South Orange County Blog from Bob Phillips

Sales volume in priciest O.C. ZIP codes up 16 percent in September

From Jonathan Lansner, O.C. Register Staff Columnist, 10/22/2015

Illuminated House With Pond In Foreground

Orange County housing’s upper crust finished the summer in style.

In September, home sales in the county’s 27 priciest ZIP codes – neighborhoods where the median sales price run from $722,500 to $3.65 million – were up 16.3 percent compared to a year ago, according to CoreLogic data.

Countywide, 3,282 Orange County residences sold, up 15 percent from a year ago. Orange County’s median selling price for all residences was $615,000 in the period, up 5.3 percent compared to a year ago.

In the nine Orange County ZIP codes with median selling prices above $1 million, sales totaled 222 homes, up 20 percent compared to a year ago. The most expensive ZIP codes were Newport Coast 92657 and Newport Beach 92661 at $3.65 million.

Other noteworthy trends in CoreLogic’s September report:

• Gains were not universal. Prices were up in 55 of 83 Orange County ZIP codes compared to the previous year. Sales volume rose in 63 of the 83 ZIPs.

• The latest countywide median price is 4.7 percent below the all-time high monthly price of $645,000 set in June 2007.

• Median selling price for resales of single family homes was $679,750 – up 4.6 percent from a year ago and 7.4 percent below the all-time high monthly price of $734,000 set in June 2007.

• Resale condos’ median selling price was $430,000 – up 7.9 percent from a year ago, yet 8.5 percent below the all-time high monthly price of $470,000 set in March 2007.

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What’s Ahead For Mortgage Rates This Week – August 3, 2015

Whats-Ahead-Mortgage-RatestLast week’s scheduled economic reports included the Case-Shiller 20 and 20-City Index reports, pending home sales data released by the National Association of Realtors® and the scheduled post-meeting statement of the Federal Reserve’s  Federal Open Market Committee.

Case-Shiller: Home Prices Growing at Normal Pace

The Case-Shiller 20-City Home Price index for May reported that year-over-year home prices grew by 4.40 percent year-over-year. S & P Index Committee Chair David M Blitzer said that home prices are increasing gradually by four to five  percent a year as compared to double-digit percentages seen in 2013. Mr. Blitzer said that home price growth is expected to slow in the next couple of years as home prices have been growing at approximately twice the rate of wage growth and inflation, a situation that is not seen as sustainable.

Denver, Colorado led the cities included in the 20-City Index with a 10 percent year-over-year growth rate for home prices. San Francisco, California followed closely with a year-over-year gain of 9.70 percent and Dallas Texas posted a year-over-year gain of 8.40 percent.

Fastest month-to-month home price growth in May was tied by Boston, Massachusetts, Cleveland, Ohio and Las Vegas, Nevada with each posting a monthly gain of 1.50 percent. May home prices remain about 13 percent below a 2006 housing bubble peak.

Pending Home Sales Down From Nine-Year Peak

According to the National Association of Realtors®, pending home sales dropped by 1.80 percent in June as compared to May’s reading. The index reading for June home sales was 110.3 as compared to May’s index reading of 112.3. This indicates that upcoming closings could slow; June’s reading represented the first decrease in pending home sales in six months. Lawrence Yun, chief economist for the National Association of Realtors®, cited would-be buyers’ decisions about whether to hold out for more homes available or to buy sooner than later will affect future readings for pending home sales.

Fed Not Ready to Raise Rates, Mortgage Rates Fall

The Fed’s FOMC statement at the conclusion of its meeting on Wednesday clearly indicated that Fed policymakers remain concerned about economic conditions and are not prepared to raise the federal funds rate yet. The FOMC statement did not provide any prospective dates for raising the target federal funds rate, which is currently at 0.00 to 0.25 percent, but the Fed continues to watch employment figures and the inflation rate.

