Spring Market Off To Strong Start

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Surging Home Sales Herald Strong Spring Market

Surging Home Sales Herald Strong Spring Market

BY: JANN SWANSON

April 22 2015, 11:29AM

The spring housing market blasted in across the county last month and existing home sales jumped 6.1 percent from the February level to the highest annual rate in 18 months.  The National Association of Realtors® (NAR) said March sales were at a seasonally adjusted annual rate of 5.19 million units compared to 4.89 million in February.  The rate of sales tied those in September 2013, which had been the most recent high in sales.  The March increase was the largest month-over-month gain since a +6.2 percent change in December 2010.
The pace of sales of existing single-family homes, townhomes, condominiums, and co-ops in March was 10.4 percent higher than in March 2014 and represented the sixth consecutive month of annual increases.  It was also the largest year-over-year increase since August 2013's 10.7 percent rise.
Single-family home sales rose 5.5 percent to a seasonally adjusted annual rate of 4.59 million from 4.35 million in February, and were 10.9 percent above the 4.14 million pace a year previous. Existing condominium and co-op sales increased 11.1 percent to a seasonally adjusted annual rate of 600,000 units in March from 540,000 units in February, and are now 7.1 percent higher than March 2014 (560,000 units).
Lawrence Yun, NAR chief economist, says the housing market appears to be off to an encouraging start this spring. "After a quiet start to the year, sales activity picked up greatly throughout the country in March," he said. "The combination of low interest rates and the ongoing stability in the job market is improving buyer confidence and finally releasing some of the sizable pent-up demand that accumulated in recent years."
The inventory of existing homes increased to 2.0 million homes for sale, a gain of 5.3 percent for the month and 2.0 percent higher than a year earlier.  The unsold inventory is estimated at a 4.6-month supply at the current sales pace, down from 4.7 months in February.
"The modest rise in housing supply at the end of the month despite the strong growth in sales is a welcoming sign," adds Yun. "For sales to build upon their current pace, homeowners will increasingly need to be confident in their ability to sell their home while having enough time and choices to upgrade or downsize. More listings and new home construction are still needed to tame price growth and provide more opportunity for first-time buyers to enter the market."
The median existing-home price for all homes in March was 7.8 percent higher than in March 2014 at $212,100.  The month was the 37th consecutive one in which annual prices increased and the change was the largest since an 8.8 percent year-over-year gain in February 2014.  The median existing single-family home price was $213,500, up 8.7 percent from March 2014 and the median condo price was 1.6 percent higher at $201,400.
Foreclosures made up 7 percent of sales during the month and 3 percent were short sales.  Total distressed sales accounted for 11 percent of all sales in February and 14 percent in March 2014.  Foreclosures sold for an average discount of 16 percent below market value in March while short sales were also discounted 16 percent.
For the third time in 12 months the share of first-time buyers broke through 30 percent, rising to that exact number in March from 29 percent in February. Investors purchased 14 percent of homes sold in both February and March but this was down from 17 percent in March 2014.  Seventy percent of investors paid cash for the homes they purchased during the month and total cash sales accounted for 24 percent of all transactions, down from 26 percent in February and 33 percent the previous March.
Properties typically stayed on the market for a shorter time period in March (52 days) compared to February (62 days), and are also selling slightly faster than a year ago (55 days). Short sales were on the market the longest at a median of 165 days in March, while foreclosures sold in 56 days and non-distressed homes took 51 days. Forty percent of homes sold in March were on the market for less than a month.
Regional sales also boomed in March.  Sales in the Northeast increased 6.9 percent to an annual rate of 620,000, and were 1.6 percent above a year ago.  Prices however eased with the median down 1.6 percent from a year earlier to $240,500.
In the Midwest, existing-home sales jumped 10.1 percent to an annual rate of 1.20 million in March, and were 12.1 percent above March 2014. The median price in the Midwest was $163,600, up 9.7 percent from a year ago.
Existing-home sales in the South climbed 3.8 percent to an annual rate of 2.19 million in March, and were 11.7 percent above March 2014. The median price in the South was $187,900 an annual increase of 9.3 percent.
Existing-home sales in the West rose 6.3 percent to an annual rate of 1.18 million in March, and 11.3 percent compared to the prior year. The median price in the West gained 8.3 percent to $305,000.

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Click link to view Wall Street Journal Article:

Fed’s Williams Sees Door Open for Interest-Rate Increases Starting in June

 

Fed’s Williams Sees Door Open for Interest-Rate Increases Starting in June

By Michael S. Derby

 

Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.In an interview with The Wall Street Journal, Mr. Williams expressed a good deal of confidence in the U.S. outlook, especially on hiring. He said the jobless rate could fall to 5% by the end of the year, which means the central bank is getting closer to boosting its benchmark short-term interest rate from near zero, where it has been since the end of 2008.

 

“We are coming at this from a position of strength,” Mr. Williams said. “As we collect more data through this spring, as we get to June or later, I think in my own view we’ll be coming closer to saying there are a constellation of factors in place” to make a call on rate increases, he said.

