Orange County Housing Report: Double Dip Hype
May 26, 2011
Good Afternoon!
I don’t know about you, but I love a double dip… in chocolate! Pundits and the media are transforming something I love into a buzzword based on conjecture and sensationalism.
Double Dip: Searching on Google for “Double Dip Housing” yields 1,175,000 results
Let’s take a closer look. There are 72,000 results for a double dip in housing in just the last 24 hours, 281,000 in the last week, and 924,000 in the last month. So, what consititues a “double dip.” I don’t know about you, but the term sounds so negative, it gives the impression that we may be in store for a second round of price drops equal to the first huge drop. Let me be the first to tell you… NO WAY. The First Dip: the average home in Orange County dropped about 35% in value. The latest statistic that has received tremendous press is the Standard & Poor’s/Case-Shiller home-price index for Los Angeles and Orange counties, where the combined counties dropped 2.1% year over year. Orange County’s current median sales price, $432,000, is 1.6% off from a year ago. Those numbers do not indicate a housing dip. They are part of market fluctuations. Demand and prices have been a little subdued in 2011 thus far. Everybody, including me, tried to explain and rationalize the housing market behavior. I have finally put my finger on it: too much hype about a double dip. The hype may have subdued demand a bit, but it’s not responsible for the latest reports of a drop in the median price. It all stems from the expiration of the first time home buyer tax credit in the spring of last year. The market in 2010 was HOT through the end of April. In order to take advantage of the credit, a property had to be under contract by April 30, 2010. Demand dropped precipitously from May 1st on. It made for a much slower market through December 2010. Essentially, the credit pulled a lot of sales forward to the beginning of the year. With lower sales, year over year prices dropped a little bit. With that drop, the headlines and media talked about the possiblity of a double dip. That was enough to slow down shell shocked consumers and move many buyers to the fence. Yet, prices have already dropped 35%. A 2.1% drop is a giant yawn in comparison. Some economists are forecasting a slight INCREASE in prices for the remainder of the year. Either way, focusing on any kind of dip is silly, given that it will not be a giant dip like in ROUND 1. Instead, buyers should be focusing on record low interest rates. We know that rates will rise, and when they do, mark my words, they will rise fast, erasing any gains in waiting for prices to dip. As a matter of fact, buyers will be paying more in terms of a monthly mortgage payment even if prices dip a little.
Housing Demand: Demand has continued to cool.
Demand, the number of new pending sales over the past month, increased for the first time in two months, adding an additional 10 homes and now totals 3,052 pending sales. Last year at this time demand was at 3,303 pending sales. It was still under the influence of the first time home buyer tax credit. Many buyers that wanted to buy and take advantage of the credit couldn’t because they lost out on several multiple offer situations. Some buyers that fell into this category walked away, but many opted to still buy despite no government subsidy. Today’s demand is not under the influence of a government subsidy. As buyers begin to understand that today’s incredible interest rates are not here to stay, demand will ultimately increase. That may not come until interest rates start to rise because of inflation, which it inevitably will. The likelihood of consumers ever seeing rates like this again during their lifetime is equivalent to the likelihood of gas prices returning to $2.00 per gallon.
The Active Listing Inventory: There has been very little change in the active listing inventory over the past month.
In the trenches I am told that there isn’t a lot of fresh inventory. Unlike last year, the inventory has not been growing at an alarming, unrealistic pace. Sellers’ expectations are more in check and much more discretionary compared to last year. Over the past month, the active inventory has only grown by 88 homes, now totaling 11,219. Last year at this time, the inventory grew by 488 homes within the prior month and totaled 9,839 homes, pushing its way to the 10,000 mark by the first week of June.
The Distressed Market: the active distressed inventory increased by 10 homes in the past couple of weeks.
Contrary to everybody’s expectations, the distressed inventory has actually dropped by 303 homes. Not much has changed within the distressed market. The distressed inventory now totals 3,808 and represents 33.9% of the active inventory. The expected market time for foreclosures is remains incredibly HOT at 1.63 months. There are currently only 669 foreclosures within the active listing inventory, an increase of five homes in the past two weeks. There are currently 3,139 short sales on the active market, decreasing by five homes in the past two weeks. The expected market time is 2.84 months for short sales, also a seller’s market.
Have a wonderful weekend.
