South Orange County Blog from Bob Phillips

Last Week’s Economic News in Review

Existing home sales outpaced expectations to hit an eight-year high, while new home sales were at a seven-month low. Meanwhile, lay-offs shrank to their smallest rate in more than 40 years.

Existing Home Sales

Sales of existing single-family homes, townhomes, condominiums and co-ops, increased 3.2 percent to an annual rate of 5.49 million in June, according to last week’s report from the National Association of Realtors. This was not only well ahead of the market expectation for a 5.4 million-unit pace, but marked the highest level in more than eight years.

“Buyers have come back in force, leading to the strongest past two months in sales since early 2007,“ NAR Chief Economist Lawrence Yun said. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.“

Looking at price, the median existing-home price for all housing types in June rose to $236,400, which is 6.5 percent higher than June 2014’s and surpassed July 2006’s peak median sales price of $230,400. Looking at inventory, the supply of existing homes at the end of June grew 0.9 percent to 2.3 million units available for sale. This put the inventory of existing homes available for sale at five months.

“Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,“ Yun noted. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.“

New Home Sales

While existing home sales skyrocketed, sales of new, single-family homes fell to an annual rate of 482,000 in June, according to last week’s report from the Census Bureau and the Department of Housing and Urban Development. This was 6.8 percent below May’s revised rate of 517,000, and marked a seven-month low.

However, compared on an annual basis, June’s sales pace was 18.1 percent higher than June 2014’s estimate of 408,000. If anything, the experts advised against reading too much into new home sales, when other real estate activity — such as existing homes sales — was performing so much better.

“We should not get too worried about the signal from the new home sales data at this point,“ JPMorgan Economist Daniel Silver told the Reuters news service.

In terms of prices, the median sales price of new homes sold in June was $281,800, and the average sales price was $328,700. Looking at inventory, the estimated number of new homes for sale at the end of June was 215,000, which represented a 5.4-month supply at June’s sales rate.

Initial Jobless Claims

First-time claims for unemployment insurance benefits filed by recently unemployed individuals plummeted to a 40-year low. Initial jobless claims filed during the week ending July 18, dropped to 255,000, a tumble of 26,000 claims from the previous week’s total of 281,000, the Employment and Training Administration reported last week.

The news marked the lowest point for lay-offs since November 24, 1973’s total of 233,000 claims. The big driver for the substantial drop was likely lay-offs due to restructuring in the car industry, but there was no denying that lay-offs were in retreat.

“This week’s claims reading may have been exaggerated on the low side but there is certainly no sign of the labor market losing momentum,“ High Frequency Economics’ Jim O’Sullivan told the Wall Street Journal. “The message: Employment growth remains more than strong enough to keep the unemployment rate declining.“

The four-week moving average — considered a more stable measure of lay-off activity — fell to 278,500, a decrease of 4,000 from the previous week’s unrevised average of 282,500. This was still well below the 300,000-claim mark that indicates a healthy job market.

This week we can expect:

  • Monday — Durable goods orders for June from the Census Bureau.
  • Tuesday — Consumer confidence for July from The Conference Board.
  • Thursday — Initial jobless claims for last week from the Employment and Training Administration; advanced second quarter GDP estimate from the Bureau of Economic Analysis.
  • Friday — Consumer sentiment for July from the University of Michigan and Thompson-Reuters Survey of Consumers.
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Orange County’s median home price inches higher to a 7-year peak

An article from Jon Lansner of the Orange County Register. June 18th, 2015

Home-Values-RisingHave Orange County house shoppers stopped paying up?

Orange County’s median selling price was $610,000 last month, CoreLogic reported Wednesday. And though that’s the highest price in seven-plus years, it’s up just 2.5 percent in a year.

The economic fundamentals of housing – local job growth, mortgage rates and availability – look solid. Those factors plus slower home price appreciation helped draw buyers. Orange County sales totaled 3,458 units – up 7.4 percent compared  with a year ago.

But Orange County’s price tag pressures loom large when when you look at the regional housing picture. That 2.5 percent year-over-year median price gain in Orange County was the smallest among Southern California’s six counties, though our local market is still the priciest in the region.

Ventura County had the region’s biggest annual gain. Its median selling price of $500,000 was up 8.7 percent compared with a year ago. Southern California’s median selling price for May was $426,000 – up 2.2 percent compared with a year ago.