“I don’t see any reason at all that we should raise rates before June. That’s out,” he said. “Maybe in June it would be the time to contemplate raising rates. Maybe we’ll want to wait longer, but at least it will be an option to decide on,” he said. The Fed has a scheduled policy meeting June 16-17.

Mr. Williams said he would like the Fed to drop its commitment to be “patient” in deciding when to raise rates because it limits the central bank’s options on when to move. “You would want to remove the patient language only to have the ability to make those data-dependent decisions later in the year,” he said.

 

Fed Chairwoman Janet Yellen has said “patient” means the Fed won’t raise short-term rates at its next two policy meetings. Mr. Williams didn’t say when he wants to drop the term, but the Fed’s next formal opportunity would be in the statement released after its meeting March 17-18.

Mr. Williams is a close ally of Ms. Yellen–he was her research director when she led the San Francisco Fed. He is a voting member of the policy-making Federal Open Market Committee this year.

 

Mr. Williams’s comments came in the wake of two days of congressional testimony by Ms. Yellen in which she laid the groundwork for interest-rate increases later this year.

She also cautioned that dropping “patient” from the statement won’t mean automatic rate increases after two meetings.  Mr. Williams’s confidence about the monetary policy outlook is rooted in what he sees as labor market strength. He believes weak inflation, which has undershot the central bank’s 2% target for more than two years, will rise to its desired level by the end of 2016.

He also said falling short on the inflation target won’t necessarily stay the Fed’s hand on rate increases. Because Fed rate actions have to take account of their effect over the long run, “it’s very likely we would start raising interest rates even with inflation below 2%,” he said.

 

Mr. Williams said it is likely that the Fed will see a hot labor market that should in turn produce the wage pressures that will drive inflation back up to desired levels. He said much of the weakness seen now in price pressures is due to the sharp drop in oil prices, which he said isn’t likely to last.

“The cosmological constant is that if you heat up the labor market, get the unemployment rate down to 5% or below, that’s going to create pressures in the labor market” causing wages to rise, he said.

Mr. Williams said there is a “disconnect” between Fed officials’ and markets’ expectations for the path of short-term rates. He said he hopes that can be bridged by effective communication explaining central bank policy choices.

 

“I have no desire to raise rates just to raise rates. I’m not worried about financial stability, personally. I’m not worried about risks of low interest rates on their own. I am focused on the very pedestrian issue” of achieving the Fed’s employment and inflation goals, and will make policy with those factors in mind, Mr. Williams said.

 

He said that when the Fed does raise rates, he would prefer a gradual path, but he doesn’t expect it to replay the series of steady, small rate increases seen a decade ago. He said he could see the Fed taking whatever action is needed at a given meeting, rather than putting rates on a steady upward path.       

Home Prices to Level Off and Reverse Course Within 2 Years - Analysts

By: Jann Swanson for Mortgage News Daily

Jul 21 2014, 12:51PM

Two Bank of America Merrill Lynch (BAML) analysts are defending what they call their big high conviction views for what should happen in the housing world over the next two years. Chris Flanagan and Gregory Fitter, ABS and MBS strategists say that their views are not mainstream but that recent data has corroborated their theories.

The two contend that home price increases will continue to moderate from the skyrocket trajectory they were on in late 2012 and early 2013 will peak in mid-2016. Second, as unemployment continues to ease, the yield curve will continue to flatten (longer term rates getting lower while shorter term rates get higher, relative to each other) and the spread between two year and 10 year treasury yields should be at zero by the time home prices peak. The long end of the curve will remain at surprising low yields, fostered by a soft housing market and low inflation.

The first "big view", that home prices will peak in two years is validated they say by the most recent income based home price model from Case Shiller. Charts 1 and 2 includes the Case Shiller historical and forecasted home price index (HPI) along with the BoA strategists' estimate of fair value. This model shows that the HPI will increase from the first quarter 2014 level of 155.5 to a peak of 167.3 in the third quarter of 2016. This is an annualized growth of 3 percent over 30 months compared to 11 percent in 2013 and the 9.5 percent annualized rate since prices bottomed in the fourth quarter of 2011. Then prices are expected to decline and not recover to the 2016 level until Q2 2022, an annualized rate of price growth over six years of 0. With this factored in, the annualized home price growth rate between Q1 2014 and Q2 2022 is expected to be 1.0 percent.

To read the full article click the link below:
Home Prices to level off

Surprise! Bank-Owned Properties Actually Sell For More!

Just when you thought you had the market all figured out....

In an article posted by Jann Swanson for Mortgage News Daily, it seemingly dispels the myth of bank owned REO properties being the default standard for the biggest bargains in the market place.

Surprise! Bank-Owned Properties Actually Sell For More!

