South Orange County Blog from Bob Phillips

More Positive Data From The Housing Sector: Existing Home Sales AND New Home Sales Rise

Posted in home affordability, Real estate by southorangecounty on May 30, 2009

Existing Home Sales April 2009As this week’s signal that homebuyers are returning to the market, both Existing Home Sales and New Homes Sales posted improvement versus month-prior figures this April.


According to the National Association of REALTORS, the number of Existing Home Sales rose by 130,000 units in April.


New Home Sales rose by a modest 1,000 units in April.


As a twist in the story, however, although sales activity is rising, the available housing inventory is rising faster. 


Versus March 2009, there were 300,000 more homes for sale in April — an increase of 9 percent.  In addition, the “housing supply” rose to 10.2 months, its highest level since October.


This is good news for home buyers, of course, because home prices are a product of Supply and Demand.  Depending on local conditions, buyers may find themselves in a position to demand lower sale prices or additional seller concessions.


The housing market has not fully rebounded but it continues to show signs of strength.  With a few more months like March and April, it’s reasonable to assume that homebuyers will lose some of their leverage for contract negotiation.


When that happens, expect home prices to rise.

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On A Monthly Basis, Home Values Look Better Than Press-Reported Annual Figures

Posted in home affordability, Real estate by southorangecounty on May 27, 2009

The March 2009 Case-Shiller 20 City Index


Each month, researchers measure home values in 20 large U.S. cities, then compile their findings in a report called the Case-Shiller Index.  It’s a popular measurement of housing health across the country, but it’s far from perfect. 


As 3 examples:



  1. It gives more weight to expensive homes than inexpensive ones
  2. Its sample set includes just 37 states of 50 states
  3. Real estate isn’t a “national” market — it’s local

All that said, however, the data is still important.  The Case-Shiller Index helps identify broader trends in housing and it’s widely believed that the economy won’t recover until the sector starts to stabilize.


We may be at that recovery point now.


Despite newspaper headlines blaring about 19 percent drops from March 2008, the month-to-month values appear to be stabilizing and the latter is the more important development.  15 of the 20 markets covered by Case-Shiller either improved, stayed flat, or declined by 0.2 percent or less.


Versus 2008, the rate of speed at which home values are falling is slowing.


Furthermore, because the Case-Shiller Index is on a 2-month delay, it doesn’t account for all of this year’s Spring Buyers, or first-timers taking the $8,000 first-time homebuyer tax credit.


Two months don’t make a trend, but if Case-Shiller Index continues to report similar data for April and May, it could be the signal that housing finally bottomed.

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Over 24 Hours, Mortgage Rates Shoot Higher

Posted in home affordability, mortgage rates, Real estate by southorangecounty on May 22, 2009

Iniital Jobless Claims May 21 2009Rates go up, rates go down.  Catch them while you can.


After Wednesday’s mortgage market rally drove rates down by a bunch, Thursday’s sell-off pushed them right back up.


This has been a common pattern in the skittish world of mortgage rates this year.


With the U.S. economy still teetering between recession and growth, markets are looking for signals anywhere it can find them.  Thursday’s clue came from a government report showing that more Americans are collecting unemployment benefits than at any point in history.


Strangely, mortgage rates rose on the news.


We call it “strange” because weak economic data has tended to draw mortgage rates lower lately to the benefit of prospective home buyers and would-be refinancers. Lower rates make homes more affordable.


Thursday, though, the pattern broke. 


The main reason why mortgage rates rose Thursday isn’t because of the employment report or any other piece of data.  Rates rose Thursday for the same reason that they had dropped the day prior — the Federal Reserve. 


On Wednesday, the released minutes from the Fed’s last meeting suggested that the group might make a larger mortgage market intervention.  On Thursday, in the face of worsening jobs data, markets bet the Fed wouldn’t. 


Mortgage rate shoppers, unfortunately, got caught in the crosshairs.


