 2,743 pending sales, 563 fewer than today. Two years ago there were 1,822, 1,484 fewer than today. The active inventory dropped slightly by 51 homes in the past two weeks to 8,895, a 1% drop. Last year the active inventory totaled 14,746 homes, 5,851 additional homes on the market compared to today. Two years ago the active inventory reached 17,596 homes, 8,701 additional homes compared to today. The expected market time for all homes in Orange County increased slightly over the past two weeks from 2.66 to 2.69 months. Last year the expected market time was 5.38 months and two years ago the expected market time was at 9.66 months. The total pending count, different than demand in that demand only tracks new pending sales over the past month, increased by 116 homes over the past two weeks to 6,519, its highest level since I began tracking the statistic back in 2007. Last year at this time the total pending count was at 4,192, 2,211 fewer than today. Two years ago there were 2,575, 3,944 fewer than today.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Wednesday, July 22, 2009
Increased Conventional Loan Limit to stay
The House Appropriations Committee approved a bill that will keep the increased conventional loan limit of $729,750 through September 2010. That is great news. We will not have to deal with the same hiccup of the limit dropping like it did at the beginning of the year (which lasted several months). Here’s a link to the article: http://mortgage.freedomblogging.com/2009/07/20/house-committee-votes-to-extend-home-loan-limits/14109/
Friday, July 17, 2009
Orange County Housing Report: A Seasonal Summer Drop in Demand
July 9, 2009
While celebrating the 4th of July and enjoying the warm weather and California surf, demand for Orange County homes dropped by 7%, a typical drop for this time of year. The average drop in demand over the past five years has been 8%. This year is no exception. Demand, the number of new pending sales over the past month, dropped from 3,629 pending sales two weeks ago to 3,359 today, a drop of 270 homes. Last year the drop was 324 homes and demand totaled 2,682 pending sales, 677 fewer than today. Two years ago there were 1,578 fewer pending sales compared to today, totaling only 1,781 for all of Orange County. Over the past five years, demand cyclically increases over the next two weeks, averaging an increase of 4%. The active listing inventory dropped to below the 9,000 mark for the first time since February 2006. The inventory dropped by 242 homes in the past two weeks from 9,188 to 8,946, a 3% drop. From the first of the year, when the active inventory totaled 11,842, the inventory has shed a total of 2,896 homes. Last year the active inventory totaled 14,701 homes, 5,755 additional homes on the market compared to today. Two years ago the active inventory reached 17,334 homes, 8,388 additional homes compared to today. Even though demand dropped, the expected market time did not increase that much because of the drop in inventory. The expected market time increased from 2.53 two weeks ago to 2.66 months today. Most buyers have the expectation of a deep buyer’s market where they can take their time and write an offer to purchase a home well below the asking price. With so much negative news swirling around the economy, the recession, employment and the housing market, it is ironic to find that homes priced below $1 million are experiencing tremendous competition and often sell for at or above the asking price. The lower ranges are incredibly hot too. From $250,000 to $500,000, the hottest price range, the expected market time is 1.44 months. That range represents 24% of the current active inventory and 45% of demand. 55% of the active inventory within that range is either a foreclosure or short sale. Buyers are looking for a deal and are looking for foreclosures. 72% of all distressed sales are found below $500,000. It is reasonable to conclude that distressed sales are fueling the market, especially in the lower ranges. Total pending count, different than demand in that demand tracks new pending sales over the past month only, dropped for the first time this year by 54 homes, now totaling 6,403. Last year at this time the total pending count was at 4,192, 2,211 fewer than today. Two years ago there were 3,797 fewer than today.
The active distressed inventory, both foreclosures and short sales, continued its decent, dropping from 2,919 homes to 2,766, a 153 home drop. Foreclosures make up 13.5% of the distressed inventory. There are only 374 in all of Orange County. The other 86.5% are short sales, totaling 2,392. Foreclosures make up only 4.2% of the TOTAL active inventory and 26.7% are short sales. Foreclosures make up 17.7% of demand and short sales make up 35.4%. With so many buyers looking for a deal, many are turning to foreclosures only to find that there is just way too much demand and competition. They fly off the market as quickly as they come on. The expected market time for foreclosures is only .63 months, between two and three weeks. The expected market time would probably be even less, but it takes a bit of time to sort through multiple offers and communicate with the out of area banks. The number of short sales on the active market has dropped to 2,392, 115 fewer than two weeks ago and 50% off of the peak of 4,810 established in May of 2008. With so few foreclosures on the market, many buyers have turned to short sales where the competition has grown substantially and the expected market time has dropped to 2.01 months. Short sales have become an acceptable alternative to both buyers and lenders alike. Not only have buyers jumped on the short sale bandwagon, but lenders have approved more and more short sales in lieu of the lengthy foreclosure process. One year ago 94% of all distressed listings were at or below $750,000. Today, 88% is found below $750,000, dropping from 89% two weeks ago. The trend is more and more distressed homes are found above the $750,000 mark as the market moves from the subprime fallout to prime loans. The upper ranges are just beginning to catch up to the lower ranges. We have all read or heard about the foreclosure wave to come. It will not manifest itself in an increase in short sales. When more foreclosures do hit the market, there is so much pent up demand for the foreclosure “deal” that many will become pending sales just as fast as they are placed on the market. The reports from agents on the streets are that they are all working with buyers and they all would love to jump on the next foreclosure to hit the market.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
While celebrating the 4th of July and enjoying the warm weather and California surf, demand for Orange County homes dropped by 7%, a typical drop for this time of year. The average drop in demand over the past five years has been 8%. This year is no exception. Demand, the number of new pending sales over the past month, dropped from 3,629 pending sales two weeks ago to 3,359 today, a drop of 270 homes. Last year the drop was 324 homes and demand totaled 2,682 pending sales, 677 fewer than today. Two years ago there were 1,578 fewer pending sales compared to today, totaling only 1,781 for all of Orange County. Over the past five years, demand cyclically increases over the next two weeks, averaging an increase of 4%. The active listing inventory dropped to below the 9,000 mark for the first time since February 2006. The inventory dropped by 242 homes in the past two weeks from 9,188 to 8,946, a 3% drop. From the first of the year, when the active inventory totaled 11,842, the inventory has shed a total of 2,896 homes. Last year the active inventory totaled 14,701 homes, 5,755 additional homes on the market compared to today. Two years ago the active inventory reached 17,334 homes, 8,388 additional homes compared to today. Even though demand dropped, the expected market time did not increase that much because of the drop in inventory. The expected market time increased from 2.53 two weeks ago to 2.66 months today. Most buyers have the expectation of a deep buyer’s market where they can take their time and write an offer to purchase a home well below the asking price. With so much negative news swirling around the economy, the recession, employment and the housing market, it is ironic to find that homes priced below $1 million are experiencing tremendous competition and often sell for at or above the asking price. The lower ranges are incredibly hot too. From $250,000 to $500,000, the hottest price range, the expected market time is 1.44 months. That range represents 24% of the current active inventory and 45% of demand. 55% of the active inventory within that range is either a foreclosure or short sale. Buyers are looking for a deal and are looking for foreclosures. 72% of all distressed sales are found below $500,000. It is reasonable to conclude that distressed sales are fueling the market, especially in the lower ranges. Total pending count, different than demand in that demand tracks new pending sales over the past month only, dropped for the first time this year by 54 homes, now totaling 6,403. Last year at this time the total pending count was at 4,192, 2,211 fewer than today. Two years ago there were 3,797 fewer than today.