Posted to: MND NewsWire
Thursday, June 26, 2014 10:03 AM

RealtyTrac recently analyzed residential sales over the year that ended in March to determine what drives discounts in the market value or premiums in the sales price for distressed properties.  They looked at four factors, foreclosure status, occupancy, equity, and property age, using them to construct 24 different distressed property profiles. Each profile was compared to a control group of properties not in foreclosure that sold in the same time frame. 
As might be expected, the properties that sold at the largest discounts, an average of 28 percent, were vacant, had negative equity, and were older (but not the oldest), built between 1950 and 1990.   What is surprising is that some property profiles sold at a premium.
Bank-owned properties overall went for an average of 3 percent above market value while bank-owned properties that were built prior to 1950 brought 6 percent more than the control group.  The largest premium was paid for properties that had negative equity but were neither in foreclosure or foreclosed.  Those properties sold at a 19 percent premium. (Note: in the chart below, negative numbers indicate above-market-value sales prices).





Two profiles tied for the second largest discount, 26 percent.  One profile was properties that were in default with positive equity; the other was properties in default with negative equity, vacant, and built before 1950.  Discounts of 25 percent were the average for two other profiles; vacant properties with negative equity that were scheduled for foreclosure auction and vacant properties scheduled for foreclosure auction.

Read More:
Bank Owned Bargains?

Mortgage Rates Push Further Into 6-Month Lows

May 7 2014, 3:15PM

by: Matthew Graham

Mortgage rates continued pushing into the lowest levels in more than 6 months after a docile congressional testimony from Fed Chair Yellen this morning. Financial markets and mortgage lenders were cautious ahead of the 10am speech, but improved afterward. A majority of lenders issued mid-day reprices, bringing rate sheets to levels not seen since November 1st. The most prevalently quoted conforming 30yr fixed rate for best-case scenarios (best-execution) is already straddling 4.25% and 4.125%. Today's improvement equates to an effective drop of 0.04%.

Read More:
Mortgage Rates Push Further Into 6-Month Lows

For more market and real estate data click below:

www.MJDavisProperties.com

www.MJDavisProperties.com

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Giving New Meaning to "Shadow Inventory"

 

May 5 2014, 2:33PM

by Jann Swanson

                

Since the beginning of the housing crisis in 2008 housing experts have cited concern over the "Shadow Inventory" and the pitfalls it could present to any recovery of the housing market.  Back then, as every month brought news of mounting delinquencies, rising unemployment, and pending adjustments to adjustable and teaser rate mortgages the shadow inventory had a particular definition; the number of homes with mortgages that are 90 or more days delinquent and that have a reasonable likelihood of ultimately being foreclosed and becoming bank-owned real estate even though they are not yet publicly listed for sale.
While lenders and servicers are still trying to rid themselves of backlogs of REO and there are still concerns over homes which may be held off the market for various reasons, the cry for months has been that there are not enough homes for sale.  Sales, appeared to have been hampered by a lack of inventory as new home builders cut back on construction and current homeowners have deferred moving, each awaiting a better market. 
The number of homes thought to be in the shadow inventory has dropped from 3 million at the peak in January 2010 to about 1.7 million in January of this year.  Mark Fleming, CoreLogic's chief economist, said recently that the traditional view of the shadow inventory doesn't tell the whole story anymore and he puts forth two new ways of looking at how a different version of shadow inventory may still be holding back recovery.

Read more:
Giving New Meaning to Shadow Inventory

Matt Davis Broker- MJDavisProperties.com

Matt@MJDavisProperties.com http://www.mjdavisproperties.com/

Mortgage Rates Sideways Ahead of Fed Announcement

Posted to: MND NewsWire  Mortgage News Daily
Mar 18 2014, 4:39PM

by Matthew Graham

Mortgage rates were effectively unchanged today, putting an end to 2 days spent moving higher as the threat of violence diminished in Ukraine.  Indeed it was violence in Ukraine (or rather, a Ukrainian Military Installation in Crimea) that enabled bond markets to improve today, thus preventing rates from rising further.  Some lenders increased costs just slightly while an equal amount went the other direction.  In both cases, today's latest rate sheets aren't that far off from yesterday's, though that wouldn't have been the case with this morning's rate sheets as many lenders improved mid-day to reach the 'unchanged' levels.  The most prevalently quoted conforming 30yr Fixed for the best-qualified borrowers remains at 4.5% for some lenders, though at least as many are still offering 4.375%.

The balancing act between Ukraine and more normal sources of market movement continues to cause volatility for markets in general.  The effects on mortgage rates have been better-enabled by the relative absence of significant domestic economic data.  Complicating matters further, the only time that geopolitical risk wasn't having an obvious effect on rates, just happened to coincide with the only recent significant data earlier this month with the Employment report on March 7th.
That employment data made for a convincing head-fake toward higher rates and renewed geopolitical risk brought rates back down in the following week.  The point is that significant domestic data hasn't really had to compete with geopolitical risk for the same stage.  They've been taking turns, as it were. 
The first good chance for this to change arrives tomorrow.  There's no way to be sure it WILL change, but tomorrow's Fed policy announcement always has the potential to move markets, and it comes one day after news of gunfire and wounded Ukrainian military at an army base in Crimea.  It's hard to imagine Ukraine-related headlines will simply take the day off tomorrow.  The Fed certainly won't.

