South Orange County Blog from Bob Phillips

Curious About Baker Ranch, New Homes in Lake Forest?

Are you curious about the huge new community being built in Northern Lake Forest, between Bake Parkway, and Alton Parkway?  I certainly was, and went to a special preview for Realtors, yesterday. ( The builders will pay an agent a commission IF that agent accompanies you, on your first visit to their model homes.  Possible advantage to you?  Many agents, myself included, will rebate some of that commission back to you, which can help cover some of the closing costs, you’ll encounter.  Amounts vary – and some agents do NOT offer such incentives – but up to half of their commission is not unusual to be able to negotiate.  In most cases all your trusty Realtor friend – like me – has to do, is introduce you to the builder.  They then, do ALL the paperwork in the purchase.  It can be a pretty sweet deal, for an agent. )

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So what about the community?  This weekend is the grand opening for six neighborhoods, built by two builders, Shea Homes, and Toll Brothers.  They seem to be nice quality houses.  They range in size from a 1,273 sq. ft. condo, priced from the mid $400’s, to a 3,268 sq. ft. single family house, priced from over a million dollars.

Advantages to the community?  NO Mello/Roos taxes. ( More on that ploy, later.)  Access to commutes, via both toll roads, and nearby freeways.  An existing surrounding infrastructure – close to schools shopping, and entertainment.  And, something increasingly rare in South Orange County – a brand new home! ( Albeit, priced at a SUBSTANTIAL premium, over nearly resale homes.)

Disadvantages?  If you want a single story house, you’re out of luck.  There isn’t a solitary single level plan.  Want a 3 ( or 4+.)  car garage?  No such animal.  Zip! Nada.   There is also rather scant room for yard sizes, or guest parking. ( Parking seems to be at a premium, throughout the neighborhoods.)  Not much in the way of views, either.

How about the pricing?  Pretty steep, in MY humble opinion.  My thought was that they’ve reverse engineered the lack of Mello/Roos taxes, into their pricing.  Kind of a “let’s pay extra to the builder, instead of the community”.  I may be wrong, but I’ll be curious for YOUR feedback, on my theory.

So, should you check them out?  If you’re thinking of buying a house, why not?  In addition, there ARE  some other new home choices in South County, in various pockets of our geography, including those from Laguna Niguel, and Rancho Mission Viejo.

In my opinion, though, you should also include a look at resale houses, if for no other reason than to compare pricing. ( Remembering that new houses come pretty bare boned, with you having to divvy up more for decor, draperies, and landscaping, all of which are typically included with a resale house, and usually for a LOT less money.)  Also, consider that many resales have been substantially updated, OR, may offer a price low enough, to build in your own decorating and landscape choices, on a larger piece of property.

Can I get rebates on the commission, in buying a resale house?  You can ask, and SOME agents – like me – will offer them. ( Perhaps not as much as on a new home, because on a resale transaction, we actually have to do all the work.  Still, a rebate can help to cover some of your escrow costs, and other closing fees.)

Let me know if you’d like to talk about your options for checking out buying your next home. ( And possibly selling your present one, or turning it into a rental.)  That’s been my job for the past 37+ years, here in South Orange County, and I would be thrilled to discuss the possibilities with you.  In the meantime, have a great weekend!

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Overpay On Your Mortgage Or Add To Your Savings, This Is The Question

Overpay On Your Mortgage Or Add To Your Savings, This Is The QuestionSo you find yourself with a little bit of extra money – perhaps due to a raise, an inheritance or an unexpected windfall?

Should you put all of your money toward paying down the mortgage on your home? Or would you be better off placing  your extra cash into a savings account?

Deciding whether to pay down your mortgage or add to your savings is a complex choice and it depends on a number of factors in your personal financial situation.

Here are some of the things that you will need to consider when making the decision:

How Much Are Your Savings Earning?

Take a look at the savings accounts where you are keeping your money and assess the interest that your savings are earning. Is your money earning more in savings than you would save by paying down your mortgage earlier?

Does Your Mortgage Have Overpayment Penalties?

Some mortgage lenders will charge you a fee if you try to repay your mortgage earlier than the agreed upon term. Check with your lender to find out and calculate whether the extra costs will outweigh the benefits you get from overpaying your mortgage. If they do, put your windfall in savings instead.

What are Your Other Debts?