The active distressed inventory, both foreclosures and short sales, continued its decent, dropping from 2,919 homes to 2,766, a 153 home drop. Foreclosures make up 13.5% of the distressed inventory. There are only 374 in all of Orange County. The other 86.5% are short sales, totaling 2,392. Foreclosures make up only 4.2% of the TOTAL active inventory and 26.7% are short sales. Foreclosures make up 17.7% of demand and short sales make up 35.4%. With so many buyers looking for a deal, many are turning to foreclosures only to find that there is just way too much demand and competition. They fly off the market as quickly as they come on. The expected market time for foreclosures is only .63 months, between two and three weeks. The expected market time would probably be even less, but it takes a bit of time to sort through multiple offers and communicate with the out of area banks. The number of short sales on the active market has dropped to 2,392, 115 fewer than two weeks ago and 50% off of the peak of 4,810 established in May of 2008. With so few foreclosures on the market, many buyers have turned to short sales where the competition has grown substantially and the expected market time has dropped to 2.01 months. Short sales have become an acceptable alternative to both buyers and lenders alike. Not only have buyers jumped on the short sale bandwagon, but lenders have approved more and more short sales in lieu of the lengthy foreclosure process. One year ago 94% of all distressed listings were at or below $750,000. Today, 88% is found below $750,000, dropping from 89% two weeks ago. The trend is more and more distressed homes are found above the $750,000 mark as the market moves from the subprime fallout to prime loans. The upper ranges are just beginning to catch up to the lower ranges. We have all read or heard about the foreclosure wave to come. It will not manifest itself in an increase in short sales. When more foreclosures do hit the market, there is so much pent up demand for the foreclosure “deal” that many will become pending sales just as fast as they are placed on the market. The reports from agents on the streets are that they are all working with buyers and they all would love to jump on the next foreclosure to hit the market.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Tuesday, June 30, 2009
Orange County Housing Report: More of the Same
June 25, 2009
The active inventory dropped slightly along with demand. It seems as if the Orange County marketplace has reached a plateau. The active listing inventory dropped by 125 homes in the past two weeks and now totals 9,188, the lowest level since February of 2006. Today there are 5,652 fewer active listings on the market compared to last year when the inventory totaled 14,840. There are 8,062 fewer active listings compared to two years ago when the inventory totaled 17,250. After reaching its height for 2009, demand, the number of new pending sales over the past month, dropped by 23 homes in the past two weeks and now totals 3,629. There are 623 additional pending sales today compared to last year’s demand level at this time. Compared to two years ago, there are 1,735 additional pending sales today. Typically at this time of year demand reaches a plateau and begins to drop a bit in July before increasing one last time for the year in August. The strongest demand is currently for single family residential homes priced below $500,000. The expected market time is a little over a month, indicating high demand, multiple offers and a seller’s market. If you are a homeowner reading this and think this would be a great time to jump in, a lot of that demand is fueled by distressed properties within that range. For detached homes priced below $250,000, there are only 160 in all of Orange County, 81% are distressed. For homes priced between $250,001 and $500,000, there are 1,004 within the range, 67% are distressed. Distressed homes are priced well and are often priced below the last comparable sale. If a homeowner with equity wants to compete, they better bring a sharp pencil in arriving at the asking price. Yes, there is a lot of demand; however, buyers are very educated and are unwilling to pay much of a premium in the current market.
The expected market time dropped slightly from 2.55 months two weeks ago to 2.53 months today. The expected market time last year was at 4.94 months, and two years ago it was at 8.5 months. The last time the expected market time was at this level dated back to September 2005. Total Orange County pending sales continued its ascent, reaching a record height, totaling 6,457, a 109 home increase over the past two weeks. Compared to last year at this time when total pending sales reached 4,363, there are 2,094 additional pending sales today. Two years ago it was at 2,816, 3,641 fewer compared to today. Total pending count is different than demand because demand tracks new pending sales over the past month. Total pending count takes into account all pending sales, including those that have been pending for longer than 30-days.
There are currently 2,919 distressed homes on the active market, a drop of 143 in two weeks and 51% off of the peak of 5,950 established in August 2008. The number of active foreclosures has dropped to 411 for all of Orange County, a drop of 4 homes in the past two weeks and 71% off of the peak of 1,404 established in November of 2008. With so many buyers looking for a deal, many are turning to foreclosures only to find that they are flying off of the market just as quickly as they are coming on. The number of short sales on the active market has dropped to 2,507, 155 fewer than two years ago and 48% off of the peak of 4,810 established in May of 2008. In the past two weeks, the number of short sales has dropped by 539 homes. Distressed sales account for 32% of the active listing inventory and 52% of demand, a slight drop from two weeks ago. The expected market time for foreclosures is currently 0.62 months. Last year there were 1,171 foreclosures and an expected market time of 1.32 months. For short sales, the expected market time is 2.03 months. Last year there were 4,789 short sales on the market and an expected market time of 7.21 months. It is simple to conclude that short sales have become an acceptable alternative to both buyers and lenders alike. It not only takes demand to move the short sale inventory, it takes lenders’ acceptance of a payoff that is less than the loan amount. One year ago 94% of all distressed listings were at or below $750,000. Today, 89% is found below $750,000. There are more distressed listings found above $750,000 today compared to last year, indicative that the current downturn is not just isolated to the lower ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
The active inventory dropped slightly along with demand. It seems as if the Orange County marketplace has reached a plateau. The active listing inventory dropped by 125 homes in the past two weeks and now totals 9,188, the lowest level since February of 2006. Today there are 5,652 fewer active listings on the market compared to last year when the inventory totaled 14,840. There are 8,062 fewer active listings compared to two years ago when the inventory totaled 17,250. After reaching its height for 2009, demand, the number of new pending sales over the past month, dropped by 23 homes in the past two weeks and now totals 3,629. There are 623 additional pending sales today compared to last year’s demand level at this time. Compared to two years ago, there are 1,735 additional pending sales today. Typically at this time of year demand reaches a plateau and begins to drop a bit in July before increasing one last time for the year in August. The strongest demand is currently for single family residential homes priced below $500,000. The expected market time is a little over a month, indicating high demand, multiple offers and a seller’s market. If you are a homeowner reading this and think this would be a great time to jump in, a lot of that demand is fueled by distressed properties within that range. For detached homes priced below $250,000, there are only 160 in all of Orange County, 81% are distressed. For homes priced between $250,001 and $500,000, there are 1,004 within the range, 67% are distressed. Distressed homes are priced well and are often priced below the last comparable sale. If a homeowner with equity wants to compete, they better bring a sharp pencil in arriving at the asking price. Yes, there is a lot of demand; however, buyers are very educated and are unwilling to pay much of a premium in the current market.
The expected market time dropped slightly from 2.55 months two weeks ago to 2.53 months today. The expected market time last year was at 4.94 months, and two years ago it was at 8.5 months. The last time the expected market time was at this level dated back to September 2005. Total Orange County pending sales continued its ascent, reaching a record height, totaling 6,457, a 109 home increase over the past two weeks. Compared to last year at this time when total pending sales reached 4,363, there are 2,094 additional pending sales today. Two years ago it was at 2,816, 3,641 fewer compared to today. Total pending count is different than demand because demand tracks new pending sales over the past month. Total pending count takes into account all pending sales, including those that have been pending for longer than 30-days.
There are currently 2,919 distressed homes on the active market, a drop of 143 in two weeks and 51% off of the peak of 5,950 established in August 2008. The number of active foreclosures has dropped to 411 for all of Orange County, a drop of 4 homes in the past two weeks and 71% off of the peak of 1,404 established in November of 2008. With so many buyers looking for a deal, many are turning to foreclosures only to find that they are flying off of the market just as quickly as they are coming on. The number of short sales on the active market has dropped to 2,507, 155 fewer than two years ago and 48% off of the peak of 4,810 established in May of 2008. In the past two weeks, the number of short sales has dropped by 539 homes. Distressed sales account for 32% of the active listing inventory and 52% of demand, a slight drop from two weeks ago. The expected market time for foreclosures is currently 0.62 months. Last year there were 1,171 foreclosures and an expected market time of 1.32 months. For short sales, the expected market time is 2.03 months. Last year there were 4,789 short sales on the market and an expected market time of 7.21 months. It is simple to conclude that short sales have become an acceptable alternative to both buyers and lenders alike. It not only takes demand to move the short sale inventory, it takes lenders’ acceptance of a payoff that is less than the loan amount. One year ago 94% of all distressed listings were at or below $750,000. Today, 89% is found below $750,000. There are more distressed listings found above $750,000 today compared to last year, indicative that the current downturn is not just isolated to the lower ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Monday, June 22, 2009
Just Reduced!
25082 Danacoral, Dana Point$665,000
3 Bedroom, 2 Bath
Single Level
Situated in Danawoods with community pool, park and playgrounds.
Call Dianna and Brian McGarvin of Altera Real Estate for a private showing.
949-370-2652
Friday, June 19, 2009
South Orange County Sees yearly gains
The newest homebuying stats for the 22 business days ending May 20 from DataQuick, a market analyzing tool, show that Dana Point, San Clemente and Laguna Beach ZIP codes saw an increase in sales over last year. Dana Point's 92624 was up 16.7 percent with 7 sales and 92629 was up 50 percent with 33 sales. San Clemente's 92672 saw an increase of 29.2 percent with 31 sales and 92673 increased by 11.47 percent with 39 sales. Laguna Beach's 92651 also increased with 53.8 percent gain from 20 sales.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Thursday, June 11, 2009
Just Reduced! Open Saturday June 13th 1-4PM
1408 Avenida TranquillaSan Clemente, CA 92672
5 Bedroom, 3 Baths
3 Car Garage
Gorgeous upgrades throughout]
$785,000
Monday, May 4, 2009
Orange County Housing Report: The Distressed Inventory is Dropping
April 30, 2009
The total number of distressed properties, foreclosures and short sales, dropped to its lowest level since December 27, 2007. There are currently 3,724 distressed homes on the active market, 37% off of the peak of 5,950 established in August 2008. The number of active foreclosures has dropped from its November 2008 peak of 1,404 to 529, a 62% drop. It is not just the number of foreclosures that has been dropping; the number of short sales on the active market has dropped by 20% since February, from 4,009 to 3,195. This drop can be directly attributed to much stronger demand for homes priced below $1 million, which accounts for 74% of the active inventory and 95% of demand. Homes above $1 million account for 5% of demand, but 26% of the active inventory. Demand has been incredibly strong in the lower ranges because of two factors: 96% of all distressed properties are found below $1 million; and, jumbo loans, loans above $729,750, are much harder to obtain than conventional loans, loans below that level.