Click to view full article:
Mortgage Rates Sideways Ahead of Fed Announcement

Matt Davis Broker- MJDavisProperties.com

Matt@MJDavisProperties.com http://www.mjdavisproperties.com/

Seventh Straight Month of Lower Home Sales in California

Posted to: MND NewsWire
Monday, March 17, 2014 3:24 PM

Closed sales of existing single-family homes slipped again in February, marking the seventh straight month of declining activity. The California Association of Realtors® (C.A.R.) said that sales of existing homes during the month were at a seasonally adjusted annual rate of 361,210 units.  This was a 0.7 percent dip from the January rate of 363,930 units.  It was the fourth month that existing home sales were under 400,000 and the rate was 13.7 percent below the rate of 418,520 homes in February 2013.
"The slower sales in February reflects diminished housing affordability after three years of solid price increases and interest rates that are nearly a full percentage point higher than a year ago," said C.A.R. President Kevin Brown.  "With the interest rate difference alone, home buyers this year would have to pay $150 more per month on their mortgage payment than last year, a substantial amount for many would-be home buyers trying to get into the market."
Virtually every country reporting to C.A.R. posted year-over-year declines in sales.  Increases were noted in Contra Costa Country (+22 percent) and San Francisco Country (+14.9 percent) and sales in the small counties of Madera and Amador were also up.
Inventories improved in February with a 4.7 month supply of existing single-family homes available for sale compared to 4.3 months in January and 3.6 months in February 2013.  C.A.R.'s Unsold Inventory Index reflects both the number of homes on the market and the current sales rate. A six- to seven-month supply is considered typical in a normal market.
With declining sales and increasing inventories the statewide median price of an existing, single-family detached home retreated 1.6 percent from January's median price of $410,990 to $404,250.  February's price was 21.3 percent higher than a year earlier marking two full years of consecutive year-over-year price increases and the 20th straight month of double-digit annual gains, as higher priced homes made up a larger share of the market compared to a year ago. 



"Supply conditions in the housing market have shown some improvement since the end of last year, except for the lowest price range where the inventory for distressed properties is depleted.  In the mid-priced range of $300,000-$750,000, which covers nearly half of all home sales, inventory is up 27 percent, while the supply of high-end homes - properties priced at or above $1 million, also is up 13 percent from a year ago," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  "The improvement in these prime price ranges will benefit trade-up buyers who are expected to dominate the market in 2014, as many of them will be searching for homes in these price categories."
The median number of marketing days for a single-family home fell to 40 days from 44.3 days in January but remained higher than the 34.3 days it took to sell a home in February 2013.
Sales and price data are generated by C.A.R. from a survey of more than 90 Realtor associations throughout the state. 

View Article: http://www.mortgagenewsdaily.com/03172014_california_real_estate.asp

What Next?

Summer is almost over, or is it really?  With the coastal marine layer extending its "June Gloom" run well into what should now be the dogs days of summer, it leaves many wondering, will it finally make that long awaited appearance?  We all hope so, in fact, normally the best summer coastal weather and beach days appear in September.  The kids are back in school, the vacation crowd has receded from our shores, leaving wide-open beaches, short traffic free commutes (unless you are on the 5 freeway these days) and much shorter waits at all the local restaurants.  Finally!

As we reorient our focus to winding it all down and resuming our "normal" schedules, there are those who have been in the trenches trying to capture that elusive "Steal of a deal" short sale, foreclosure, bank owned home or the ever-increasing equity sale.  The challenges have been many as of late, the prices, as predicted, have not only turned the corner,  but we have realized substantial, actual gains in the local real estate markets.  Talks of bubbles, unheard of just a year ago, are now back in the discussion. Now that interest rates have also changed direction and are well on their way off historical lows, it has many either reaching deeper into their pockets and having to settle for that home that only last year, was $75,000 less.  OUCH!
A quick look at some data shows us this to be true.  A quick look at Scott Grannis' Calafia Beach Pundit and his July blog post, it shows a nice shot of where we were and where we may be headed

http://scottgrannis.blogspot.com/2013/07/housing-prices-firm.html

 

Scott's article mentions that home prices seem to be slowing, and not necessarily because of the traditional easing at the end of the summer, but that factors such as the perceived large run up in home prices and talk of bubbles have buyers rethinking the timing.  That and of course the largest run up in interest rates in as many years.  See the chart below.

Even with this latest run up in rates, there are still great deals to be had.  The big picture tells us it is still a great time to refinance that old 5% plus rate or purchase that first time home.  Whether you are trading up or down, now just might be the perfect time while the prices take a brief pause.  If you have been thinking of selling to take advantage of the market, it is time.  Get your home listed and exposed out into the market to get it sold well before the end of the year.