Rates can — and do — change quickly, without warning.  And, thus far this year, the changes have been extra sudden.  This is one reason why it’s often prudent to lock a mortgage rate as soon as you find one that’s agreeable.  Wait too long, and it could be gone.


Expect more volatility today with traders leaving early for Memorial Day Weekend.  Less volume means more chances for rates to change.

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How The “Fed Minutes” Can Change Mortgage Rates And Home Affordability

Posted in home affordability, mortgage rates, Real estate by southorangecounty on May 21, 2009

FOMC Minutes can move mortgage ratesMortgage rates fell after the Federal Reserve released its April 28-29, 2009 meeting’s internal notes Wednesday.


Officially known as “Fed Minutes”, the report is an in-depth account Federal Reserve’s last get-together, detailing the discussions and decisions that create our country’s monetary policy. 


It’s the lengthy companion to the Federal Reserve’s brief, post-meeting press release.


For comparison’s sake, the Federal Reserve’s April 29 announcement contained 383 words.  The minutes of that same meeting held 5,754 words.  The extra words offer extra details about what the next monetary steps might be for the nation’s policymakers. 


This is a big deal to markets because investors are always looking for clues about what’s next — especially considering how the April Fed Minutes showed that group discussed increasing its $1.25 trillion mortgage market commitment to something bigger.


Remember that the Fed’s mortgage-buying program is largely credited with keeping mortgage rates low this year.  If there’s more buying ahead, that should help rates stay similarly low.  Mortgage rates fell Wednesday in anticipation of a move like that.  For now, though, the Fed Minutes are just talk. 


As economic conditions change later this year, so might the Federal Reserve’s stance.

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Housing Starts Are No Longer Falling, Another Positive Signal In Housing

Posted in home affordability, Real estate by southorangecounty on May 20, 2009

Single-Family Housing Starts April 2009A “housing start” is a new home on which construction has started and, for the fourth straight month, single-family home construction remained flat in April.

For the battered housing market, this is the latest in a series of signals that a long-awaited turnaround is coming.

The current plateau in Housing Starts may indicate that builders are more confident in the economy, and that Americans are, too.  Especially in light of the freefall over the past few years.

Single-Family Housing Starts have hugged the 360,000 mark since January 2009.

However, there is a footnote to the story.

As noted by the Commerce Department in its official report, the April Housing Starts conclusion is suspect because of the data’s large Margin of Error.  Had the government’s sample set included a different series of data, in other words, it may have concluded that housing starts had fallen instead of staying flat.  Or risen.

We won’t know the final results of the report until 3 months from now but if the initial figures hold, it will fortify the argument that the housing market has, indeed, found its bottom.

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This is an interesting time to buy or sell a house in South O.C.

Posted in home affordability, Real estate by southorangecounty on May 19, 2009

One third of the way into the year and we have an interesting real estate market that has developed in South Orange County – both for buyers, and sellers. Of course you have heard about distressed houses being a good 50% of sales for the past 12 months or so. So, has this market turned into a good time to buy, sell, or perhaps both? The answer depends on your point of view.

Buying in today’s market. As strange as it may sound, the higher the price, the better opportunity for buyers. How can that be? Well, the lower price range – where the majority of sales are happening – is extremely competitive. It is not unusual for there to be 10 offers on houses priced under $450,000. That is producing sales at higher than list price – and more than a reasonable share of frustrated potential buyers.

In higher price ranges – over $750,000 – there is usually more negotiability in the prices, as there are fewer buyers. The higher the price, the fewer the buyers, and the most flexibility in prices – usually. There is a small percentage of exceptions – mostly houses that are really special in one way or another. A few of those are selling at higher ( Than neighboring distressed houses.) prices, but frankly, there are some pretty special houses that have been distressed properties, as well. Most of those are priced 15-20% lower than their “equity” seller ( Non-distressed.) neighbors – definitely priced competitively. That is where some exceptional buys have recently been struck.

Heard horror stories about buying a short sale, or an REO? Some of these properties represent exceptional opportunities! That’s where a little experience can go a long way. Personally, with over 32 years of local experience, I have seen – and done – just about every type of transaction.