Freddie Mac reported that mortgage rates fell last week, likely on news of the Fed’s decision not to raise rates. Average mortgage rates fell across the board with the rate for a 30-year fixed rate mortgage dropping by six basis points to 3.98 percent; the rate for a 15-year fixed rate mortgage dropped by four basis points to 3.17 percent and the average rate for a 5/1 adjustable rate mortgage fell by two basis points to 2.95 percent. Average discount points remained the same for fixed rate mortgages at 0.60 percent and fell from 0.50 percent to 0.40 percent for 5/1 adjustable rate mortgages.

What’s Ahead

This week’s economic calendar includes reports on consumer spending, core inflation and consumer spending. July readings on Non-Farm Payrolls and the national unemployment rate will also be released along with regularly scheduled weekly reports on new jobless claims and mortgage rates.


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Mortgage Rates and Purchasing Power

Mortgage ratesHow Does Purchasing Power Work? You’ve heard the term before — but really, what does ‘purchasing power’ mean? In its most basic form, purchasing power means what you can buy for a given amount of money. For example, a cup of coffee that cost $1 in 2010 now costs almost $4 (thanks, Starbucks!). You buy less gas with $25 today than you did a few years ago, and a car that costs $35,000 once could be bought for less than $10,000. So the purchasing power of a dollar has dropped over time. Inflation makes items cost more and lessens purchasing power.

Buy Low …
So when costs are low, it’s better to buy, before they rise, right? That may not exactly work with a cup of coffee, but it definitely works with things like cars, airplane tickets, and of course houses. When it comes to buying a home, your purchasing power is directly related to several factors, including the availability of desirable homes, average home prices, and the current mortgage rate.

Today’s interest rates are still astonishingly low. The average rate for 30-year fixed-rate loans over the last 40 years has been around 8.9 percent. But over the last several months, mortgage rates have been in the 3-4% range. This is significantly lower than the historic average — but higher than it was a year ago. Experts are predicting mortgage rates to steadily go up, possibly to as high as 5% by the end of the year.

Little Numbers, Big Difference Five percent might not seem like a lot, but when you do the math, you’ll see that even a quarter of a percent rise in mortgage rates will significantly lessen your purchasing power and make a big difference to how much you end up paying for your home. Just check the following chart, which assumes you put 20% down (although loans are available with only a 3% down requirement — call me to learn more!).

Your Monthly Payment Rate Loan Amount Purchase Power
$1,500 3.75% $323,893 $404,867
$1,500 4.25% $304,915 $381,144
$1,500 5.00% $287,551 $279,422

Don’t be like the family who delayed and delayed buying, and ended up shopping in the $270,000 price range rather than the $380,000 range and had to settle for two bedrooms rather than three. With rates this low, the smart buyer makes a move. The market can’t sustain these numbers for long, and won’t need to as it improves. If you’re considering a home purchase, contact me today to see the strength of your purchasing power — before it drops!

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Foreclosures Across California Reach Eight Year Low

Initially posted by, on November 14th, 2014

“While California’s real estate market has remained flat throughout the year, recent changes have revealed that things may be making a turn for the best. In addition to September’s jump in sales, a new study has found that foreclosures across California have hit their lowest mark in over eight years – the latest sign that our economy is finally catching up with the housing market.
Foreclosure home
According to San Diego-based research firm DataQuick, fewer foreclosures were initiated across California in the third quarter of 2014 than any in the past eight years. This is largely an outcome of a recovering market and a declining number of toxic loans made between 2006 and 2007.

The study found that during the July-through-September period, there were a total of 16,833 Notices of Default (NoDs) recorded – 691 fewer than the second quarter of 2014 and a 17.1% drop from the same time last year.

One should also note that the recent drop in foreclosure starts is actually part of a larger trend. Prior Q3, DataQuick found that Notices of Default were declining during the second quarter of 2014 – the lowest since the fourth quarter of 2005 when only 15,337 NoDs were reported. Similarly, NoDs have dropped significantly since their peak in 2009, when a total of 135,431 NoDs were recorded.