 

You can check market activity and search for homes for sale at www.MJDavisProperties.com or check out recent sales and stats using this interactive link  Coastal OC Sales Market Report

Real Estate's Bumpy Ride

A lot has happened in this ever-shifting real estate market since my last post back in July.  This latest update, while long overdue, offers support to the insight offered in the previous posts.  In many aspects it has been a quick close to what turned out to be a great summer and an even quicker start to our finally cooler fall season.  While the local temps have yielded to some cooler and wetter weather, home sales and prices have gone the other way for the most part.

Interest rates continue to drive further recovery to our local real estate market here in south Orange County. While they had been up slightly for a short time over the last few weeks, they are still touching historical record lows and that is keeping the steady stream of buyers lining up to make offers for the relatively few properties available here in South County.  If your home is priced right for this current market, sellers are seeing prices driven up by multiple offers and being able to pick from a nice pool of buyers that range from first time buyers, investors (many of which are all cash), those looking to trade up and those trading down.

From offers I have written that stretch from LA to San Diego, there have been very few that hit the owners tables all alone.  In some cases there have been eight, fifteen, twenty and one where there was thirty plus!  A very unique aspect that comes from this newly reinvigorated sellers market is that you need to have your buyers positioned to make an offer that stands tall among all the others.  For our sellers, it is a welcome change and one reminiscent of the middle part of the last decade.

In looking at an updated chart from our last July post, you can see that the sales numbers bear out evidence of this continued recovery, while the numbers are not even close to the crazy run up that prompted this twisted real estate and economic malaise, that is actually a good thing.

While the southernmost coastal cities (Laguna Beach, Dana Point & San Clemente) have posted higher total sold numbers, the average sold price figures, YTD 2012 compared to all of 2011 tell a mixed story.  Laguna Beach and San Clemente have both posted solid gains, Laguna Beach sits at 6.8% when compared to prices last year and San Clemente has solid gains showing a healthy 5%+.  Dana Point, while posting in increase in total sales overall has continued to drop, sitting around  a 7.8% drop in prices.

As expected, this "Recovery" has been all over the news, both local and national, over the past few months.  Many wonder what the future holds, can this run continue, through a presidential election, the economic and political instability in Europe and points further east?  Only time will tell but if I had to throw down some money, my bet is on slow and steady.  One of the most positive aspects of our current real estate market is that there is some benefit for both sides, sellers and buyers.  On the sell side, you have your choice of buyers, they are lining up, offers on hand, most of them are even reasonable.  For buyers, the deals are still out there and the rates, well, these are as good as they have ever been.

Jump in, its time, no matter what side you are on, its win-win (for now).  The Fed can only hold rates down for so long (right, wrong, artificially too low, whatever, there is no wrong answer) and when the rates turn, it will have a much bigger impact on the market than any other of the metrics.

For additional info relating to MLS statistics, data and real time MLS home searches, visit http://BuySouthOChomes.com

Train Keeps on Rolling

Now that we are all comfortably rolling along in the summertime groove, it appears that the current real estate environment is also traveling the same tracks that have carried us through spring.  Interest rates continue to touch and hold new record lows, purchase business is steady and the expected boost of new inventory has yet to show.  What gives?  Wasn't there supposed to be a wave of new inventory that would crush any hopes of a rebound?   A flood that many on the sidelines had predicted and banked on, one that would have so much inventory hitting the market that we would see another 10% to 15% drop in prices across the board.  What happened? Many have stood by and watched as rates plunge and inventory continues to thin, hoping that now is finally the time.

Well, it has not quite worked out that way to the surprise of many.  A quick look at the chart shows that we have indeed started to see a measurable recovery. Huh..?  Recovery..?  Where is the double dip crash?    Now I use the term "Measurable Recovery" very carefully.  It does not mean we will see home values start racing skyward as we did back when Alan Greenspan famously coined the term "Irrational Exuberance", but what we have seen is a shift towards a seller's market.  In fact, if you are currently in the market and seriously looking for a home, I would be willing to bet that many of you have made an offer on a home where you were one of several, if not many offers, on a home that you missed out on.  It is a fact of this "New Market", that after looking long and hard for the perfect home for you and your family,  you will have some competition. 

The year over year chart measures sold real estate activity in the cities of San Clemente, Dana Point and Laguna Beach.  Each year, going back to 2002, measuring the total number of closed sales up to the mid-point of July.  You can see that in all three cities we are well off our lows of 2008. Sales continue to improve from one year to the next but without that feeding frenzy driving prices soaring towards unsustainable growth.  You can see in this next link, exactly what they are selling for and at what percentage in relation to the list price.  This chart covers Laguna Niguel, Dana Point, Corona Del Mar, Newport Beach, San Clemente and Laguna Beach. Market Report - San Clemente, Dana Point, Laguna Beach, Corona Del Mar, Newport Beach & Laguna Niguel   To get an idea of what interest rates are and what payments would be using mortgage calculators, check out this link. Interest Rate and Mortgage Calculators .