It doesn’t make sense to be overpaying on your mortgage if you have a lot of credit card debt that is charging you an enormous amount in interest. Prioritize your high-interest debt first before you think about overpaying on your mortgage.

Do You Have An Emergency Fund?

You should always have an emergency fund in cash that will protect you from having to use expensive credit card debt if an unexpected payment comes up such as a burst pipe or a flat tire on your car or if you lose your job.

A good rule is to have the equivalent of three to six months of savings in a bank account just in case you need it. This is a first priority and only when you have this emergency fund established should you consider overpaying on your mortgage.

These are just a few of the important factors that you should consider when deciding whether to overpay the mortgage on your home or place the money in savings.

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Sales of $1-million-plus homes went through the roof in California in 2013

Posted in Existing Home Sales, Financial Reports, Home Selling, Home Values, Housing Analysis, Real Estate Trends by southorangecounty on February 4, 2014
By Lauren Beale, of the Los Angeles Times, January 30, 2014

In California last year, 39,145 homes were sold for $1 million or more, a six-year high. Celebrities and flippers did their part.

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“Crowned by the sale of a Malibu estate for $74.5 million, the number of houses sold last year at $1 million and above statewide jumped to a six-year high, according to real estate information service DataQuick.

In the strongest showing, the number of homes sold at $2 million and up set state, Southern California and L.A. County records.

“The luxury market did bounce back last year,” said housing market analyst Paul Habibi, a real estate lecturer at UCLA’s Anderson School of Management. “A lot of people were stepping back into the waters.”

Among them were lucrative investors looking for a place to park their dividends.

“The stock market lined the pockets of high-end buyers,” Habibi said. “That translated into home purchases.”

Appreciation-fueled gains in home equity allowed others who had been waiting on the sidelines to move up to bigger and better digs, releasing pent-up demand from recent years.

“It’s a herd mentality,” said Westside Estate Agency co-founder Stephen Shapiro, who last year saw well-priced homes drawing multiple bidders. “When people start paying more for houses, other people don’t mind paying more.”

Statewide, 39,145 homes changed hands for $1 million or more in 2013, up 45% from the year before and the best showing since 2007, DataQuick said. This slice of the market outpaced overall sales, which were essentially the same as in 2012, down only 0.6%.

An all-time high of 7,383 homes sold in the state at the $2-million-and-above mark, up 33% from the 5,536 that changed hands in 2012. Southern California broke a record with 4,514 sales at $2 million and above, and L.A. County also eclipsed previous highs with 2,628 sales.

In L.A.’s ultra-luxury market, locals, foreigners, flippers and celebrities came to the party, with billionaires playing musical houses in the $20-million-and-up price range.

Oaktree Capital Management Chairman Howard Marks had the priciest sale statewide, unloading his 9.5-acre estate in Malibu in an off-market deal for $74.5 million. The beachfront property includes a 15,000-square-foot main house, two guesthouses, a gym and a swimming pool.

Just down the street, “Karate Kid” producer Jerry Weintraub had the next highest 2013 sale for L.A. County, based on public record searches conducted by PropertyShark.com and Coldwell Banker. His bluff-top seven-acre compound, with two guesthouses, a swimming pool, a tennis court and a guardhouse, sold for $41 million.

“Our market has finally caught up with what is happening globally,” said Coldwell Banker’s Bobby Syed, who brokered an off-market deal last year of a 12,000-square-foot Beverly Hills estate priced in the $37-million to $39-million range. “A lot of foreign money is coming in, particularly to Beverly Hills and Bel-Air, which are still very cheap by comparison” to other major cities.

The 2.5-acre property he sold boasts a large flat area and expansive vistas, Syed said. “It was the biggest view from here to Taiwan,” he said.

He represented the buyers and the sellers, who had bought the property in the 1970s from actress Elizabeth Taylor.

Serial house buyer and talk show host Ellen DeGeneres was among celebrities who did their part to push high-end home sales, buying a 13-acre estate centered on a Tuscan-style villa in Santa Barbara County’s Toro Canyon that had been listed at $26.5 million.

She then started this year off with another big purchase, snagging a modernist trophy home on the Westside for $39.9 million.

Madonna pitched in too, ditching her 1.25-acre compound in Beverly Hills for $19.5 million.