Although that’s the slowest regional price growth in three years, it’s mainly due to a changing mix of sales throughout the region. Simply put, more people are buying inexpensive houses in Riverside and fewer people are buying pricey ones in L.A.

When it came to homebuying, Orange County’s 7.4 percent sales increase easily topped the region’s collective 4.9 percent annual gain. But note that Southern California’s sales hot spot, Ventura, was up 15.1 percent compared with a year ago. That high demand likely explains Ventura’s major price hikes.

To see how price tag pressure is playing out in Orange County, look at the performance of local builders, who typically sell the costliest homes.

New homes in Orange County had a median selling price in May of $861,000 – up 6.8 percent compared with a year ago. That’s darn expensive when you look at the resale home median of $667,500 – up 3.5 percent from a year ago – and the resale condo median of $415,000, up 2.3 percent compared with a year ago.

To my eye, too many builders have bet on Orange County’s high end, perhaps missing a chance to excite shoppers in more modest income ranges with their newly constructed offerings. If builders offered more $600,000 homes, they probably would go like hotcakes.

Orange County developers sold 278 new residences in May, down 24.7 percent compared with a year ago. That dip contrasts sharply with how quickly existing homes are selling. Resale house sales totaled 2,163 – up 8 percent compared with a year ago. Condo resales were 1,017 – up 20.1 percent.

Similar patterns were seen across Southern California. New-home sales were up only in the Inland Empire, where developers sell relatively inexpensive housing.

Riverside County’s builders sold 421 new homes in May, up 36 percent in a year. The median selling price was $384,000 – less than half of Orange County’s median even after rising 10.8 percent in a year. San Bernardino developers sold 186 homes, up 14 percent from May 2014. The median selling price was $417,250, off 1.6 percent in a year.

Sales of new homes were lower in the region’s three other counties. In Los Angeles (median price of $548,000), sales fell 16 percent compared with a year ago. In San Diego (median price of $539,000), sales were off 10 percent. In Ventura (median price of $477,500), sales were down 26.3 percent.

So who is balking in Orange County? I see one very curious pattern inside May’s sales data: the lack of homebuying growth in the midpriced communities.

I divided Orange County’s sales results by three price ranges, using the median selling price for 83 local ZIP codes. My trusty spreadsheet tells me that last month’s sales in the cheapest third – ZIP codes with median home prices up to $521,500 – were up 9 percent compared with May 2014. In the upper third – where prices start at $689,000 – May sales were up 13 percent compared with a year ago.

But I’m puzzled why homebuying in the ZIPs priced in between ran flat.

Certainly we know if a home is “affordable” for Orange County it sells quickly. That explains buying enthusiasm among the lower third. And the upper-crust house hunter typically does not feel the impact of economic cycles as much those with leaner finances.

But what of the middle? Are people not seeing enough choice? Inventory data suggest that supply shortages may be turning off some shoppers. (Note to builders: Free market research right here!)

Or is this middle group’s skittishness another example of the home-affordability stress felt particularly by the local middle class – and an explanation of why home price appreciation has stalled?

Orange County home prices moved slowly higher in May with the smallest year-over-year gain among Southern California’s six counties.

CoreLogic reported Wednesday that Orange County’s median selling price for May was $610,000 – up 2.5 percent compared to a year ago.

Ventura County had the region’s biggest annual gain. Its median selling price $500,000 – up 8.7 percent compared to a year ago. San Diego County had the smallest gain after Orange County with its median at $459,000, up only 3.1 percent compared to a year ago.

Andrew LePage, a research analyst with CoreLogic, said: “It’s slow going, but in many ways, the housing market continues to edge back toward normalcy with fewer distressed property sales and fewer investor and cash purchases. While home sales remain sub-par, they’ve been trending closer to long-term averages.

“Job growth and other factors suggest we should see solid housing demand. But in the wake of the Great Recession and years of weak income growth, many would-be home buyers are struggling with affordability and credit hurdles,” he said.

Perhaps slower home appreciation drew buyers into Orange County as sales totaled 3,458 units – up 7.4 percent compared to a year ago. That was a swifter sales increase than the regional trend. SoCal sales totaled 21,644 – up 4.9 percent compared to a year ago.

Southern California’s homebuying hot spot was Ventura, which likely explains the county’s May price surge. Ventura sales totaled 977 – up 15.1 percent compared to a year ago.

A changing mix of sales throughout the region led to a curious move in the six-county median sales price. Southern California’s median selling price for May was $426,000 – up 2.2 percent compared to a year ago.