We first saw some indicators of the increase in sales volume in the industry trade magazines, web sites and industry blogs over the last six months.  Now it is much more mainstream, many of those in the national press and regional media are claiming that we are finally and measurably, on the road to recovery. The San Francisco Chronicle claims "After several years of false starts, the evidence is finally starting to point to signs of a real recovery". Housing Wire magazine states that JP Morgan Chase economists are calling for real estate prices "to rise 12% by 2016".  Soon we will be seeing it consistently on all the major news channels, monthly, weekly, then daily, with all the talk of real estate being back. Finally.

Well, the truth is that it is back, and it has been for a little while now.  The key is do you want your piece of the pie, now or later.  Wait much more and there will be more offers to compete with and possibly, even higher prices. Smaller pieces of pie and more expensive...  Don't wait,  NOW is the time.

To view any property listed on the Orange County MLS, check out Buy South OC Homes

The Local Patch News sites

Make sure to check us out as we occasionally post to this fabulous local news source!  Patch is growing quickly and is a great alternative to the larger, less in depth news sites.  You can find them in many of our local Orange County communities and surrounding areas.

Here is just a partial list:

• Aliso Viejo
• MCB Camp Pendleton
• Carlsbad
• Laguna Beach
• Laguna Niguel
• Lake Forest
• Mission Viejo
• Newport Beach - Corona Del Mar
• San Clemente 
• San Juan Capistrano

If you don't see your city, just contact any of the other Patch editors and voice your opinion.  The more interest they get the better the chances your local city with be featured.

As always, keep checking back here for the latest in local deals on real estate, interest rates and anything affecting our local real estate landscape!  You can also find us and the hottest real estate deals around at:

 www.MJDavisProperties.com

Interest Rates versus Inventory

OK, OK, the new home listings predicted to start showing up in April took a bit longer than expected to materialize. This unpredictable run continues to reflect the contrary nature of today's real estate market. It was a short-lived bump in rates that seemed to have tempered the market just a bit. Now that the facebook IPO has came and went with a whimper, the stock market volatility continues to be driven in part by the uncertainty Greece, and the rest of the European Union is sowing. We should see rates continue to bump along lows with the occasional three-eighth bumps here and there. Overall, it is having a nice effect on the sector driving interest rates and we are pleasantly surprised to see rates again setting new record lows. With this continued historic drop in rates, many people are taking advantage of both record lows in housing and the cost to finance these homes.

San Clemente saw a long overdue resupply of homes as 81 homes new to the market finally made an appearance. The continuing challenge is that while it great to get these properties, 98 homes closed escrow in the month of May. Hard to keep a healthy a balance when the sales keep outpacing these new listings.


The Dana Point market does not appear to be suffering these same issues affecting San Clemente.  It is encouraging to see they had 56 new homes listed for sale while 44 homes closed escrow in the month of May.  You can see in the market report that Dana Point has maintained a nice healthy balance most of the year with the exception of January when you typically get a big boost in homes being listed for the new year.

Laguna Beach seems to be the opposite of San Clemente when it comes to the number of homes listed and sold.  As of Friday June 1st, they are leading the way among coastal cities with 241 active homes for sale.  The new listings have outpaced sales since the first of the year, even with the last three months showing some nice gains.  There were five sales with double digit discounts from list price.  In total, 26 of the 35 homes sold in May sold at a discount to the list price while 5 homes went for more than list.  There were 4 homes sold right at list price.  You can still get great deals on homes but as the market continues to slowly turn, you will see more and more homes getting multiple offers and being bid up as market demand grows.

Overall, we should see these trends continue and when the banks finally get around to working through all their short sales and foreclosures, a healthier market awaits.  When is that you ask? It is already starting to happen, we are seeing more and more value buyers recognizing the deals that are out there and they are getting back in the game.  The crash has happened and is behind us, recovery is ahead, and it is long overdue.

The Price of Admission

It has long been understood that the coast is a desirable place to live.  Anyone who has ever had the chance to plunk down the chair, stake the umbrella in the sand and kick back with a good book, magazine or Kindle understands this.  It could be a day at the beach with the kids, family or friends, it is a ritual most have experienced, and one in which we usually wish that we could repeat far more often than our hectic schedules allow. 

For us fortunate souls who just have to load the car or truck with chairs, boards, blankets and coolers then journey a few minutes towards the coast, we can count our blessings.  There are MANY others who love the beach just as much, maybe even more.  For them, the dream is still yet to be realized, they need to either sell what they currently have or those who are ready to enter into the realm of home ownership for the first time.  For buyers in today's market, the challenges come in varying degrees.  Those that are trying to buy for the very first time are faced with an extremely tight market with continued shrinking inventory.  You can see by the graphic below that if you are looking to buy a home and have up to $400,000 you have some competition.  The investors are alive and well and their pockets are deep and flush with cash.

