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.

Picture Perfect Day..!

This is why we live where we do!  An absolutely beautiful day to get outside, take in some sunshine, fresh air, and enjoy it while it lasts.  With a slight cooling trend heading in over the weekend, it still won't be as bad as if we were in the Great Lakes or Central Texas regions where they will see temps in the high 20's to the low 40's.  With lots to do over the weekend, it is a great time to get out there and start "Kicking some tires" or in this case, some "Garage Doors".

Dana Point continues with the "Festival of the Whales" ...  According to reports, there seems to be an abundance of whales and other fabulous sea life out there to catch on one of these local cruises.  If you have never been out there to see these majestic creatures, you owe it to yourself and your family to at least try it once.  These are moments that you will for your whole life and kids are sure to never forget.

Speaking of abundance, there are 15 Dana Point homes that have been listed for sale in the last 7 days.  Spring is here and the local markets should reflect this, week over week, with more and more listings hitting the market.  These 15 join the already 159 homes that have been patiently waiting for those offers.  With interest rates bouncing a bit over the last few days, now is a great time to lock in if you have an accepted offer with a firm close date.

Another area with an active week for listings is Laguna Beach, they too had 15 new listings, with the especially impressive Irvine Cove listing. According to notes in the CRMLS ©, it has never been listed for sale since it's construction in 2002. At nearly 7,000 square feet and 5 bedrooms and seven baths, there is plenty of room to take in the spectacular ocean and white water views.  It joins a very select list of homes currently listed North of the $10,000,000 price tag, and if you were wondering, there are 25 world class estates looking down at the more "moderately priced" luxury segment.  There are still plenty of bargains in all price ranges in Laguna Beach, down in Dana Point and a bit further South into San Clemente.

With the busiest week of all, San Clemente rang in with 25 new listings this week alone. As the Spring market continues to heat up, you will see this trend continue, as we mentioned in last week's post.  Anyone wanting to beat the rush and get their home sold, needs to get the ball rolling as more and more buyers are taking advantage of the awesome interest rates; many dropping into the high 3% range. These 25 San Clemente homes offer some great opportunities, from the $299,900 home built in 2001 and offering nearly 1400 square feet to luxuriously roomy 4,300 square foot, 5 bedroom and 5 bath home priced at $1,195,000.

So get out there and soak up some sunshine and while you are at it, take a look at some great opportunities that are ready and waiting for your offer!