Selling in today’s market. This is a whole different ballgame. It has been getting better, though, for a couple of good reasons. One, potential sellers are coming to realize that if they really want to sell, they will have to price their house competitively – against the distressed houses, nearby.

That might be a bitter pill for some people to swallow. It goes against the philosophy we’ve always heard – that we should buy low, and sell high. To some people, however, especially if they’re wanting to get into a bigger, more expensive house, it just might be a good time to sell low, and buy low. This is a good time to be selling lower priced properties, even those priced near a million dollars. You can competitively price similar to nearby distressed houses, and have a couple of advantages to offer to buyers.

For one, yours is likely more of a turnkey house, where most distressed houses are in shabby condition. Plus, you can make a decision in minutes, instead of days or even weeks, for some distressed houses. With those two advantages, you might be able to charge a small premium to buyers, over and above the usual 15-20% discount that distressed houses are selling for – while still lower than “normal”, out of touch, wishful thinking, “equity sellers” that make up about 25-30% of existing listings available – and 100% of the expired, or cancelled listings.

So, why would you sell at a 10-15% discount from your “equity seller” neighbors? How about this, for a logical reason? To buy the bigger, more expensive house at an even bigger discount. Many of the distressed houses, in the higher price ranges are selling for hundreds of thousands of dollars less than their neighbors next door! This philosophy is working right now in most move-up scenarios. It does take some deftness to coordinate, and frankly, some of the agents who have only known the “good times” real estate market of from 2000 to 2005, don’t have the experience to figure out how to do it.

The truth is, though, that it can be done, and it is being done. Thinking of trying to make a move but not sure where to start? Give me a call and let’s discuss the possibilities. There is no obligation, nothing to lose – and there might be a lot to gain.

Are YOU in trouble with your mortgage? This is another sign of these times. Mortgage payments getting out of hand, for any one of a number of reasons – frequently more than one? Job loss? A reset of a loan – resulting in unexpectedly higher payments?

There ARE solutions out there, and I am familiar with pretty much all of them. Have you been thinking of selling, to relieve the hardship? Or, do you prefer to stay in your house, but need to modify the payments? Or, are you already facing a potential foreclosure?

There are viable solutions for every scenario – just some confusion as to which course to pursue. In most scenarios you might be contemplating, I have been there, and done that, with other clients. I am experienced and adept in navigating the decision making process, and fully prepared to help you sort out the correct solution, for you.

If you are looking for help or answers, give me a call – (949) 643-2100 – or shoot me an email, at BobPhillipsRE@gmail.com and let’s put our heads together to solve your situation. For buying, leasing, and/or selling real estate, or solving real estate problems, you should be getting in touch with me. I have been assisting your neighbors in the same ways, for over 32 years.

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Mortgage Guidelines Show Signals Of A Thaw

Posted in home affordability, mortgage rates, Real estate by southorangecounty on May 15, 2009

The Federal Reserve Senior Loan Officer Opinion Survey April 2009Getting approved for a home loan isn’t getting easier, but it doesn’t appear to be getting much more difficult, either.


In its quarterly survey to member banks, the Federal Reserve asked senior bank loan officers whether “prime” residential mortgage guidelines had tightened in the last 3 months.


Nearly 50 percent of banks said guidelines tightened last quarter, a much lower figure than during all of 2008 and a signal that mortgage lending may be turning a corner.


Guidelines remain restrictive, however. 


Versus 18 months ago, lenders subject would-be borrowers to all of the following:



  • Higher minimum credit score thresholds
  • Larger minimum downpayments
  • Lower debt-to-income requirements
  • Mandatory fees based on certain loan traits

In addition, the availability of subordinate financing has all but disappeared when a home’s loan-to-value exceeds 80 percent.


Combined, these changes preclude a lot of Americans from getting access to today’s low rates but that could change in the coming months if the Fed’s reported trend continues.