How can the regional sales gain be lower that any one county’s increase? Look to sales in Riverside County – the region’s second-most active and second-cheapest county – which surged 9.9 percent, twice the regional growth rate. ( End of Jon’s article.)

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Orange County Real Estate Update for 6/9/2015

Orange County Housing Report:  Data Can Lie   

June 7, 2015  From Steven Thomas, of Reports On Housing

Truth = liesSometimes we rely on data that just does not paint the correct picture.

Housing Data: so many people rely on the “Days on Market” statistic and “Sold Data Indices” even though they often misrepresent what is truly going on in the marketplace today.

The average days on market for the current active inventory in all of Orange County is 79 days. For homes below $250,000 it is 80 days, over 11 weeks. Who in their right mind would sit down with a potential seller today and set an expectation of selling in 11 weeks for homes priced below $250,000? Clearly, any sound strategy to market a home will not include Average Days on Market.

The true expected Market Time for Orange County as a whole is 62 days. For homes priced below $250,000 it is 48 days. That is more like it. Sitting down with that same seller and outlining expectations between a sign in the ground to entering escrow of less than 7 weeks is a market reality. So, what’s with the huge disparity between the Market Time and Average Days on Market?

First, let’s take a closer look at how we arrive at Market Time. Market time answers how many months it will take to exhaust the current supply of active, listed homes based upon demand, the past month’s pending activity. For example, Gotham City has 100 homes currently on the market and 25 were placed into escrow within the prior 30 days. To ascertain the market time, divide 100 by 25, which is 4. So, given the most recent activity, the market time for Gotham City is 4 months.

The market can and will change and so will the Market Time; but, it is a pretty precise barometer for what everybody is experiencing in the real estate trenches today. This chart is like taking a pulse of the market. If there were suddenly a flood of listings and demand remained the same, the Market Time would increase. When demand increases, Market Time drops. However, Average Days on Market does not move as quickly and cannot accurately identify market changes and new trends.

6-8-15-A

For homes priced above $1 million, the Expected Market Time tells a completely different story compared to the Average Days on Market. The higher the price range, the larger the discrepancy. Often, luxury sellers read how the housing market is hot and mistakenly expect their home to fly off the market too. They may be encouraged by the Average Days on Market, but that is far from a market reality. For example, homes priced between $2 million and $4 million have an expected market time of nearly 7 months, not even close to the average days on market of only 85 days.

The argument against emphasizing pending sales is that many homes fall out of escrow. It happens, but not an alarming rate. Even though some pending sales do not go together, the Expected Market Time is extremely accurate and a powerful gauge of the current market. Yet, sold data is not a reliable gauge of demand TODAY. Sold data is tracked by most widely publicized housing indices, but it tells us a story of what happened about 45 to 60 days back. The market does not adhere to following what happened in the past. Instead, it does whatever it pleases today. Using pending sales over the prior month tells us what buyers are willing to do right now.

As the market slows a bit during the summer months, pending sales are going to drop slightly and the inventory will climb. As a result, the Expected Market Time will climb throughout the summer, slowing any appreciation considerably. Relying on this data is like looking out the windshield of your car, the best way to determine where you are headed. Yet, during the summer months Sold Data Indices will be elevated and indicate rising values; but, remember, this data will be a reflection of late spring, a completely different market compared to the summer. Relying on this data is like driving a car while looking out the rearview mirror.

Days on Market and Sold Data Indices often does not paint an accurate picture of what is truly going on in the housing market right NOW. Alternatively, the Expected Market Time encompasses the twists and turns as real estate evolves from season to season or responds to changes in the economy, interest rate changes, or local and global events.

Active InventoryThe inventory increased by 3% in the past two weeks.

The active inventory increased by 172 homes in the past two weeks and now totals 6,276, a 3% gain. Since the end of March, the inventory has continued to increase without pause. It looks like that trend will continue through the end of summer. The expected market time is on the rise and is currently at 62 days.

6-8-15-inventory

End of Steven’s report for 6/7/2015

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What’s Ahead For Mortgage Rates This Week – March 2, 2015

What's Ahead For Mortgage Rates This Week March 2 2015Last week provided several housing-related reports including New Home Sales, Pending Home Sales and Existing Home Sales reports. Case-Shiller and FHFA also released data on home prices. The details:

Sales of Pre-Owned Homes Hit Nine-Month Low

According to the National Association of Realtors® (NAR), Sales of pre-owned homes dropped to a seasonally-adjusted annual reading 4.82 million sales in January as compared to an estimated reading of 4.95 million sales and December’s reading of 5.07 million existing homes sold. This was a month-to-month decline of 4.90 percent, and represented the lowest reading for existing home sales in nine months.