“This home repo pipeline isn’t exactly drying up, but it sure is diminishing. Its negative effect on the overall market is only a fraction of what it was several years ago, and is really only still noticeable in some pockets of the hardest-hit markets of the Inland Empire and Central Valley,” said John Karevoll, a CoreLogic DataQuick analyst.

Do you think this is an indication of a stronger market in Q4?” ( End of’s article.)

From MY vantage point, it looks as though this quarter is turning out to be a fairly “normal” one for Southern Orange County. The type that frequently leads to a more robust Spring home buying season – which in this area usually starts between the last week of January, and February 15th.

If you are thinking of BUYING your next home anytime soon, there are two things to consider right now – today. First, there aren’t going to be many foreclosure houses to look for – less than 2% of available houses – and second, you’ll have much better negotiability on regular, non-distressed properties before that Spring buying season begins.

Give me a call – at (949) 887-5305 – or shoot me an email – to – and let’s talk about your real estate goals.

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What’s Ahead For Mortgage Rates This Week – November 17, 2014

Negotiation Tips: How to Ask the Seller to Pay the Closing Costs Last week’s housing related news was lean, with no scheduled reports released other than Freddie Mac’s primary mortgage market survey.

We’ll start with some good news. The University of Michigan / Thompson-Reuters Consumer Sentiment Index reported its highest reading in more than seven years. November’s reading of 89.4 surpassed the expected reading of 88.0 and was higher than October’s reading of 86.9

Mortgage Rates Near 4.00 Percent, Weekly Jobless Claims Up

Freddie Mac reported a one-basis point drop in the average rate for 30-year fixed rate mortgage from 4.02 percent to 4.01 percent; the average rate for a 15-year fixed rate mortgage also fell by one basis point to 3.20 percent.

The average rate for a 5/1 adjustable rate mortgage rose by 5 basis points to 3.02 percent. Discount points for all three loan types held steady at an average of 0.50 percent.

Weekly jobless claims rose by 12,000 to 290,000 against expectations of 280,000 new jobless claims filed and the prior week’s reading of 278,000.

Last week’s report was the ninth straight week that new jobless claims came in under 300,000. The reading for the four-week rolling average was 285,000 new jobless claims, which represented an increase of 6,000 new claims.

What’s Ahead

This week’s number of scheduled economic reports will be more robust. The NAHB Housing Market Index, Housing Starts and the National Association of REALTORS® Existing Home Sales reports will be released.

The minutes of the most recent Federal Open Market Committee (FOMC) meeting of the Federal Reserve will also be released along with weekly mortgage rates and jobless claims data.

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Five facts impacting California’s housing future

An article by Brena Swanson, of, August 7, 2014

CalifFive facts impacting California’s housing future

Next year is projected to be the best year yet for the economy since the start of the recovery, with California’s state economy lining up to do better than the nation. And this positive trend is expected to continue for the next two years, a new report from Beacon Economics said.

But HousingWire isn’t happy to stop with just that. Scroll down to see 5 facts on the future of California’s housing.

First, here are the results of the Beacon report:

California’s economy will continue to steadily improve throughout the life of the state forecast in 2019. Employment growth is expected to settle in at 2.5% by 2016, and the state’s unemployment rate is forecast to drop below 6% by mid 2017 – about half of what it was at its peak in October 2010 (12.4%).

“Every metropolitan area in California has now returned to job growth,” says Jordan Levine, Beacon Economics’ director of economics. “Although the jobs and broader economic recovery has been more robust in some areas of the state than in others, the overall numbers are indicative of real, sustained improvement statewide.”

However, one of the biggest problems facing California is the rapidly rising cost of housing, driven by a lack of new supply.

“You can’t add jobs if there is no growth in the labor force because people are leaving because they can’t afford housing,” says Thornberg.

But things look positive for the next couple of years since there is sufficient slack in the labor market to allow for solid growth.” ( End of report.)