For Orange County, demand, the number of new pending sales over the prior month, increased by an additional 79, now totaling 3,632 and the current height of demand for 2009. Orange County demand has not been at this level since August of 2005, just prior to the beginning of the current cycle. Last year there were 1,092 fewer pending sales, totaling 2,540, 30% less. Two years ago demand was 1,769 fewer, totaling 1,863, 49% less. Three years ago demand was 26% less and totaled 2,701. The recent surge in demand seems to be abating, but this can be attributed to less inventory in the lower ranges. With an expected market time of 1.73 months, the $250,000 to $500,000 range has been incredibly hot and many buyers have written offer after offer with no success. The sales to list price ratio for homes within this range is 100%. So, those buyers looking to scoop up a deal by writing for less than the asking price are, on average, out of luck. The sales to list price ratio for foreclosures within that range is 101%.
The active listing inventory dropped 198 homes in the past two weeks to 10,363. The inventory has not been at these levels since April 2006. At the start of the year the active inventory was at 11,842, 1,479 additional homes compared to today. Last year there were 15,437 homes on the market, 5,074 additional homes compared. Two years ago there were 15,519 homes on the market, 5,156 additional homes. Three years ago there were 11,956 homes on the market, 593 additional homes compared to today. The expected market time dropped from 2.97 months two weeks ago to 2.85 months today. The expected market time last year was at 6.08 months, two years ago it was at 8.33 months, and three years ago it was at 4.43 months. This is the lowest expected market time since October 2005. Total Orange County pending sales continues its surge, reaching record heights for this three and one-half year downturn, totaling 5,733, an 828 home increase over the past month. Last year at this time, total pending sales reached 3,514, 2,219 fewer than today. Two years ago it was at 2,824, 2,909 fewer. Total pending count is different than demand because demand tracks new pending sales over the past month. Total pending count takes into account all pending sales, including those that have been pending for longer than 30-days. The 5,733 tabulation indicates that there will be a surge in sales over the next couple of months.
How should a buyer approach this market? Most buyers have the wrong expectations in approaching the Orange County real estate market. Everybody is acutely aware of the current global recession caused by the financial crunch, so it is understandable that today’s buyers want a deal when buying a home. However, buyers fail to consider two important aspects of the current real estate market: there is tremendous demand for lower priced homes and distressed properties; and, today’s asking prices already reflect a major drop in value. Prices have reached much more affordable levels just as interest rates have dropped to historical lows, the end result, demand not seen prior to the current downturn. So, buyers need to take a litmus test of the market that they are interested in. Buyers can expect multiple offers and even above asking price sales prices for homes priced below $500,000 and distressed homes. The market has heated up considerably for homes priced between $500,000 and $750,000 as well, with an expected market time of 2.49 months. The market is much stronger between $750,000 and $1 million too, with an expected market time of 4.95 months, considered a market in equilibrium. The incredibly hot demand has been underreported and most buyer have to learn the hard way before getting realistic, writing offers below the asking price and losing out on a property or two. Another reality of the current marketplace is the number of hoops lenders will put you through in funding a loan. Buyers will not only put together the initial loan package; more often than not, the lender is going to request additional paperwork during the pending sale process. As of May 1st, the government imposed an additional hurdle which will change the appraisal process. This new process has a very high potential in delaying the close of a pending sale. It is my humble opinion that these additional hurdles are necessary, but should be postponed until the market has healed. It is easy for politicians to make headlines and change the way lending and appraising is processed in the midst of a downturn, but the real fixes need to come when the market is moving on all cylinders.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
The total number of distressed properties, foreclosures and short sales, dropped to its lowest level since December 27, 2007. There are currently 3,724 distressed homes on the active market, 37% off of the peak of 5,950 established in August 2008. The number of active foreclosures has dropped from its November 2008 peak of 1,404 to 529, a 62% drop. It is not just the number of foreclosures that has been dropping; the number of short sales on the active market has dropped by 20% since February, from 4,009 to 3,195. This drop can be directly attributed to much stronger demand for homes priced below $1 million, which accounts for 74% of the active inventory and 95% of demand. Homes above $1 million account for 5% of demand, but 26% of the active inventory. Demand has been incredibly strong in the lower ranges because of two factors: 96% of all distressed properties are found below $1 million; and, jumbo loans, loans above $729,750, are much harder to obtain than conventional loans, loans below that level.
For Orange County, demand, the number of new pending sales over the prior month, increased by an additional 79, now totaling 3,632 and the current height of demand for 2009. Orange County demand has not been at this level since August of 2005, just prior to the beginning of the current cycle. Last year there were 1,092 fewer pending sales, totaling 2,540, 30% less. Two years ago demand was 1,769 fewer, totaling 1,863, 49% less. Three years ago demand was 26% less and totaled 2,701. The recent surge in demand seems to be abating, but this can be attributed to less inventory in the lower ranges. With an expected market time of 1.73 months, the $250,000 to $500,000 range has been incredibly hot and many buyers have written offer after offer with no success. The sales to list price ratio for homes within this range is 100%. So, those buyers looking to scoop up a deal by writing for less than the asking price are, on average, out of luck. The sales to list price ratio for foreclosures within that range is 101%.
The active listing inventory dropped 198 homes in the past two weeks to 10,363. The inventory has not been at these levels since April 2006. At the start of the year the active inventory was at 11,842, 1,479 additional homes compared to today. Last year there were 15,437 homes on the market, 5,074 additional homes compared. Two years ago there were 15,519 homes on the market, 5,156 additional homes. Three years ago there were 11,956 homes on the market, 593 additional homes compared to today. The expected market time dropped from 2.97 months two weeks ago to 2.85 months today. The expected market time last year was at 6.08 months, two years ago it was at 8.33 months, and three years ago it was at 4.43 months. This is the lowest expected market time since October 2005. Total Orange County pending sales continues its surge, reaching record heights for this three and one-half year downturn, totaling 5,733, an 828 home increase over the past month. Last year at this time, total pending sales reached 3,514, 2,219 fewer than today. Two years ago it was at 2,824, 2,909 fewer. Total pending count is different than demand because demand tracks new pending sales over the past month. Total pending count takes into account all pending sales, including those that have been pending for longer than 30-days. The 5,733 tabulation indicates that there will be a surge in sales over the next couple of months.
How should a buyer approach this market? Most buyers have the wrong expectations in approaching the Orange County real estate market. Everybody is acutely aware of the current global recession caused by the financial crunch, so it is understandable that today’s buyers want a deal when buying a home. However, buyers fail to consider two important aspects of the current real estate market: there is tremendous demand for lower priced homes and distressed properties; and, today’s asking prices already reflect a major drop in value. Prices have reached much more affordable levels just as interest rates have dropped to historical lows, the end result, demand not seen prior to the current downturn. So, buyers need to take a litmus test of the market that they are interested in. Buyers can expect multiple offers and even above asking price sales prices for homes priced below $500,000 and distressed homes. The market has heated up considerably for homes priced between $500,000 and $750,000 as well, with an expected market time of 2.49 months. The market is much stronger between $750,000 and $1 million too, with an expected market time of 4.95 months, considered a market in equilibrium. The incredibly hot demand has been underreported and most buyer have to learn the hard way before getting realistic, writing offers below the asking price and losing out on a property or two. Another reality of the current marketplace is the number of hoops lenders will put you through in funding a loan. Buyers will not only put together the initial loan package; more often than not, the lender is going to request additional paperwork during the pending sale process. As of May 1st, the government imposed an additional hurdle which will change the appraisal process. This new process has a very high potential in delaying the close of a pending sale. It is my humble opinion that these additional hurdles are necessary, but should be postponed until the market has healed. It is easy for politicians to make headlines and change the way lending and appraising is processed in the midst of a downturn, but the real fixes need to come when the market is moving on all cylinders.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Sunday, April 19, 2009
Orange County Housing Report: The Spring Surge Continues
April 16, 2009
Demand surged by 33% in the past month as the active listing inventory dropped by 9%. In turn, the expected market time for Orange County dropped from 4.35 months to 2.97 months. Typically in April, the Spring market picks up steam. However, the market has not been “typical” in years, at least not until this year. Demand has literally taken off over the past four weeks. It is almost as if somebody turned the demand switch to its “on” position. Can this be the stimulus package at work? Are the lower interest rates working? Could the recent uptick be attributed to pent up demand? Is the public at large feeling a little bit at ease given the recent improvement on Wall Street? It is most likely a little bit of everything at work. And, this recent trend is not isolated to just the OC; the entire Southern California market has experienced a 25% increase in demand and a 9% drop in inventory over the past month.