Sincerely,
Brian McGarvin
Realtor
Cell 949.370.2652
Tuesday, May 31, 2011
Sunday, May 29, 2011
Investing in San Clemente Re4al Estate
Investing In San Clemente Ca Real Estate
If you are among the many, who have been wanting to invest in the San Clemente, Calif., real estate market, then there may not be a better time than the present. While some would prefer to wait until prices are at absolute rock bottom, the harsh reality is that predicting "rock bottom" is difficult in the 21st Century real estate market. While some are reporting that the "new norm" for unemployment is 9%, and that can certainly affect home sales and home pricing, real estate is a cyclical market, and it usually comes back to prominence following extended downturns such as the one the US is currently experiencing.
Recent months in the San Clemente region have seen inventory start to dissipate. That means more people are buying, and less homes are on the market, an indication that pricing may have finally "bottomed." Supply and demand dictates pricing in the real estate market wherever you go. As these factors fluctuate, so, too, can prices. Of the 9 available areas within the San Clemente region, realtors and agents are starting to see unheard of low prices for the quality and location of home. To determine which home you want to live in, you must first decide what is important to you with regards to location. Do you like instant beachside access, or are you more about overlooking views? The areas within San Clemente offer the best of both worlds and the chance to find the home of your dreams in the location of your dreams.
Once you have determined what it is you want from the location, you need to start thinking about home features and square footage. Observe what the price per square foot tagged on the home is, and then compare to other new homes and older homes in the region. Work with your realtor to determine a reasonable offer that will be of serious consideration to the seller. Also, see if there are any buying advantages available, such as short sale home listings. Being able to "rescue" a homeowner from foreclosure can allow you to get into a home at a much cheaper rate than you otherwise would. But for this to be effective, it is important that you act fast.
Acting fast requires the expertise of an experienced agent familiar with the San Clemente region. Scratch that. It requires the expertise of an experienced agent, who knows all 9 areas inside and out. Timing is of the utmost importance to capturing one of these bargain homes, and in order for time to be on your side, you need to know which homes are at risk of becoming short sales so that you can make an offer within minutes. That will give you the competitive advantage over other buyers. Also keep in mind that real estate agents only send in one offer to the bank on a short sale so acting quickly can secure your spot with the bank. Make sure your offer is clean and don't ask for a lot of extra items from the seller. You want to get the seller excited about your offer so they will accept it and send it to the bank for the short sale approval. Buying a home in San Clemente can be a fun venture if you understand the process and have a professional real estate agent on your side.
If you are among the many, who have been wanting to invest in the San Clemente, Calif., real estate market, then there may not be a better time than the present. While some would prefer to wait until prices are at absolute rock bottom, the harsh reality is that predicting "rock bottom" is difficult in the 21st Century real estate market. While some are reporting that the "new norm" for unemployment is 9%, and that can certainly affect home sales and home pricing, real estate is a cyclical market, and it usually comes back to prominence following extended downturns such as the one the US is currently experiencing.
Recent months in the San Clemente region have seen inventory start to dissipate. That means more people are buying, and less homes are on the market, an indication that pricing may have finally "bottomed." Supply and demand dictates pricing in the real estate market wherever you go. As these factors fluctuate, so, too, can prices. Of the 9 available areas within the San Clemente region, realtors and agents are starting to see unheard of low prices for the quality and location of home. To determine which home you want to live in, you must first decide what is important to you with regards to location. Do you like instant beachside access, or are you more about overlooking views? The areas within San Clemente offer the best of both worlds and the chance to find the home of your dreams in the location of your dreams.
Once you have determined what it is you want from the location, you need to start thinking about home features and square footage. Observe what the price per square foot tagged on the home is, and then compare to other new homes and older homes in the region. Work with your realtor to determine a reasonable offer that will be of serious consideration to the seller. Also, see if there are any buying advantages available, such as short sale home listings. Being able to "rescue" a homeowner from foreclosure can allow you to get into a home at a much cheaper rate than you otherwise would. But for this to be effective, it is important that you act fast.
Acting fast requires the expertise of an experienced agent familiar with the San Clemente region. Scratch that. It requires the expertise of an experienced agent, who knows all 9 areas inside and out. Timing is of the utmost importance to capturing one of these bargain homes, and in order for time to be on your side, you need to know which homes are at risk of becoming short sales so that you can make an offer within minutes. That will give you the competitive advantage over other buyers. Also keep in mind that real estate agents only send in one offer to the bank on a short sale so acting quickly can secure your spot with the bank. Make sure your offer is clean and don't ask for a lot of extra items from the seller. You want to get the seller excited about your offer so they will accept it and send it to the bank for the short sale approval. Buying a home in San Clemente can be a fun venture if you understand the process and have a professional real estate agent on your side.
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