Here are the five facts that play into California’s housing future: 

1. Home sales will rise!

First and foremost, home sales are set to rise in the Golden State! Although the rate of home sales needs some time to pick up, pick up it will. Home sales are estimated to continue on their upward trajectory over the next two years; however, the pace of growth will cool to the 4% to 6% range, a rate more in line with income growth. Home sales in California are forecast to rise by double-digit percentages in 2015. What’s more, the really, really pricey homes are already knocking it out of the park.


2. The state’s budget

The good news is that the state’s bottom line continues to heal, with the improvement trickling all the way to the financially strapped local governments as sales and property tax revenues rise across the state. According to Reuters, “California’s newest budget package of $152.3 billion in state spending emphasizes large increases for education, pays down debts, and proposes a 32-year plan to fully fund the teachers’ pension system.” That represents a three-decade investment that is a net positive for homeowners who must swallow the coming rise to their yearly tax bill, which averages close to three grand.

3. Tourists love it!

The state remains a top tourist destination as it keeps driving the economy forward with hotel occupancy at 73.4% statewide, 10 percentage points higher than the national average. According to TripAdvisor, there are precisely 12,246 things for tourists to do in California. That represents a robust and extensive opportunity for state and local economies that forever feeds financing to homeowners who work off the tourism trade.

California houses

4. The bad news

California faces a number of major structural challenges that keep the state’s economy from reaching its full potential, including hyper-cyclical budgeting, failure to address the state’s substantial long-term pension obligations, housing costs driven in significant part by abuse of the California Environmental Quality Act and a widening education gap relative to other states. And the state’s enduring drought will no doubt weigh on the agricultural sector, the main user of the state’s H2O.

5. And finally: jobs, jobs, jobs

Technological change will be a long-term challenge for California, and for all states. In commercial real estate, for example, traditional relationships between employment and commercial absorption are breaking down as more workers telecommute or work remotely. The job growth that used to propel new commercial construction activity is expected to have a smaller and smaller effect. And with more markets, such as North Texas, building larger tech sectors, skilled labor will continue to slowly bleed out of the state. Luckily, a surge in white collar jobs is helping to balance out this shift.

( End of Brena’s article.)


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Million-dollar home sales hit seven-year high in California

An article by Tim Logan, of the L.A. Times, 7/31/2014

stone-tuscanThe number of homes that sold for $1 million or more in California hit a seven-year high in the second quarter, and sales north of $2 million reached a new record.

That’s according to new figures from San Diego-based DataQuick, which tracks local housing markets in the state. They found million-dollar-plus sales grew at a 9.1% clip statewide compared with last year, while sales overall fell 7.4%.

Several factors are driving the high-end liftoff, market-watchers say.

One is the hot technology sector in the Bay Area and some affluent parts of Southern California, which is minting new millionaires who can afford seven-figure homes. Another is the 11.6% price growth in California over the last year, which means a house worth $925,000 last summer may be worth $1,032,300 today. And there’s the influx of international buyers, which is pushing up prices at the high end.

Then there’s that old saw that the rich are just different than you and me, especially in a time when credit is tight and the job market remains soft for many middle-income home buyers.

“It’s always fascinating to watch this part of the real estate market. It behaves differently, responds to its own set of criteria,” said DataQuick analyst Andrew LePage. “These buyers, especially those in the multi-million-dollar market, are less likely to agonize over credit scores, income and job security, down payments and mortgage interest rates.”

Of course, in the most desirable parts of coastal California, a million-dollar home is rather routine. Half of all homes sold in San Francisco County in June exceeded $1 million, according to DataQuick, and parts of Los Angeles and Orange counties regularly cross into seven figures.

The market for even higher-priced homes is even hotter. While there were more million-dollar homes being sold here in the mid-2000s than today, California in the second quarter set all-time records for the number of homes sold for more than $2 million, more than $3 million, more than $4 million and more than $5 million.

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S P Case-Shiller Home Price Index: May Home Prices Rise

S&P Case-Shiller Home Price Index: May Home Prices RiseMay home prices rose in all 20 cities tracked by the S&P Case-Shiller 20 City Home Price Index. This was the second consecutive month in which all cities posted gains.