For Orange County, demand, the number of new pending sales over the prior month, increased by an additional 306, now totaling 3,553. This is the current height of demand for 2009, and who knows where it will go from here. The last time demand exceeded 3,500 dates back to August of 2005, just prior to the beginning of the current cycle. Last year there were 1,179 fewer pending sales, totaling 2,374, 50% less. Two years ago demand was 1,628 fewer, totaling 1,925, 85% less. Three years ago demand was 21% less and totaled 2,942. Demand has broken from a normal cyclical path and is currently marching to the beat of its own drum. The same happened for the first half of 2008, where demand continued to grow week after week, ignoring normal market gyrations. Demand followed the atypical seasonal ups and downs for the second half of 2008. So, where does demand go from here? We will all have to wait and see, knowing that there are still a lot of buyers actively looking.
Isn’t there going to be a wave of foreclosures coming on the market? I am often asked about a foreclosure moratorium or banks holding back on releasing foreclosures so that they do not saturate the market. First off, let’s understand the terms when discussing foreclosures. REO, bank owned and foreclosures are all the same thing. Some lenders prohibit the use of the term foreclosure or even bank owned; instead, settling on REO, “Real Estate Owned.” In my opinion, there is so much demand for foreclosures that if it were up to me, I would leverage the terms foreclosure and bank owned. Distressed properties also include short sales, where a seller owes more to a lender, or lenders, than a home is worth. In the case of a short sale, even with a successful negotiation between a buyer and seller, the sale is still subject to the lender, or lenders’, approval. Lenders cannot prevent homeowners from placing their homes on the market as short sales, where they owe more than a home is worth. They can hold up the approval process, but they cannot stop a seller from trying to sell and submitting an offer for the bank’s consideration. So, any moratorium or intentional, intermittent release of foreclosures, would only affect the number of foreclosures or investor bought foreclosures. Yes, investors have been buying, rehabilitating and flipping or buying, rehabilitating and renting, because the “numbers” look good again. Currently, only 15% of the active distressed inventory is a foreclosure. One year ago, it was at 20%. At its height, it was at 24%. Today’s active distressed inventory totals 4,006, a drop of 86 in the past two weeks. 613 of the 4,006 are foreclosures, meaning that the remaining 3,392 are short sales. Let’s just assume that the rumors are correct and that there had been a moratorium and that lenders were intentionally holding off foreclosures from the market. Even if the total surpassed the record mix of foreclosures, 24%, and rose to 30%, the total would only rise to 1,201, almost doubling from its current level. Yet, what everybody has failed to realize is that there is major pent up demand for foreclosures. Just ask any real estate agent or buyer that has written an offer on a foreclosure. You will quickly find that the norm is multiple offers, accepted offers at or above the list price, and losing property after property due to the bidding wars. This is a reality of today’s market that is most often misunderstood. When a buyers journey begins in today’s market, they have the expectations of isolating a foreclosure and getting a heck of a “deal” buy offering thousands, if not tens of thousands, less than the asking price. Buyers fail to consider that prices have already fallen between 30% to 40%. Almost all buyers have to learn the hard way about the realities of today’s market. There are 613 foreclosures in all of Orange County today and demand is at 938. The expected market time for foreclosures has dropped all the way down to .65 weeks, about a 19 day market, a deep, deep seller’s market. So, throw in even double the current number of active foreclosures and they will quickly be eaten up by the insatiable appetite for foreclosures. Given current demand, doubling the foreclosure inventory will increase the expected market time to 1.28 months, about 5 weeks, still a major seller’s market. The real story is that short sales are currently more successful than they were a year ago. Today there are 3,392 short sales on the active market and demand is at 1,106, representing an expected market time of 3.07 months. One year ago there were 4,379 short sales on the market and demand was at 444, representing an expected market time of 9.86 months. Some conclusions can be made based upon all of this data: foreclosures are hot; short sales are hot; expect a lot of competition; and, any increase in foreclosure activity will just help relieve current pent up demand.
So how do the rest of the numbers look? The active listing inventory shed 1,045 homes in the past month, a 9% decrease, now totaling 10,561. The inventory has not dropped below 11,000 since the beginning of April 2006. Last year there were 15,556 homes on the market, 4,995 additional homes compared to today. Two years ago there were 14,811 homes on the market, 4,250 additional homes. The expected market time dropped from 3.4 months two weeks ago to 2.97 months today. The expected market time last year was at 6.55 months, two years ago it was at 7.69 months, and three years ago it was at 3.83 months. This is the lowest expected market time since October 2005. There are 1,944 fewer distressed homes on the market compared to the August 2008 height, a 33% drop. The distressed inventory now represents 38% of the current active inventory, dropping from 40% a month ago. Total Orange County pending sales continues to reach record heights. I started tracking the statistic back in September of 2006. After increasing by 475 homes over the past two weeks and 830 over the past month, the total pending count has reached 5,308 pending sales. Last year at this time, total pending sales reached 3,924, 2,121 fewer than today. Two years ago it was at 2,824, 2,556 fewer.
There is a major difference between the lower and upper ranges. Every price range improved over the past two weeks with the exception of homes priced above $4 million. The expected market time for homes priced below $250,000 dropped to 2.23 months. For the hottest range, homes priced between $250,000 and $500,000, the expected market time is 1.8 months. We have not seen the market time below the two month mark since October 2005. For homes between $500,000 and $750,000, the expected market time has dropped to 2.82 months. This range has not seen these levels since February 2006. Between $750,000 and $1 million, the expected market time dropped below the six month mark for the first time since October 2008, now at 5.49 months. For homes between $1 million and $1.5 million, the expected market time dropped below ten months for the first time since October last year as well, now at 9.51 months. For homes priced above $1.5 million, the markets have improved, but still have expected market times in the double digits, stagnant markets. As the lower ranges improve and consumer confidence slowly emerges, the good vibes are starting to flow to the upper ranges. If the latest trends continue, a bottom could be reached in the upper ranges by the end of this year to the beginning of next year.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Demand surged by 33% in the past month as the active listing inventory dropped by 9%. In turn, the expected market time for Orange County dropped from 4.35 months to 2.97 months. Typically in April, the Spring market picks up steam. However, the market has not been “typical” in years, at least not until this year. Demand has literally taken off over the past four weeks. It is almost as if somebody turned the demand switch to its “on” position. Can this be the stimulus package at work? Are the lower interest rates working? Could the recent uptick be attributed to pent up demand? Is the public at large feeling a little bit at ease given the recent improvement on Wall Street? It is most likely a little bit of everything at work. And, this recent trend is not isolated to just the OC; the entire Southern California market has experienced a 25% increase in demand and a 9% drop in inventory over the past month.
For Orange County, demand, the number of new pending sales over the prior month, increased by an additional 306, now totaling 3,553. This is the current height of demand for 2009, and who knows where it will go from here. The last time demand exceeded 3,500 dates back to August of 2005, just prior to the beginning of the current cycle. Last year there were 1,179 fewer pending sales, totaling 2,374, 50% less. Two years ago demand was 1,628 fewer, totaling 1,925, 85% less. Three years ago demand was 21% less and totaled 2,942. Demand has broken from a normal cyclical path and is currently marching to the beat of its own drum. The same happened for the first half of 2008, where demand continued to grow week after week, ignoring normal market gyrations. Demand followed the atypical seasonal ups and downs for the second half of 2008. So, where does demand go from here? We will all have to wait and see, knowing that there are still a lot of buyers actively looking.
Isn’t there going to be a wave of foreclosures coming on the market? I am often asked about a foreclosure moratorium or banks holding back on releasing foreclosures so that they do not saturate the market. First off, let’s understand the terms when discussing foreclosures. REO, bank owned and foreclosures are all the same thing. Some lenders prohibit the use of the term foreclosure or even bank owned; instead, settling on REO, “Real Estate Owned.” In my opinion, there is so much demand for foreclosures that if it were up to me, I would leverage the terms foreclosure and bank owned. Distressed properties also include short sales, where a seller owes more to a lender, or lenders, than a home is worth. In the case of a short sale, even with a successful negotiation between a buyer and seller, the sale is still subject to the lender, or lenders’, approval. Lenders cannot prevent homeowners from placing their homes on the market as short sales, where they owe more than a home is worth. They can hold up the approval process, but they cannot stop a seller from trying to sell and submitting an offer for the bank’s consideration. So, any moratorium or intentional, intermittent release of foreclosures, would only affect the number of foreclosures or investor bought foreclosures. Yes, investors have been buying, rehabilitating and flipping or buying, rehabilitating and renting, because the “numbers” look good again. Currently, only 15% of the active distressed inventory is a foreclosure. One year ago, it was at 20%. At its height, it was at 24%. Today’s active distressed inventory totals 4,006, a drop of 86 in the past two weeks. 613 of the 4,006 are foreclosures, meaning that the remaining 3,392 are short sales. Let’s just assume that the rumors are correct and that there had been a moratorium and that lenders were intentionally holding off foreclosures from the market. Even if the total surpassed the record mix of foreclosures, 24%, and rose to 30%, the total would only rise to 1,201, almost doubling from its current level. Yet, what everybody has failed to realize is that there is major pent up demand for foreclosures. Just ask any real estate agent or buyer that has written an offer on a foreclosure. You will quickly find that the norm is multiple offers, accepted offers at or above the list price, and losing property after property due to the bidding wars. This is a reality of today’s market that is most often misunderstood. When a buyers journey begins in today’s market, they have the expectations of isolating a foreclosure and getting a heck of a “deal” buy offering thousands, if not tens of thousands, less than the asking price. Buyers fail to consider that prices have already fallen between 30% to 40%. Almost all buyers have to learn the hard way about the realities of today’s market. There are 613 foreclosures in all of Orange County today and demand is at 938. The expected market time for foreclosures has dropped all the way down to .65 weeks, about a 19 day market, a deep, deep seller’s market. So, throw in even double the current number of active foreclosures and they will quickly be eaten up by the insatiable appetite for foreclosures. Given current demand, doubling the foreclosure inventory will increase the expected market time to 1.28 months, about 5 weeks, still a major seller’s market. The real story is that short sales are currently more successful than they were a year ago. Today there are 3,392 short sales on the active market and demand is at 1,106, representing an expected market time of 3.07 months. One year ago there were 4,379 short sales on the market and demand was at 444, representing an expected market time of 9.86 months. Some conclusions can be made based upon all of this data: foreclosures are hot; short sales are hot; expect a lot of competition; and, any increase in foreclosure activity will just help relieve current pent up demand.