Lawrence Yun, chief economist for the NAR, said that a short supply of available homes coupled with rising prices contributed to the drop in sales. While mortgage rates remain near historical lows, higher home prices and short supply are negatively impacting affordability; this puts home buyers who rely on mortgages in competition with cash buyers.

More encouraging news arrived with the Commerce Department’s new home sales report; new home sales reached 481,000 sales on a seasonally-adjusted annual basis in January. Analysts had expected new home sales of 467,000 new homes based on December’s reading of 482,000 new homes sold in December.

Pending Home Sales Highest Since August 2013

The National Association of Realtors® reported that pending home sales rose by 1.70 percent in January as compared to December’s reading of -3.70 percent. Pending sales were up 8.40 percent year-over-year. Job growth, a little more leniency in mortgage credit standards and slower inflation were seen as factors that contributed to higher pending sales. Pending sales represent under sales contracts that have not closed.

Case-Shiller, FHFA Post Home Price Data

The Case Shiller 20-City Composite reported that home prices rose by 0.10 percent month-to-month and 4.50 percent year-over-year according to its index report for December. San Francisco, California had the highest year-over-year price gain at 9.30 percent, while Chicago, Illinois had the lowest year-over-year home price appreciation rate at 1.30 percent as of December.

FHFA reported that home prices for properties connected with Fannie Mae and Freddie Mac loans rose by 5.40 percent on a year-over-year basis as compared to November’ year-over-year reading of a 5.20 percent increase in home prices.

Mortgage Rates Rise

Freddie Mac reported that average mortgage rates rose across the board last week. The rate for a 30-year fixed rate mortgage rose by four basis points to 3.80 percent; the average rate for a 15-year fixed rate mortgage increased by two basis points to 3.07 percent and the rate for a 5/1 adjustable rate mortgage was also two basis points higher at 2.99 percent. Discount points for all loan types were unchanged at 0.60 percent for fixed rate mortgages and 0.50 percent for 5/1 adjustable rate mortgages.

What’s Ahead?

This week’s scheduled economic news includes consumer spending, construction spending and the Labor Department’s non-farm payroll and national unemployment reports. Weekly jobless claims and Freddie Mac’s PMMS report on mortgage rates will be released as usual on Thursday.

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3 Reasons Why Setting Your Listing Price is the Most Important Aspect of the Home Sales Process

Three Reasons Why Setting Your Listing Price is the Most Important Aspect of the Home Sales ProcessHave you decided to sell your home, perhaps to make an upgrade to a newer, larger house? Whatever your reasons for selling, you’ll have a number of decisions to make as you craft your listing and begin receiving offers from buyers but few are as important as your initial selling price.

Let’s take a look at three reasons why setting your listing price is the most important factor in your home sale.

Reason #1: You Can Scare Off Potential Buyers With A High Price

You’ll receive the majority of your buyer interest in the first few days and weeks after you place your home up for sale, so it’s critical that your price isn’t set so high that it scares a number of buyers off.

While some sellers believe that it’s better to price high and let buyers submit lower offers, this can actually work against you. It’s better to have your home priced fairly from the beginning as you can always refuse offers that you deem are too low.

Reason #2: Your Price Directly Impacts How Long Your Sale Will Take

If you’re interested in seeing your home sell quickly it’s going to be in your best interest to have it priced competitively. Buyers will be shopping around for similar homes in your community and if there are other listings with lower prices on the market you may find it takes you a while to get your home sold.

Also, if you do find a buyer who is interested they’ll likely try to haggle with you, which can extend the length of the sale by a week or more as you go back and forth to reach an agreement.

Reason #3: A Low Price Means Leaving Money On The Table

While pricing too high can cause issues with your sale, pricing your home too low isn’t going to benefit you either. While you’ll likely find that you receive a high number of offers very quickly, you’ll end up leaving some of your home equity on the table – equity that you could easily have realized as buyers would have been willing to pay the difference. That’s a good reason for choosing a Realtor with an excellent track record of obtaining top dollar sales prices on his or her listings, in the shortest amount of time possible.