On average, national home prices rose by 1.10 percent in May as compared to April’s reading. Year-over-year, home prices rose, but at a slower rate of 9.39 percent in May as compared to 10.80 percent year-over-year for April.

Nevada, Florida and California Cities Post Highest Gains

Cities posting the highest year-over-year price gains in May included Las Vegas, Nevada at 16.90 percent, San Francisco, California at 15.40 percent, Miami, Florida at 13.20 percent. San Diego and Los Angeles, California reported home price growth rates at 12.40 and 12.29 percent respectively.

According to the 20-City Index, home prices are 18 percent below their peak reached in mid-2006, but are 27 percent higher as compared to March 2012 lows.

Pending Home Sales Decline in June

More evidence of sluggish home sales was reported for June. The National Association of REALTORS® reported that pending home sales dropped by 1.10 percent in June. This was a surprise as compared to May’s month-to-month gain of 6.00 percent for pending sales.

Several factors were cited as contributing to slower home sales; higher home prices, stagnant wage growth, higher mortgage rates and stringent loan requirements were seen as obstacles for home buyers. Pending home sales are an indicator of future closings and mortgage activity. Approximately 80 percent of purchase contracts signed sales completed within 60 days.

FHFA House Price Index: Home Price Growth Slips in May

FHFA, the agency that oversees Fannie Mae and Freddie Mac, reported that home prices grew by 0.40 percent in May to a seasonally-adjusted year-over-year rate of 5.50 percent as compared to April’s year-over-year reading of 5.90 percent. FHFA’s House Price Index is based on sales of homes connected with Fannie Mae and Freddie Mac mortgages.

On a positive note, the reading for the Consumer Confidence Index jumped from 85.20 in June to 90.90 in July. Expanding consumer confidence suggests that more families may decide to transition from renting to owning their homes, and that homeowners may feel confident enough to move up to larger homes.

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Southern California housing market settles to a stable pace

An article by Tim Logan, of the Los Angeles Times. ( From June 11th, 2014.)

sold-homeAfter several topsy-turvy years, Southern California’s housing market is starting to look almost normal.

Home prices grew again in May, but not at the frenzied pace seen last spring. Sales are down, but mostly because there are fewer foreclosures to buy. More home sellers are testing the market. But big bidding wars are so last year.

All of it signals a housing market that’s settling to a more stable, even healthy, pattern, which analysts say is a  notable change from the big ups and downs of the bubble and its aftermath.

“The market’s not bad,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, who sees prices going up but competition easing. “The urgency’s gone. I think that’s a positive thing. I really do.”

The slowdown has been underway for months, but it showed up anew in home sales numbers out Wednesday for May, a big month for the key spring real estate season.

The median price of a home sold in the six-county Southland was $410,000, according to San Diego-based DataQuick. That’s up 11.4% from the same month last year, the slowest annual gain since August of 2012, and just 1.5% above the median price recorded in April.

More and more, the market hinges on regular people buying houses with normal mortgages, and with lending standards still tight and the economy still feeling soft, there’s only so much those people will pay.

“We’re bumping along a ceiling. I really can’t see values going up much more,” said Steven Thomas, of, which analyzes Southern California housing markets. “Buyers are homing in on trying to pay a fair value. A year ago, everyone was willing to pay extra. Now that bidding up is not happening.”

That’s good news for would-be home buyers, said John Venti, a real estate agent with Redfin who focuses on the San Fernando and San Gabriel valleys. This time last year, he said, his clients regularly got beat out by all-cash, above-asking-price offers. That’s far less common now.

“It definitely has softened up a little bit,” he said. “Instead of competing with 20 other offers, you’re competing with four or five.”

That’s an unpleasant surprise for some sellers, especially those who were finally lured into the spring market by tales of bidding wars and double-digit price hikes, and then valued their homes accordingly. Mona Cohen, an agent with Rodeo Realty in Brentwood, finds herself more often having to play the bad guy with sellers who think their home is worth more than the market will bear.

“They still think they’re in that little bubble of 2013, where you’d put it on the market and have 15 offers,” she said. “That still happens in pockets. But buyers have become a lot more savvy.”