Getting in on the high-end home-flipping act was retired actor Kristoffer Winters, who renovates homes with actor Jeremy Renner. Winters and his investors raked in $24 million for a mansion on two acres in Holmby Hills. The Roaring ’20s Art Deco-style house, reached by a cobblestone driveway, includes five fireplaces, six bedrooms, 11 bathrooms and 10,005 square feet of living space.

Statewide, areas with the highest number of sales at $1 million-plus were led by Manhattan Beach, Hillsborough and La Jolla. Brentwood and Beverly Hills came in sixth and seventh, respectively.

In some communities, such as Santa Monica, Rancho Santa Fe, Atherton and Los Altos, almost all home sales were in the $1-million-and-up category, partly because of rising prices.

“A lot of homes have just popped up over the $1-million mark with appreciation,” said DataQuick analyst Andrew LePage.” ( End of Lauren’s article.)

Locally, in Coto de Caza, for an example, there were 149 sales in 2013, over $1,000,000, with an average sales price of $1,595,026.

That number was exactly half of the total of 298 homes sold in Coto last year.

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What’s Ahead For Mortgage Rates This Week – February 03, 2014

Whats Ahead For Mortgage Rates This Week February 03 2014Last week brought mixed news; while the Department of Commerce reported a dip in new home sales, mortgage rates also fell. The Federal Reserve’s FOMC statement revealed that quantitative easing would be further reduced by an additional $10 billion monthly.

New Home Sales: Y-O-Y Reading Best Since 2008

December’s reading of 414,000 for new home sales fell short of November’s revised reading of 445,000 new homes sold as well as expected sales of $455,000. The consensus figure was based on November’s original sales reading of 464,000 new homes sold.

The inventory of new homes available rose from last month’s level of 4.70 month supply to a 5 month supply in December. Cold weather was cited as a cause of lower new home sales.

New home sales increased by 4.50 percent year-over-year; this was the highest reading since 2008. The median price of a new home rose by 0.60 percent in December to $270,299.

The national median home price was $265,800 in 2013, an annual growth rate of 8.40 percent and the highest annual growth rate for median home prices since 2005.

Economists cited rising mortgage rates, new mortgage rules and a lagging labor market as signs that slower home sales could be expected in 2014.

Pending home sales echoed the slowing trend in home sales; the index reading fell by -8.70 percent to a reading of 92.4 in December.

All Four Regions Reported A Drop In Pending Sales As Compared To November:

Northeast              -10.30 percent

West                    -9.80 percent

South                   -8.80 percent

Midwest                -6.80 percent

This was the lowest reading for pending home sales since October 2011.

Case-Shiller: Home Prices Up 13.7%

The Case-Shiller 10 and 20 city home price indices for November reported a 13.70 percent gain in home prices year-over-year. This was the fastest annual growth rate in home prices since 2006. Further evidence of slower growth in home prices was evident as nine of 20 cities tracked reported lower home prices.

Fed Continues Stimulus Reduction

Wednesday’s FOMC statement confirmed expectations that the Fed would continue tapering its monthly asset purchases made under its quantitative easing program.

Monthly purchases of mortgage-backed securities and Treasury securities will be reduced from January’s level of $75 billion to $65 billion in February. Economists expected this reduction to occur.

Freddie Mac’s Primary Market Survey reported lower average mortgage rates. The rate for a 30-year fixed rate mortgage fell by 7 basis points to 4.32 percent with discount points unchanged at 0.7 percent.

15-year mortgage rates also fell to 3.40 percent with discount points lower at 0.60 percent. The average rate for a 5/1 adjustable rate mortgage fell by 3 basis points to 3.12 percent with discount points unchanged at 0.50 percent.

This was welcome news as homebuyers and mortgage lenders have felt the effects of higher home prices and new mortgage rules that became effective January 10.

New Jobless Claims Higher

Weekly jobless claims jumped to 348,000 from the prior week’s 339,000 new jobless claims. This was the highest level of new jobless claims in six weeks. Reasons for increased claims were unclear, but were possibly caused by lingering influences of the holiday season or a sinking labor market.

Consumer confidence rose in January to a reading of 80.7 as compared to December’s reading of 77.5 as compared to January 2012’s reading of 58.4.

This Week

This week’s scheduled economic and housing news includes construction spending, non-farm payrolls and the national unemployment rate. Freddie Mac’s PMMS report and weekly jobless claims will be released as usual on Thursday.

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