In these parts – South Orange County, in Southern California, such a Realtor is Bob Phillips, of Realty One Group. Call Bob today at (949) 887-5305, or email to BobPhillipsRE@gmail.com.

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Updating New Home Sales, Existing Home Sales, And The Rental Market

DOC New Home Sales and NAR Existing Home SalesThe Department of Commerce reported July sales of new homes dropped by 2.40 percent over June to a four month low. Analysts noted that although July’s reading of 412,000 new homes sold fell short of expectations and June’s reading, the new homes sector is volatile and subject to change.

June’s reading of 406,000 new homes sold was revised to 422,000 new homes sold; expectations were based on the original reading. Three of four regions posted a slower rate of growth for home prices with only the South posting a gain.

The average price of a new home in the U.S. rose to $269,800, which is 2.90 percent higher than June’s average home price. Inventories of new homes increased to a six-month level based on current sales pace.

This was the highest inventory of new homes available since 2011. Strict mortgage credit requirements and an elevated national unemployment rate contributed to the lower rate of home value appreciation and higher inventories of new homes.

The good news: New home sales increased by 12.90 percent year-over-year in July.

There are presently quite a few areas where you can buy a new home in Orange County, primarily though, in South County. There are pocket communities in Tustin, Irvine, Lake Forest, as well as the entirely new community just South of Ladera Ranch, Rancho Mission Viejo.

Existing Home Sales Rise: Steady Mortgage Rates, Rising Rents Cited

The National Association of REALTORS® reported that July sales of previously-owned homes rose from June’s revised figure of 5.03 million sales to 5.15 million sales and achieved the highest reading for 2014.

The existing home sales readings are calculated on a seasonally adjusted annual basis. Existing home sales were 4.30 percent lower than for July 2013, which had the highest reading for existing home sales in 2013.

Lawrence Yun, chief economist for the NAR, said that a growing inventory of available pre-owned homes for sale and strengthening labor markets contributed to sales growth. Mr. Yun said that July’s pace of sales was expected to continue based on mortgage rates holding steady and rising rents for apartments.

The inevitable rise of mortgage rates and increasing home prices were cited as factors that could cool existing home sales in coming months. With the Fed scheduled to complete its asset purchase program in October and changes to the Fed’s target federal funds rate expected within months, mortgage rates are expected to rise. Affordability looms as an obstacle to sales; home prices continue to rise as wages grow at a slower pace than home prices.

The national median price for existing homes was $222,900, which was a year-over-year increase of 4.90 percent. This was the 29th consecutive month for year-over-year price gains for existing homes. The inventory of existing homes for sale increased by 3.50 percent to 2.37 million available homes and represents a 5.50 month supply. Unsold inventory of existing homes is 5.80 percent higher year-over-year. As compared to July 2013’s reading of 2.24 million available pre-owned homes.

Homes sold through foreclosure or short sales have steeply declined from 36 percent of existing home sales in 2009 to approximately 9 percent in July and were down from 15 percent of existing home sales in June. ( In Orange County, the percentage of distressed property sales is less than 5%.)

The South Orange County Rental Market is Booming

While both the local new home, and the existing home market’s have slowed considerably as we enter the fall, the rental market has remained quite strong. I have been seeing increases of 7-10% in the rental prices over the past year. Many of my clients who have moved up into a bigger house – if they had the wherewithal – have kept their former home and turned it into a rental. as part of my advice. In almost every case, I’ve been able to get tenants moving in, no longer than a week after my clients moved out.

Vacancy factors have been practically non-existent, as I have also had great success replacing former tenants who have moved on – almost always within a week of the past tenants moving out. The management of rental properties has become an increasingly higher percentage of my business, and my clients have been happily increasing their net worth, with the holding onto, or the acquisition of additional rentals. This is an excellent time to either be, or to become, a landlord.

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Orange County Housing Report: Bumping Along a Ceiling

aThe following is today’s Orange County Housing Report, from my local economist friend Steven Thomas.

Pushing the ceilingOrange County Housing Report: Bumping Along a Ceiling,  August 3, 2014

With the best time of the year to sell coming to a quick end, Orange County appreciation is coming  to an end. 

A Ceiling in Values: Sellers are learning the hard way that they can no longer arbitrarily set the price.

Buyers, sellers, REALTORS®, lenders, and everybody else involved within real estate know that there is a palpable difference in the 2014 real estate market. The number of homes fetching multiple offers is shrinking drastically. Homes are sitting on the market. The expected market time is on the rise. The active inventory has been growing all year and  just surpassed the 8,000 home mark, just a few hundred short of a long term county average.