Indeed, Cohen and other market watchers say they’re starting to see more price reductions as sellers lower their sights to compete.

Still, no one is expecting home prices to go down overall. There’s still more demand than supply, and well-priced homes are still selling quickly. Many experts just think the market will keep muddling along through summer.

FNC Inc., a real estate data firm based in Oxford, Miss., projects price gains in metro Los Angeles of six-tenths to eight-tenths of a point each month through October — positive, but roughly half of last year’s pace.

In a recent note to clients, Thomas described a market on “cruise control” and said it would take a sharp improvement in the broader economy for home prices to pick up again.

“Jobs and everything else,” Thomas said. “There needs to be a lot of healthy growth.”

And in a region like Los Angeles, where the median-priced house costs seven times the median household income and housing affordability is a growing challenge, having a market that moves in tune with the fundamentals of the economy isn’t such a bad thing, said Appleton-Young, even if it’s growing a bit more slowly than it has been the last few years.

“Whatever normal means,” she said, “I agree.” ( End of Tim’s article.)

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Giving and Getting: Why the Terms of a Home’s Sale Are Frequently More Important Than the Price Paid

Giving and Getting: Why the Terms of a Home's Sale Are Far More Important Than the Price PaidOne of the most significant factors home buyers and sellers focus on when buying real estate is the negotiated sales price in the purchase contract. While the sales price is undeniably important, the reality is that other terms in the sales contract may have more far-reaching and significant effects on the transaction.

In fact, with a closer look at some of the most important terms, you will see why you and your agent should actively negotiate for improved terms rather than a lower sales price.

Closing Costs

Some buyers and sellers will haggle over a few thousand dollars in the sales price without paying attention to the closing costs, but the fact is that the closing costs for a typical transaction may cost the buyer between two to five percent of the sales price on average.

A sales contract may be negotiated so that the seller assumes some or most of the closing costs, and this can result in considerable savings the buyer. Likewise, when a contract is negotiated in the interest of the seller, the seller may save thousands of dollars at closing if the contract states that the buyer is responsible for these costs.

The Appraised Value

In an ideal world, a home would appraise for the contracted sales price, but this is not always the case. A sales contract may be written with terms that allow for the sales price to be renegotiated after the appraised value is confirmed, and this may benefit both parties. Some sales contracts, however, state that the negotiated sales price is final regardless of the appraised value.

The Property Inspection

Many home buyers opt to obtain a property inspection to determine if there are hidden issues with the property structure, foundation, roof, air quality and other components. Some inspections reveal that a home is in fairly good condition, but others may reveal that a property needs thousands or even tens of thousands of dollars’ worth of repairs.

Some sales contracts may be written so that the buyer may back out of a contract within a certain period of time after receiving the property inspection report or so that the terms of the sales contract may be renegotiated once the property inspection report has been completed.

Special Contingencies

A real estate transaction may extend for several weeks or even months while the buyer contracts with a lender, an appraiser, a property inspector and other third parties. During this period of time, many events can occur that may adjust the interest level or even the ability of the buyer and seller to fulfill the contract.

Some sales contracts are written so that the buyer may opt out of the contract within a certain period of time with minimal expense and regardless of other factors related to the appraisal and inspection. ( In California, there is usually an initial 17 day period during which a buyer can withdraw for no stated reason.)

Generally, there are standard terms found in many real estate sales contracts, but these terms can be adjusted by either party to benefit buyers or sellers. Those who are preparing to buy or sell property should actively communicate their needs and desires with their real estate agent so that the contract may be negotiated with terms most favorable to their needs.

In 37+ Years of Local Experience, I have Seen Almost Every Possible Type of Scenario.

Whether you are buying, selling, or leasing, it is important to have an experienced agent negotiating at your side.  You would have to look far and wide to find a more experienced real estate agent in South Orange County.  Give me a call or a text, at (949) 887-5305, or shoot me an email at, and let’s talk about your real estate goals.

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