So how do the rest of the numbers look? The active listing inventory shed 1,045 homes in the past month, a 9% decrease, now totaling 10,561. The inventory has not dropped below 11,000 since the beginning of April 2006. Last year there were 15,556 homes on the market, 4,995 additional homes compared to today. Two years ago there were 14,811 homes on the market, 4,250 additional homes. The expected market time dropped from 3.4 months two weeks ago to 2.97 months today. The expected market time last year was at 6.55 months, two years ago it was at 7.69 months, and three years ago it was at 3.83 months. This is the lowest expected market time since October 2005. There are 1,944 fewer distressed homes on the market compared to the August 2008 height, a 33% drop. The distressed inventory now represents 38% of the current active inventory, dropping from 40% a month ago. Total Orange County pending sales continues to reach record heights. I started tracking the statistic back in September of 2006. After increasing by 475 homes over the past two weeks and 830 over the past month, the total pending count has reached 5,308 pending sales. Last year at this time, total pending sales reached 3,924, 2,121 fewer than today. Two years ago it was at 2,824, 2,556 fewer.
There is a major difference between the lower and upper ranges. Every price range improved over the past two weeks with the exception of homes priced above $4 million. The expected market time for homes priced below $250,000 dropped to 2.23 months. For the hottest range, homes priced between $250,000 and $500,000, the expected market time is 1.8 months. We have not seen the market time below the two month mark since October 2005. For homes between $500,000 and $750,000, the expected market time has dropped to 2.82 months. This range has not seen these levels since February 2006. Between $750,000 and $1 million, the expected market time dropped below the six month mark for the first time since October 2008, now at 5.49 months. For homes between $1 million and $1.5 million, the expected market time dropped below ten months for the first time since October last year as well, now at 9.51 months. For homes priced above $1.5 million, the markets have improved, but still have expected market times in the double digits, stagnant markets. As the lower ranges improve and consumer confidence slowly emerges, the good vibes are starting to flow to the upper ranges. If the latest trends continue, a bottom could be reached in the upper ranges by the end of this year to the beginning of next year.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Wednesday, April 15, 2009
Just Listed!
25082 Danacoral, Dana Point
3 Bedroom, 2 Bath, 2 Car Garage
$689,000
Rarely available single level home in Danawoods! Offering three bedrooms and two baths. Third bedroom currently used as office off master bedroom. Bright kitchen with high ceilings opens to family room with large breakfast counter. Living room offers fireplace and opens to dining room. Relax and unwind in the backyard with mature landscaping and fountain. Generous built-ins and bookshelves throughout. Garage features stairs leading to large storage area. The community of Danawoods offers a large park in the center of the neighborhood, community pool with adjacent playground, picnic tables and barbeques. Walk to Ocean Ranch shopping, dining and restaurants.
For more information or a private showing call Dianna and Brian McGarvin at 949.300.1600
Monday, April 6, 2009
Orange County Housing Report: Demand Suddenly Surges
April 2,2009
Coinciding with a drop in interest rates and a Wall Street rebound, demand for Orange County housing increased by 22% in just two weeks. Demand, the number of new pending sales over the past month, increased from 2,670 pending sales two weeks ago to 3,247 today, a 577 home increase. Last year’s high of 3,060 pending sales was reached on June 12. Orange County demand has not reached this level since September 2005, the beginning of the current downturn. Last year there were 962 fewer pending sales, totaling 2,285, and two years ago there were 1,114 fewer,
totaling 2,133. The active listing inventory shed 580 homes in the past two week, a 5% decrease, totaling 11,026. The active listing inventory has not seen these lower levels since the beginning of April 2006. Last year there were 15,474 homes on the market, 4,448 additional homes compared to today. Two years ago there were 14,010 homes on the market, 2,894 additional homes. The expected market time dropped from 4.35 months two weeks ago to 3.4 months today. The expected market time last year was at 6.77 months, and two years ago it was at 6.57 months. This is the lowest expected market time since March 2006. The distressed homes inventory, foreclosures and short sales, dramatically changed over the past two weeks, dropping by 581 homes to 4,092. The height of the distressed inventory, 5,950, was achieved on August 7, 2008. There are 1,858 fewer distressed homes on the market compared to the height, a 31% drop. The distressed inventory now represents 37% of the current active inventory, dropping from 40% two weeks ago. Foreclosures now have an expected market time of 0.77 months, or three weeks. There are 170 fewer foreclosures on the market, totaling 731. Demand for foreclosures is at 953 pending sales. The foreclosure market is extremely hot. Buyers can expect to compete with multiple offers and sales prices above their list prices. The short sale inventory shed 391 homes in the past two weeks to 3,379 homes. The short sale inventory height, 4,701, was reached on August 7, 2008, coinciding with the total distressed inventory height. There are 1,322 fewer short sales on the market today. Demand for short sales increased by 205 pending sales, totaling 967. Since short sales are subject to lenders approval and are often not changed to pending status until lender approval is received, this may be a sign that lenders are gearing up to curb foreclosures through the accommodation of short sales. Total Orange County pending sales continues to reach record heights week after week. I started tracking the statistic back in September of 2006. After increasing by 355 homes over the past two weeks, the total pending count has reached 4,905 pending sales. Last year at this time, total pending sales totaled 2,852, 1,698 fewer than today. Two years ago it was at 3,047, 1,858 fewer.
Word within the trenches is that there is tremendous activity out there in the lower ranges and with distressed properties. Many buyers first enter the market with anticipation that they are going to somehow be able to obtain a property for tens of thousands less than the asking price. They are quickly learning that there is a lot of competition in the lower ranges and all distressed homes. There just is not enough news highlighting this aspect of the real estate market. The activity in the lower ranges has reached such a high level, that it is starting to reflect in the median sales price for Orange County, which posted its first month over month increase, from January to February 2009, in eight months. Lower interest rates, a lot of stimulus, the massive return of the first time home buyer, the return of investors, have all equated to a sharp uptick in the current Orange County real estate market.
There is a major difference between the lower and upper ranges. For all home below $750,000, the expected market time has been dropped considerably. The best range in Orange County is homes between $250,000 and $500,000, with an expected market time of 2.09 months. 60% of the inventory within that range is either a short sale or foreclosure. The expected market time for homes below $250,000 is 2.46 months. For homes between $500,000 and $750,000, the expected market time is 3.46 months. It shoots up to a 6.4 month expected market time for homes between $750,000 and $1 million. From there, the expected market time blossoms to a stagnant market. The expected market time ranges from 13.11 month, homes between $1 million and $1.5 million, and 43.44 months, homes above $4 million. What this helps illustrate is that the government’s focus on freeing up conventional financing, loans up to $729,750, is working within the real estate market. For jumbo financing, where loans are much more difficult to obtain and are at a higher rate, especially above $1 million, demand has just come to a crawl. With no focus from the government on higher ranges, it will not be until a bottom is reached in the lower ranges, which some are predicting during the second half of 2009, and confidence is restored in the financial markets, that decent demand will return to the upper ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Coinciding with a drop in interest rates and a Wall Street rebound, demand for Orange County housing increased by 22% in just two weeks. Demand, the number of new pending sales over the past month, increased from 2,670 pending sales two weeks ago to 3,247 today, a 577 home increase. Last year’s high of 3,060 pending sales was reached on June 12. Orange County demand has not reached this level since September 2005, the beginning of the current downturn. Last year there were 962 fewer pending sales, totaling 2,285, and two years ago there were 1,114 fewer,
totaling 2,133. The active listing inventory shed 580 homes in the past two week, a 5% decrease, totaling 11,026. The active listing inventory has not seen these lower levels since the beginning of April 2006. Last year there were 15,474 homes on the market, 4,448 additional homes compared to today. Two years ago there were 14,010 homes on the market, 2,894 additional homes. The expected market time dropped from 4.35 months two weeks ago to 3.4 months today. The expected market time last year was at 6.77 months, and two years ago it was at 6.57 months. This is the lowest expected market time since March 2006. The distressed homes inventory, foreclosures and short sales, dramatically changed over the past two weeks, dropping by 581 homes to 4,092. The height of the distressed inventory, 5,950, was achieved on August 7, 2008. There are 1,858 fewer distressed homes on the market compared to the height, a 31% drop. The distressed inventory now represents 37% of the current active inventory, dropping from 40% two weeks ago. Foreclosures now have an expected market time of 0.77 months, or three weeks. There are 170 fewer foreclosures on the market, totaling 731. Demand for foreclosures is at 953 pending sales. The foreclosure market is extremely hot. Buyers can expect to compete with multiple offers and sales prices above their list prices. The short sale inventory shed 391 homes in the past two weeks to 3,379 homes. The short sale inventory height, 4,701, was reached on August 7, 2008, coinciding with the total distressed inventory height. There are 1,322 fewer short sales on the market today. Demand for short sales increased by 205 pending sales, totaling 967. Since short sales are subject to lenders approval and are often not changed to pending status until lender approval is received, this may be a sign that lenders are gearing up to curb foreclosures through the accommodation of short sales. Total Orange County pending sales continues to reach record heights week after week. I started tracking the statistic back in September of 2006. After increasing by 355 homes over the past two weeks, the total pending count has reached 4,905 pending sales. Last year at this time, total pending sales totaled 2,852, 1,698 fewer than today. Two years ago it was at 3,047, 1,858 fewer.