If you consider that there are a total of 29 homes that are available at $400K or less from Laguna Beach, through Dana Point and south into San Clemente, that figure is astounding!  Who are the 29 lucky ones that may actually close escrow for these?  They should indeed count themselves as lucky because I know almost 29 people alone that are looking in those price ranges.  My greatest challenge right now is the lack of homes at many of the price points.

Between $400,000 and $800,000 you can see a much more balanced availability of homes.  Not usually the realm of first time buyers but certainly those looking to move up to a larger home to accommodate an expanding family or maybe those that continue to thrive in this challenging economy.  The competition from the investor segment is again present and well represented here.  Their favored prey are the long neglected homes that have fallen into disrepair and are ready to be taken back by the bank.  We are still seeing homes priced under market garnering multiple bids, the winner sometimes separated by less than $1,000.

Have a million bucks burning a hole in your pocket?  You have come to the right coastline!  To say the market is "top heavy" may be a bit misleading.  After all, you can't expect your beach front sand palace to come cheaply could you?  But in looking at the sheer numbers of homes available over $1,000,000, all 363 of them, they clearly outnumber the rest of the market, $1MM and under.  From $1MM all the way to the little condo on the hill in San Clemente for just $149,900, they only account for 264 homes.

So, it is really your choice, what will be the cost of admission?  That short drive to the beach, the books, boards, umbrellas and chairs, can be had. And with a little determination, luck, skill and of course the cash, you too can pick your price.

To start your journey, clink the link below and get your ticket:
Coastal Estates

Crazy Busy...

I really need to get some data plugged in here.. It has been an absolutely CRAZY busy ten day stretch, all good stuff but definitely busy.  Look for a much more comprehensive update sometime tomorrow.  We'll have all the latest listings and sales posted along with some other great market data.  As it stands tonight, San Clemente listings have shrunk to 208 active homes for sale.  Dana Point has increased its current available inventory to 194 homes and Laguna Beach has crept up just to 245 since we last blogged about all the numbers.

Look for further analysis in the next couple of weeks as we delve into trying to estimate the numbers of distressed inventory that will likely be hitting the market.

Until then, happy hunting!

Matt

Inventory Trends Continue ... For Much Longer?

Now that we can all get back to our regular routine and stop fantasizing about hitting it big for $640 million, let's focus in on a bit of reality.  We are still in the midst of the prolonged dip in inventory and it continues to be a factor in this still undecided market.  Trolling through the most recent stats and figures this morning over a hot cup of fresh brew, I found that San Clemente has actually lost even more ground in overall inventory since our last post back on March 16th, San Clemente is down from 231 active listings to just  these 224.

 In looking at the chart above, we can see that with the exception of January,  the number of homes sold has outpaced the amount of new homes coming to market, a trend appearing to start in October 2011.

Below, we see that Dana Point has remained relatively well balanced when compared to San Clemente with a total of 181 Active listings, not much change from the 179 for sale back on March 16th.

Laguna Beach though seems to be well out front in the available inventory with these 241 homes for sale, considering the population differences, there are plenty of choices.  Just bring your checkbook, because the average list price is $4,072,601.  It is a bit skewed though, 25 of the 241 for sale are listed at $10,000,000 or above.

So when does the market start to resupply towards a more balanced real estate outlook? The answer may lie in the data relating to the fabled "Shadow Inventory".   This rumored cache of real estate gold, is said to be sitting at 1.6 million units, nationally, down from last years number of 1.8 millon.  It is further reported by Justin Hilley, of HousingWire.com ®, that data pulled from Core Logic®,  estimates that "of the 1.6 million national units, Florida, Illinois and California account for roughly a third or nearly 528,000 homes".   Does this mean that we are due a flood of homes in the next 24 months that will contribute to yet another economy crushing decline in the housing sector.  It is unlikely, although I would expect we will see a moderate stream of homes released starting in the next few months, this will allow lenders to ease their already battered balance sheets, one step at a time.  This, coupled up with the "normal" Spring listing boost should satisfy the  continued demand for homes and help "balance" things back towards a buyers market.

Once we get past the upcoming tax deadline, look for a noticeable increase in the second half of April.  Now that interest rates have again retreated after a week of instability, we should have a decent run of stable rates, you could see ranges from just under the 4% threshold to 4.5% or just above.

As always, if you are thinking of taking advantage of this historically volatile market in the next one to two years, NOW is the time to get in the game!

Spring Opportunities...?

  Today is the first day of Spring 2012, the "Vernal Equinox", when the sunrise and sunset share the light of day and the dark of night with equal favor. From here on out though, the days get longer (actually these days, they have all seemed long) and we all get to bask in some long overdue sunshine. With this new transition, we all look forward to things to come, Summer, BBQ's, baseball, the beach, the 5:30 a.m. start at your home course and even a few nice South swells.

Another thing that many of us have long anticipated is the return of some stability in the housing market. That time when we had an idea of what is going to happen with reasonable certainty.
Remember those days?