Some experts believe that credit tightening started the recession.  Credit loosening, therefore, could help lead us out.

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Home Affordability Increases On Weak Retail Sales Data

Posted in home affordability, Real estate by southorangecounty on May 14, 2009

Retail Sales, ex-auto. April 2009Home affordability improved again Wednesday after the government reported worse-than-expected results for April’s Retail Sales.


Mortgage rates edged lower for the third consecutive day.


The impetus for the rate rally this week may be a long-awaited stock market correction.  After touching multi-year lows in mid-March, the Dow Jones added 30 percent going into last Friday. 


It has since lost close to 300 points and as those dollars leave the stock market, they’re finding their way toward bonds. 


The demand is pushing bond prices up which, in turn, causes rates to fall.


Yesterday morning, the rally in rates picked up steam on the heels of April’s Retail Sales report.  With figures off a half-percent from March and roughly 7 percent from 2008, investors are concerned that consumer spending may not be as strong into the summer months as previously expected.


Consumer spending is important because it comprises two-thirds of the economy and is believed to be the way out of the current recession.


If expectations of a recovery caused mortgage rates to rise recently, it makes sense that a revision of those expectations would cause rates to fall.


Markets are fickle, however, and the slightest bit of “good news” could pump cash back into stocks at the expense of bonds.  Until then, however, enjoy the low rates — they may not last long.

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For The Second Month In A Row, Foreclosures Are Concentrated In 3 States

Posted in Foreclosures, home affordability, Real estate by southorangecounty on May 13, 2009

Florida, California and Nevada accounted for more than half of the country's foreclosures in April 2009For the second month in a row, the country’s foreclosure activity was dominated by a small number of states.


As shown by the latest stats from RealtyTrac.com, more than half of the country’s foreclosure actions from April were concentrated in just 3 states:



  1. California
  2. Florida
  3. Nevada

Those 3 states are home to but 19 percent of the U.S. population.


No matter in which state you live, however, it’s important to understand the far-reaching ramifications of foreclosures.


Although real estate is local, mortgage lending is not.  Fannie Mae and Freddie Mac insure loans in all 50 states and when those mortgages go into default, the government entities often take losses. 


This is the primary reason both Fannie and Freddie asked for government aid to the tune of $19 billion and $6 billion, respectively, last week.  It’s also the reason why loan fees have increased over the last 12 months — another way to shore up balance sheets is to raise consumer charges.


Furthermore, downpayment requirements are larger than before foreclosures proliferated and private mortgage insurance is more expensive, too. 


These are important changes to homeowners in all states — not just the 3 named above.  In some cases, they can be the difference between a home loan approval and an underwriting turndown.


Search the complete April 2009 foreclosure report for yourself on RealtyTrac’s website.

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With Mortgage Rates, You Can’t Shop For Good Luck

Posted in home affordability, mortgage rates, Real estate, Refinances by southorangecounty on May 12, 2009

Getting a good mortgage rate is often a matter of good luckAfter a series of increases starting April 30, mortgage rates finally took a dip Monday.  It was a welcome surprise for home buyers that went under contract over the weekend. 


Same for homeowners looking to pull the refinance trigger.


Versus mortgage rates on Friday afternoon, many lenders were already showing lower rates Monday morning before a late-afternoon rate sheet reprice even lower.


The drop in rates lowered annual mortgage payments by roughly $180 per $100,000 borrowed.


Rate dips like this aren’t expected, of course, bringing us to the one of the most important axioms of shopping for a mortgage rate: You can’t shop for good luck. This is because mortgage rates are inherently unpredictable. 



  • On some days, rates are higher
  • On some days, rates are lower
  • On some days, rates are unchanged

Occasionally, there are days when rates are all three.


Monday’s rate dip, though — while sharp — may not last.  Early this morning, markets were pressuring mortgage rates to rise and lenders are often quick to pass rate hikes on to consumers.


With a little bit of luck, you’ll get your rate locked in before changes for the worse.

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