The lesson for 2014 is that sellers cannot price their homes on a whim, on what they would like to walk away with from the sale of their home. 2012 and 2013 were completely different. In those years, values were skyrocketing. When that occurred, sellers were able to price their homes above recent sales. They dealt with multiple offers and often sold for more than their list prices. That simply is not the case anymore; yet, sellers continue to adopt that strategy and overprice their homes.

What changed? Values reached a level where buyers were no longer comfortable paying much more than the most recent sale. They wanted to pay what is “fair,” also known as the Fair Market Value. This explains why month to month appreciation has stalled. Unfortunately, news outlets across the country mainly report on year over year statistics; whereas, month to month statistics tell the real story. Orange County’s headlines highlighted a 10% increase in the median sales price year over year in June. Drill down a little bit deeper, when you remove new home sales, residential detached houses are up 6.6% and condominiums are only up 4.2%. That’s the difference in a year. Most important, month to month appreciation is flat.

With flat appreciation, the Orange County housing market is bumping along a value ceiling. And, the Autumn Market is right around the corner. Cyclically, housing cools a bit after the kids go back to school. It will cool further during the Holiday Market, from Thanksgiving through the first few weeks of the New Year.

When the market bounces along a value ceiling, occasionally there is a sale in a neighborhood that neighbors get really excited about and are lured to jump into the housing fray. Typically, they price above that sale in hopes that they can get more. They also add an additional amount leaving “room for negotiating.” Remember, this is a market where buyers do not want to pay too much for a home. So, the home sits on the market. Eventually, after one or two reductions, they arrive at or near the sales price of the home that motivated them to sell in the first place. Surprisingly, they still are unable to sell and just sit on the market longer. It could be condition, location, or upgrades, but often it is that buyers do not want to match the price of that most recent sale. After viewing similar properties, potential buyers feel that another buyer simply overpaid. That can still happen today, but just because one buyer is willing to stretch the value, the vast majority are not. The bottom line: when a home sits on the market even though it is priced at or near a recent closed sale, the price is too high.

As we bounce along a ceiling, sellers should price their homes realistically right from the start, taking into consideration the most recent sales, all pending sales, their condition, location, and upgrades. DO NOT PRICE BASED UPON OTHER LISTINGS; instead, know your competition, but price according to pending and closed sales. There are neighborhoods where every single home on the market is overpriced. In that case, instead of the lowest priced home selling, everybody will sit on the market with absolutely no success.

Active Inventory: The active inventory increased by 3% in the past two weeks and pushed past the 8,000 home mark.

8-3-14-active inventory-y-o-y

The active listing inventory added an additional 231 homes in the past two weeks and now totals 8,057. That’s the first time the inventory has been above 8,000 homes since January 2012, 2½ years ago. Thus far in 2014 the inventory has grown without pause, adding an additional 3,324, a 70% increase, and is poised to continue to increase through the end August. Keep in mind, in order for the active inventory to grow, more home need to be placed on the market than are coming off as pending sales.

Last year at this time there were 5,522 homes on the market, 2,535 fewer than today.

DemandDemand increased by 2% in the past two weeks.

8-3-14-demand

Demand, the number of new pending sales over the past month, increased by 48 now totals 2,549. After an initial small dip in demand in July, it will slightly rise in August. Last year at this time demand was at 2,707, 158 additional pending sales compared to today.

Distressed Breakdown: The distressed inventory increased by 5% in the past two weeks.

The distressed inventory, foreclosures and short sales combined, increased by 13 homes and now totals 294, its highest level since December of last year. The distressed inventory started the year at 271, so it really has not changed much. The long term trend is for it to remain at a very low level. Last month, they represented only 5% of all closed sales.

In the past two weeks, the number of active foreclosures increased by 2 homes and now totals 78. Only 1% of the active inventory is a foreclosure. The expected market time for foreclosures is 65 days. The short sale inventory increased by 11 homes in the past two weeks and now totals 216. The expected market time is 48 days and remains one of the hottest segments of the Orange County market. Short sales represent 3% of the total active inventory. ( End of Steven’s report.)

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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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Altos: Critics wrong about housing, it’s going to soar in 2015!

An interesting new article from Jacob Gaffney, of HousingWire.com, dated July 29, 2014:

HotAirBalloonWith so many fists beating on the housing-is-facing-ruin door, Altos Research is set to release data that claims all that pounding is in vain.