Word within the trenches is that there is tremendous activity out there in the lower ranges and with distressed properties. Many buyers first enter the market with anticipation that they are going to somehow be able to obtain a property for tens of thousands less than the asking price. They are quickly learning that there is a lot of competition in the lower ranges and all distressed homes. There just is not enough news highlighting this aspect of the real estate market. The activity in the lower ranges has reached such a high level, that it is starting to reflect in the median sales price for Orange County, which posted its first month over month increase, from January to February 2009, in eight months. Lower interest rates, a lot of stimulus, the massive return of the first time home buyer, the return of investors, have all equated to a sharp uptick in the current Orange County real estate market.
There is a major difference between the lower and upper ranges. For all home below $750,000, the expected market time has been dropped considerably. The best range in Orange County is homes between $250,000 and $500,000, with an expected market time of 2.09 months. 60% of the inventory within that range is either a short sale or foreclosure. The expected market time for homes below $250,000 is 2.46 months. For homes between $500,000 and $750,000, the expected market time is 3.46 months. It shoots up to a 6.4 month expected market time for homes between $750,000 and $1 million. From there, the expected market time blossoms to a stagnant market. The expected market time ranges from 13.11 month, homes between $1 million and $1.5 million, and 43.44 months, homes above $4 million. What this helps illustrate is that the government’s focus on freeing up conventional financing, loans up to $729,750, is working within the real estate market. For jumbo financing, where loans are much more difficult to obtain and are at a higher rate, especially above $1 million, demand has just come to a crawl. With no focus from the government on higher ranges, it will not be until a bottom is reached in the lower ranges, which some are predicting during the second half of 2009, and confidence is restored in the financial markets, that decent demand will return to the upper ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Monday, March 23, 2009
Orange County Housing Report: 21% Fewer Distressed Homes on the Market
March 19, 2009
As the market marches forward, the distressed active inventory, both foreclosures and short sales, has dropped by 21% since its peak in August of 2008. There have been various explanations for a dip in the number of distressed sales, like legislation that lengthens the amount of time to file a notice of default (when somebody is behind on their mortgage) and ultimately delay foreclosure. The problem with that theory is that the distressed inventory has been steadily dropping for seven months. The distressed inventory has dropped by 1,277 homes, or 21%. On August 7, 2008, the distressed inventory was at 5,950 homes and represented 41% of the 14,348 total active inventory (both distressed and non-distressed listings). Today, the distressed inventory has fallen to 4,673, 40% of the 11,606 total active inventory. One year ago today, the distressed inventory was at 5,221, 548 more that today, the second report in a row with a year over year improvement. However, the distressed inventory is still extremely high. This inventory needs to drop significantly for the real estate market to start to appreciate once again. The rate that it drops is slow because of the number of bad loans in the system combined with a high unemployment. However, in the lower ranges, the rate of depreciation has slowed remarkably, and even bottomed in some areas. This is due primarily to the extremely high demand in the lower ranges, homes priced below $500,000. This range accounts for 49% of the total active inventory, but 73% of demand. There are some cities with expected market times close to two months, technically a seller’s market. A lot of this demand has been fueled by the drop in prices and the desire to acquire a bank owned, foreclosed home. Buyers looking for a home below $500,000 need to be prepared for a lot of competition. The average sales to list price ratio for foreclosed homes is 101%, meaning that, on average, the home is selling for above the list price. Short sales DOMINATE the distressed sales market within Orange County and account for 80.7% of all distressed homes. The other 19.4% are foreclosures, the hottest properties in the county. There are currently 905 foreclosures on the market and demand, the number of homes placed into escrow within the last month, is at 882 pending sales. The expected market time for foreclosure is 1.03 months. Foreclosures are so hot, that multiple offers are the norm. The demand is similar to 2005 demand for all homes, CRAZY seller’s market. Buyers in today’s market expect a discount and expect to be able to take their time in making a decision to write a purchase offer. Most buyers must learn the hard way, after losing a property or two, that these homes generate tremendous buyer competition. The expected market time for short sales has dropped significantly, now at 4.95 months, but this figure is grossly overinflated due to the nature of short sales. Short sales are where a homeowner attempts to sell their home, owing more than their home is worth. Even though most short sales have an agreed upon purchase offer between a buyer and the seller, most are continually marketed as an active listing rather than as a pending sale because of the belief by many that they do not have an official acceptance until the lender approves the sale at a discount in what is owed. In the trenches, agents are reporting that vast majority of short sales that are a part of the active inventory have offers that are already submitted to the lender(s). Another giant drawback to short sales is that the “lender approval” process can take weeks to months to obtain. Often, by the time a lender does approve of a short sale offer, the buyer has already moved onto another home. The bottom line, there may be a lot of distressed homes on the market, but as a buyer, expect a lot of competition.
So how do the numbers look? In the past two weeks, demand, the number of new pending sales within the prior month, increased by 46 pending sales to 2,670. Last year at this time there were 587 fewer pending sales, totaling 2,083. Two years ago there were 2,195 pending sales, 475 fewer than today. All of the recent stimulus aimed specifically at real estate should begin to trickle down into the Orange County real estate scene in the form of increased demand within the next couple of weeks. In the trenches, agents are already reporting increased buyer interest, increased open house activity and more buyers on the verge of writing after fence sitting for quite some time. All of the ingredients for an increase are there: historically low interest rates, government incentives to purchase now, and a lot of government intervention aimed at placing a sound bottom underneath the housing market. Prices, especially in the upper ranges, may continue to fall; however, what most buyers fail to consider is that these historically low interest rates will not be around forever. Instead, with all of the money that the federal government is pumping into our economy, the U.S. economy will most certainly endure a major increase in inflation down the road. The Federal Reserve responds to an increase in inflation with an increase in interest rates. In 1990, interest rates were thought to be at a great level when they broke just below 10%. At 5%, today’s approximate interest rate, the payment for a $500,000 loan is $2,684. At 7%, the payment is $3,327, an increase of $643 per month. At 10%, the payment would be $4,388, a difference of $1,704. Even if homes were to fall an additional 10%, a 7% loan at $450,000 would be $2,994, still $310 a month more than a 5% loan at $500,000. At 10% it would be $1,265 more per month. The beauty of homeownership in Orange County is it is an incredible long term investment. So, if you are a buyer and can live in your home for more than just a few years, ultimately it makes sense to buy as soon as you isolate the home that best fits your family’s criteria and budget. It may not pay to wait because after the economy turns around, inflation will increase interest rates. Almost all buyers fail to factor the negative effects of increasing interest rates, which can be profound.
The active listing inventory continues to remain relatively unchanged so far this year, increasing by only 65 homes over the past month, bringing the current total to 11,606. Last year the active inventory was at 15,617 homes, 35% higher. Two years ago there were 1,767 additional homes on the market, totaling 13,373, 15% higher. The current expected market time decreased slightly from 4.41 months two weeks ago to 4.35 months today. Last year the expected market time was 7.5 months. Two year ago the expected market time was 6.09 months. Total Orange County pending sales continues to reach record heights over the past two reports. I started tracking the statistic back in September of 2006. After increasing by 142 homes over the past two weeks, the total pending count has reached 4,550 pending sales. Last year at this time, total pending sales totaled 2,852, 1,698 fewer than today. Two years ago it was at 3,321, 1,229 fewer.