It was not that long ago when things were easy to determine where they were headed. Right or wrong, you just knew that your home was going to double in value next year and you would have
that nice little five-bedroom "Beach Cottage" front row at T-Street.

All you had to do was sign that listing agreement, stick the sign in the ground and make sure the new beach chair and sunscreen were ready to go. It was that easy... Almost...

  While these T-Street Treasures are still there today, things have changed. They can be had for well below a peak 2007 list price of $5,250,000 for a single-family lot and home on Paseo De Cristobal.
In fact, Spring usually brings such "bargains", if you can consider a $3.3 million dollar oceanfront enclave a bargain. Maybe you can, at over 6,000 square feet, six bedrooms and seven baths, with that view, it is a steal compared to some of the other comparably appointed estates just a dozen or so miles to our North.

To know where we stand now as we head into Spring and Summer, all we have to do is look at some Spring trends of the past decade. Starting back in 2002, ending the period from January 1st to March 20th, San Clemente stood at 187 homes sold for an average sales price of $490K. They sold in a combined average of just 79 days on the market. 2003 saw the jump to $562K on 203 homes sold and averaged only 77 days on market. Spring of 2004 saw a very dramatic jump to an average of $712K. For 2005, try $775K average, nice huh..? T-Street here we come! By the Vernal Equinox of 2006, we hit $975K, but could it keep going? Next stop, the Cotton Estate at our southern border?

Could it be?

Well, Spring 2007 we cracked the million-dollar average, $1,004,040. Wow... Start packing, right? Not so quickly. 2008 gave us $894K, 2009 a plunge to $669K. Was 2010 the year of the recovery? After all the Spring average put us at $711K. Not at all, 2011 saw us back in the high $600K range and now, how about this Spring? We just closed 149 homes for an average of $637K and it is taking nearly 130 days on market for a home to sell, on average. The graphs show it, the run up, the peak, the fall. All the way back down to where we are today. Is there more to give? Yeah, probably a bit. How much though is a thing of great speculation and wild theory, even this one here. I do know that if you are still thinking about dusting off that beach umbrella, do it now and get out there looking, because one thing is certain, June will be here soon.

What A Difference A Week Makes..

Here I sit, typing away on a Friday night,  looking up all the weekly sales and listing stats for our little slice of paradise.  Keeping one eye on the big spoiler rolling down the coast.  Rain, rain, go away, we all have things to do this weekend that DO NOT include paddling down to the market, camping out under umbrellas watching the kids attempt whatever outdoor activities still remain scheduled or trying to qualify for the pole position out on the I-5 with the other racers. Don't the forecasters know my littlest Leprechaun turns eight tomorrow..?   Well, I guess it's just the price of living in paradise, before you know it things will be back to being blissfully perfect in a matter of days. Just wait..

  At the office today, a friend mentioned about some family being back in Michigan this past week, they just sat through unseasonably warm temps (80+ degrees no less) and a very rare tornado.. IN MARCH..!

The local real estate market seems to be acting similarly odd... Or at least as unpredictable.

  The inventory continues to shrink at Orange County's Southern most border.  San Clemente  currently sits at just 231 homes for sale..  That's it...  231 homes for a population that according to the 2010 Census, is over 63,500 people.  Mighty slim, especially compared to  Laguna Beach, which as of tonight, the  CRMLS © Multiple Listing Service, is showing that there are 236 homes currently for sale for their 22,723 residents (again, 2010 Census stats).  Dana Point is holding its own  for the 33,300 + inhabitants with 179 homes ready for their new owners.

With this week's jump in interest rates and the ever-thinning inventory, I can't help but think that we are close... Close to the elusive "Bottom". I am not quite ready to call it yet but if you are planning to buy a home in the next year, you should be looking now.  Don't ever forget, that for buyers, it is still your market.  For now...  Rising rates are one of the enemies we must all deal with.  You, me, the banks, the sellers... EVERYONE.  When that rubber band snaps and things finally start getting back to the new normal, we will all once again readjust to yet another economic trend.

     Reproduced with the permission of Mortgage-X.com

All you have to do is look at the chart above and you can see the slight dampening of the trend line curve..  Now look back to previous years and see what happens after they go flat.  They bounce, sometimes for a year or longer, although they do tend to soften up after a period, the important thing to realize is that we are so close to unsustainable low rates that they will have nowhere to go but back up to what used to be unheard of lows. 5%, 5.75%, 6%, do I hear 7%? You remember, right?  7% is doubtful in the next two years but who really knows beyond that?  Now is the time.  Time to strike the deal that fits your budget, your lifestyle and your 10-year plan.  Beyond that?  Even harder to tell, but for now, now is the time. Sharpen your pencils and get out there before you are reading about it in the local Patch, or even worse, your neighbor scores that trade up gem.  Leaving you wishing you had.  Go ahead....test the water..

There should be plenty this weekend.