The condition of the Orange County real estate market really depends upon the price range. The story of 2009 remains the same, the lower the price range, the hotter the market. The hottest range is detached homes below $250,000 with an expected market time of only 1.94 months. However, there are only 303 detached homes in that range. The second hottest range is detached homes between $250,000 and $500,000, with an expected market time of 2.27 months. Here’s a breakdown of the year over year change in both supply and demand for Orange County’s various price ranges for both detached homes and condominiums:
It will be interesting to see the impact of all of the recent stimulus within the various ranges. We can expect the lower ranges to improve and eventually bottom first. It won’t be until confidence is restored in the financial marketplace, the current focus of the Federal Reserve, the Obama administration and Congress, that we will see a bottom in the upper ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
As the market marches forward, the distressed active inventory, both foreclosures and short sales, has dropped by 21% since its peak in August of 2008. There have been various explanations for a dip in the number of distressed sales, like legislation that lengthens the amount of time to file a notice of default (when somebody is behind on their mortgage) and ultimately delay foreclosure. The problem with that theory is that the distressed inventory has been steadily dropping for seven months. The distressed inventory has dropped by 1,277 homes, or 21%. On August 7, 2008, the distressed inventory was at 5,950 homes and represented 41% of the 14,348 total active inventory (both distressed and non-distressed listings). Today, the distressed inventory has fallen to 4,673, 40% of the 11,606 total active inventory. One year ago today, the distressed inventory was at 5,221, 548 more that today, the second report in a row with a year over year improvement. However, the distressed inventory is still extremely high. This inventory needs to drop significantly for the real estate market to start to appreciate once again. The rate that it drops is slow because of the number of bad loans in the system combined with a high unemployment. However, in the lower ranges, the rate of depreciation has slowed remarkably, and even bottomed in some areas. This is due primarily to the extremely high demand in the lower ranges, homes priced below $500,000. This range accounts for 49% of the total active inventory, but 73% of demand. There are some cities with expected market times close to two months, technically a seller’s market. A lot of this demand has been fueled by the drop in prices and the desire to acquire a bank owned, foreclosed home. Buyers looking for a home below $500,000 need to be prepared for a lot of competition. The average sales to list price ratio for foreclosed homes is 101%, meaning that, on average, the home is selling for above the list price. Short sales DOMINATE the distressed sales market within Orange County and account for 80.7% of all distressed homes. The other 19.4% are foreclosures, the hottest properties in the county. There are currently 905 foreclosures on the market and demand, the number of homes placed into escrow within the last month, is at 882 pending sales. The expected market time for foreclosure is 1.03 months. Foreclosures are so hot, that multiple offers are the norm. The demand is similar to 2005 demand for all homes, CRAZY seller’s market. Buyers in today’s market expect a discount and expect to be able to take their time in making a decision to write a purchase offer. Most buyers must learn the hard way, after losing a property or two, that these homes generate tremendous buyer competition. The expected market time for short sales has dropped significantly, now at 4.95 months, but this figure is grossly overinflated due to the nature of short sales. Short sales are where a homeowner attempts to sell their home, owing more than their home is worth. Even though most short sales have an agreed upon purchase offer between a buyer and the seller, most are continually marketed as an active listing rather than as a pending sale because of the belief by many that they do not have an official acceptance until the lender approves the sale at a discount in what is owed. In the trenches, agents are reporting that vast majority of short sales that are a part of the active inventory have offers that are already submitted to the lender(s). Another giant drawback to short sales is that the “lender approval” process can take weeks to months to obtain. Often, by the time a lender does approve of a short sale offer, the buyer has already moved onto another home. The bottom line, there may be a lot of distressed homes on the market, but as a buyer, expect a lot of competition.
So how do the numbers look? In the past two weeks, demand, the number of new pending sales within the prior month, increased by 46 pending sales to 2,670. Last year at this time there were 587 fewer pending sales, totaling 2,083. Two years ago there were 2,195 pending sales, 475 fewer than today. All of the recent stimulus aimed specifically at real estate should begin to trickle down into the Orange County real estate scene in the form of increased demand within the next couple of weeks. In the trenches, agents are already reporting increased buyer interest, increased open house activity and more buyers on the verge of writing after fence sitting for quite some time. All of the ingredients for an increase are there: historically low interest rates, government incentives to purchase now, and a lot of government intervention aimed at placing a sound bottom underneath the housing market. Prices, especially in the upper ranges, may continue to fall; however, what most buyers fail to consider is that these historically low interest rates will not be around forever. Instead, with all of the money that the federal government is pumping into our economy, the U.S. economy will most certainly endure a major increase in inflation down the road. The Federal Reserve responds to an increase in inflation with an increase in interest rates. In 1990, interest rates were thought to be at a great level when they broke just below 10%. At 5%, today’s approximate interest rate, the payment for a $500,000 loan is $2,684. At 7%, the payment is $3,327, an increase of $643 per month. At 10%, the payment would be $4,388, a difference of $1,704. Even if homes were to fall an additional 10%, a 7% loan at $450,000 would be $2,994, still $310 a month more than a 5% loan at $500,000. At 10% it would be $1,265 more per month. The beauty of homeownership in Orange County is it is an incredible long term investment. So, if you are a buyer and can live in your home for more than just a few years, ultimately it makes sense to buy as soon as you isolate the home that best fits your family’s criteria and budget. It may not pay to wait because after the economy turns around, inflation will increase interest rates. Almost all buyers fail to factor the negative effects of increasing interest rates, which can be profound.
The active listing inventory continues to remain relatively unchanged so far this year, increasing by only 65 homes over the past month, bringing the current total to 11,606. Last year the active inventory was at 15,617 homes, 35% higher. Two years ago there were 1,767 additional homes on the market, totaling 13,373, 15% higher. The current expected market time decreased slightly from 4.41 months two weeks ago to 4.35 months today. Last year the expected market time was 7.5 months. Two year ago the expected market time was 6.09 months. Total Orange County pending sales continues to reach record heights over the past two reports. I started tracking the statistic back in September of 2006. After increasing by 142 homes over the past two weeks, the total pending count has reached 4,550 pending sales. Last year at this time, total pending sales totaled 2,852, 1,698 fewer than today. Two years ago it was at 3,321, 1,229 fewer.
The condition of the Orange County real estate market really depends upon the price range. The story of 2009 remains the same, the lower the price range, the hotter the market. The hottest range is detached homes below $250,000 with an expected market time of only 1.94 months. However, there are only 303 detached homes in that range. The second hottest range is detached homes between $250,000 and $500,000, with an expected market time of 2.27 months. Here’s a breakdown of the year over year change in both supply and demand for Orange County’s various price ranges for both detached homes and condominiums:
It will be interesting to see the impact of all of the recent stimulus within the various ranges. We can expect the lower ranges to improve and eventually bottom first. It won’t be until confidence is restored in the financial marketplace, the current focus of the Federal Reserve, the Obama administration and Congress, that we will see a bottom in the upper ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
Thursday, March 19, 2009
The Federal Open Marketing Committee
The Fed is clearly doing “EVERYTHING” it can to stabilize the housing market and head off a prolonged period of deflation that would be difficult to break.
Of particular note: The Fed is substantially increasing its support of mortgage lending and housing markets. The FOMC committed the Fed to buy an additional $750 billion in agency mortgage-backed securities, bringing its total purchases of these securities to $1.25 trillion this year.
Moreover, the Fed will increase its purchases of agency debt by $100 billion to a total of up to $200 billion. Both measures are designed to increase the ability of Fannie Mae and Freddie Mac to expand their balance sheet and reduce the cost of “conventional” mortgages.
If that wasn’t enough to get borrowers’ and lenders’ blood pumping, the FOMC threw in a kicker: they committed to buying $300 billion worth of long-term Treasury securities, an action they had signaled they were prepared to do at some time. This is huge in my opinion, perhaps the policy impact of greatest importance. The Fed is committing itself to monetizing the debt of the Federal government in order to push down general long-term interest rates and restart a refinancing wave. Given the reluctance of foreigners of late to finance our growing federal deficit, this will be a necessary step toward recovery. But the potential costs of this action are increasingly problematic. It is like a cancer patient that is given a heavy dose of chemo and radioactive therapy to cure their cancer, but the patient first appears to get sicker with each passing day. Renewed dollar weakness is likely. Longer-term, the U.S. economy could face higher inflation and higher interest rates down the road.
The FOMC also said it is likely to expand the range of eligible collateral for the Term Asset-backed Lending Facility (TALF) to include other financial assets on top of the ones already promised.
Bottom-line, these actions by the Fed today certainly increase the chances of a housing bottom sometime this year, and a return to economic growth by year end. Ten-year Treasury yields plunged by a half a percentage point shortly after the statement, which will drive significantly lower mortgage and corporate bond rates across the country. I sense a refinancing or financing opportunity coming on.
Scott Glass Wells Fargo Home Mortgage (949) 282-4007 Tel Scott.Glass@wellsfargo.com
Of particular note: The Fed is substantially increasing its support of mortgage lending and housing markets. The FOMC committed the Fed to buy an additional $750 billion in agency mortgage-backed securities, bringing its total purchases of these securities to $1.25 trillion this year.
Moreover, the Fed will increase its purchases of agency debt by $100 billion to a total of up to $200 billion. Both measures are designed to increase the ability of Fannie Mae and Freddie Mac to expand their balance sheet and reduce the cost of “conventional” mortgages.
If that wasn’t enough to get borrowers’ and lenders’ blood pumping, the FOMC threw in a kicker: they committed to buying $300 billion worth of long-term Treasury securities, an action they had signaled they were prepared to do at some time. This is huge in my opinion, perhaps the policy impact of greatest importance. The Fed is committing itself to monetizing the debt of the Federal government in order to push down general long-term interest rates and restart a refinancing wave. Given the reluctance of foreigners of late to finance our growing federal deficit, this will be a necessary step toward recovery. But the potential costs of this action are increasingly problematic. It is like a cancer patient that is given a heavy dose of chemo and radioactive therapy to cure their cancer, but the patient first appears to get sicker with each passing day. Renewed dollar weakness is likely. Longer-term, the U.S. economy could face higher inflation and higher interest rates down the road.
The FOMC also said it is likely to expand the range of eligible collateral for the Term Asset-backed Lending Facility (TALF) to include other financial assets on top of the ones already promised.
Bottom-line, these actions by the Fed today certainly increase the chances of a housing bottom sometime this year, and a return to economic growth by year end. Ten-year Treasury yields plunged by a half a percentage point shortly after the statement, which will drive significantly lower mortgage and corporate bond rates across the country. I sense a refinancing or financing opportunity coming on.
Scott Glass Wells Fargo Home Mortgage (949) 282-4007 Tel Scott.Glass@wellsfargo.com
Tuesday, March 10, 2009
Orange County Housing Report: A Stimulating Pause
As all of the details of the various stimulus plans are slowly making their way to Main Street, the Orange County housing market has slowed as well. The tax credit for first time home buyers (individuals who have not owned within the prior 3 years), the increased conventional loan limit to $729,750, the unveiling of the details to help instigate lenders to refinance loans for homeowners who are as much as 5% upside down in their homes, and the unveiling of the finer points to help promote loan modifications, are only just beginning to make their way to the experts and professionals that work within the real estate and lending industries. It is no wonder that there has been a pause in recent Orange County demand as buyers are just not yet aware of how all of the recent fanfare applies to them. Also, there has benn recent news of even more stimulus to come to help resurrect the dormant financial engine that keeps our economy in gear. The frozen financial markets are only moving because the U.S. Treasury is purchasing pools of loans to keep lending flowing. The government is working on incentives to motivate investors to enter the game as well. They are looking to help purchase “toxic assets,” a term that simply means “bad loans,” to help instigate lenders to lend again. The problem thus far has been that lenders have received billions of dollars from the government only to clamp down further on lending. Part of the problem is that for every loan that is bad, they have to have a certain threshold of capital set aside. With so many bad loans on the books, lenders have had to maintain hordes of capital in the form of reserves and they cannot use that money for new loans. So, this is what the government is sifting through in the background to repair out financial markets and restore confidence in the U.S. financial system once again. As more and more of these programs are unveiled there will be a slight delay until it trickles down to the Orange County marketplace. Similarly, the new higher conventional loan limits that were unveiled in February of 2007 took over a month until it finally hit Main Street in the form of new loans. The latest round of stimulus was only unveiled in the third week of February of this year, but the real estate and financial industries are still ironing out all of the details. With all of the stimulus and record low interest rates, each program is going to slowly trickle down in the form of increased demand in real estate in weeks and months to come.
So how do the numbers look? In the past two weeks, demand, the number of new pending sales within the prior month, decreased by 195 homes to 2,624. Last year at this time there were 731 fewer pending sales, totaling 1,893. Two years ago there were 2,388 pending sales, 236 fewer than today. The affects on demand from the stimulus plan should probably start to play out within the Orange County real estate marketplace over the next month. The active listing inventory has remained relatively unchanged so far this year, increasing by only 43 homes over the past month, bringing the current total to 11,562. Last year the active inventory was at 15,412 homes, 33% higher. Two years ago there were 996 additional homes on the market, totaling 12,558, 10% higher. The current expected market time increased from 4.09 months two weeks ago to 4.41 months today. Last year the expected market time was 8.14 months. Two year ago the expected market time was 5.26 months. Total Orange County pending sales is at a much healthier level compared to the last two years. Currently, total pending sales is at 4,408, an increase of 67 pending sales in the past two weeks. This is the highest level for total pending sales since I began tracking this figure back in September of 2006. Last year at this time, total pending sales totaled 2,524, 1,884 fewer than today. Two years ago it was at 3,419, 989 fewer compared to today. Today marks the first time that the distressed inventory is lower compared to the prior year, after falling by another 99 foreclosures and short sales over the prior two weeks to 4,408. One year ago today, the distressed inventory was at 5,057, 649 more than today. Since peaking on August 7th at 5,950, the distressed active inventory has dropped by 20%; that is 1,166 fewer distressed homes on the active market. The distressed inventory represents 41% of the total active inventory, dropping from 42% two weeks ago. The number of pending sales that are either a short sale or a foreclosure remained at 62%. The expected market time for foreclosures increased slightly from its record low of .99 months two weeks ago to 1.08 months today. Foreclosures remain the hottest category of homes within the Orange County marketplace today. The expected market time for short sales dropped ever so slightly from 5.16 months to 5.14 months today, a record low for the current housing downturn.
The condition of the Orange County real estate market really depends upon the price range. Of course, the lower the price range, the hotter the market. The hottest range is detached homes below $250,000 with an expected market time of only 1.95 months. However, there are only 321 detached homes within the detached active home inventory out of 6,966 total, less than 5%. The second hottest range is detached homes between $250,000 and $500,000 with an expected market time of 2.46 months. There are 1,905 detached homes within that range, 27% of the detached inventory. Here’s a breakdown of the year over year change in both supply and demand for Orange County’s various price ranges for both detached homes and condominiums:
It will be interesting to witness the ramifications of increased demand in the lower ranges. The lower ranges are already hot and there have been reports from the trenches that a bottom in pricing has been achieved in many areas where prices have not changed over the course of the past few months. As a stronger bottom is established in the lower ranges throughout Orange County, and the flow of financial system is restored, the strength in the market will eventually start to trickle up to the higher ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
So how do the numbers look? In the past two weeks, demand, the number of new pending sales within the prior month, decreased by 195 homes to 2,624. Last year at this time there were 731 fewer pending sales, totaling 1,893. Two years ago there were 2,388 pending sales, 236 fewer than today. The affects on demand from the stimulus plan should probably start to play out within the Orange County real estate marketplace over the next month. The active listing inventory has remained relatively unchanged so far this year, increasing by only 43 homes over the past month, bringing the current total to 11,562. Last year the active inventory was at 15,412 homes, 33% higher. Two years ago there were 996 additional homes on the market, totaling 12,558, 10% higher. The current expected market time increased from 4.09 months two weeks ago to 4.41 months today. Last year the expected market time was 8.14 months. Two year ago the expected market time was 5.26 months. Total Orange County pending sales is at a much healthier level compared to the last two years. Currently, total pending sales is at 4,408, an increase of 67 pending sales in the past two weeks. This is the highest level for total pending sales since I began tracking this figure back in September of 2006. Last year at this time, total pending sales totaled 2,524, 1,884 fewer than today. Two years ago it was at 3,419, 989 fewer compared to today. Today marks the first time that the distressed inventory is lower compared to the prior year, after falling by another 99 foreclosures and short sales over the prior two weeks to 4,408. One year ago today, the distressed inventory was at 5,057, 649 more than today. Since peaking on August 7th at 5,950, the distressed active inventory has dropped by 20%; that is 1,166 fewer distressed homes on the active market. The distressed inventory represents 41% of the total active inventory, dropping from 42% two weeks ago. The number of pending sales that are either a short sale or a foreclosure remained at 62%. The expected market time for foreclosures increased slightly from its record low of .99 months two weeks ago to 1.08 months today. Foreclosures remain the hottest category of homes within the Orange County marketplace today. The expected market time for short sales dropped ever so slightly from 5.16 months to 5.14 months today, a record low for the current housing downturn.
The condition of the Orange County real estate market really depends upon the price range. Of course, the lower the price range, the hotter the market. The hottest range is detached homes below $250,000 with an expected market time of only 1.95 months. However, there are only 321 detached homes within the detached active home inventory out of 6,966 total, less than 5%. The second hottest range is detached homes between $250,000 and $500,000 with an expected market time of 2.46 months. There are 1,905 detached homes within that range, 27% of the detached inventory. Here’s a breakdown of the year over year change in both supply and demand for Orange County’s various price ranges for both detached homes and condominiums:
It will be interesting to witness the ramifications of increased demand in the lower ranges. The lower ranges are already hot and there have been reports from the trenches that a bottom in pricing has been achieved in many areas where prices have not changed over the course of the past few months. As a stronger bottom is established in the lower ranges throughout Orange County, and the flow of financial system is restored, the strength in the market will eventually start to trickle up to the higher ranges.
If you are considering buying or selling a home in South Orange County, call on the experts! Dianna and Brian McGarvin 949-370-2652 or visit our website at http://www.pierbowl.com/
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