Clients will begin receiving a report Wednesday afternoon, but HousingWire was able to get a sneak peek, and the results say that housing recovery critics are wrong about housing. According to Altos, it’s going to soar in 2015.

“While we see signs of demand easing, we are significantly more bullish on housing than many of the recent headlines seem to suggest,” said Altos CEO Michael Simonsen. “Based on our models, we’re forecasting another year of home price appreciation, with a 7% home price increase for the year of 2015.”

Single-digit appreciation is a remarkable prediction. Many other experts anticipate depreciation in   the nation’s housing market, so the Altos call is relatively noteworthy.

What’s driving the negative stand most of the market holds? The media is partially to blame, the report states.

Bearish Headlines, Bullish Reality

In the section titled, “Bearish Headlines, Bullish Reality,” the researchers state their case this way:

“In our view, these attitudes reflect a myopic view of actual market conditions and conflate concerns over the mortgage industry, the otherwise-constrained new construction market, and more broadly, the long-term financial stability of the U.S. consumer with specific current housing market supply and demand dynamics. While these are valid long-run concerns, the variables impacting home prices have proven to be driven by low available supply and growing household formation.”

So what is the main driver for the Altos view that prices will rise 7%? Altos expects inventory to climb another 10%.

“As inventory and transactions rise along with pricing, participants in the housing market stand to benefit broadly,” they write. Furthermore, the number of days on market remains low compared to before the housing bust, indicating a seller’s market.

In a seller’s market, sellers can list homes at a higher value, hoping a buyer takes the bait. If not, they can also bring down the price closer to market value, while appearing to offer a sales compromise to the buyer.

Altos estimates that approximately 35% of properties will take such a price cut. Altos sees this as an indicator of strong competition, despite weaker demand overall.

The nation’s housing market, they note, continues to require a more nuanced view of its future.

“Home prices across the U.S. are poised for a fifth consecutive year of recovery. The market is still faced with low inventory and demand, buoyed by an expanding economy, which, among other factors, remains healthy,” the report concludes. “Both supply and demand conditions are moving from extreme bullish conditions to healthy condition.”

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Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)

Sellers, Beware: Five Reasons You Might Not Get Top Dollar when You Sell Your Home (And How to Avoid Them)For most people, their home is their largest asset, so they want to maximize that asset by getting top dollar when they sell. Here are a few reasons you might not get top dollar when you sell – and how to avoid them!

Selling At The Wrong Time

From early spring to late summer is home-buying season for most people, especially those with children. Putting your house on the market during this period is when you are likely to get top dollar for it. Early fall is also a good time to list your home. Winter – especially December – is the worst time to list. If you list your home outside of prime selling season, you are likely to get less for it than you could have otherwise.

Not Staging Your Home Properly

Many people think of staging as simply rearranging the furniture or changing curtains, but there is so much more to it, and not doing it properly can mean less money for your home. To stage your home properly, you must declutter, putting knick-knacks and family pictures away. You also want to make sure your home is as clean as possible and that you correct any defects such as holes in the wall or cracked window panes. Another thing you should do as part of your staging routine is to paint your walls in neutral colors and update cabinet hardware and light fixtures that are out of date. These little changes can make a big difference.

Not Paying Attention To Curb Appeal

You can spend all the time and money necessary to spruce up the inside of your home, but if your lawn is a patch of dirt and your gutters are falling down, all that work and money can go for naught. To get top dollar for your home, you need to improve your curb appeal. This includes seeding or sodding bare spots in your lawn, trimming trees and shrubbery and fixing up home-related items such as broken concrete and sagging gutters.

Not Getting The Price Right

You might think that to get the highest price out of your house, you have to price it high. However, that’s not necessarily always the case. If you price your house too high, it can make other similar houses that are priced lower look like better deals. You should make sure to pay close attention to what comparable homes are selling for in the area and price your home accordingly.

Not Working With A Real Estate Agent

Many people think they can save a bundle selling their home by not working with a real estate agent. While you might save on the real estate commission, that is probably not the case, since your potential buyer is wanting to save that same commission.  So, at best you’re likely only saving HALF the commission.  Also, if you’re thinking that the commission is going to be 6%, you’re probably wrong there, as well.  Many agents, like me, are willing to offer a substantial discount to a seller – frequently, as low as 1% to 2% on the seller’s side, ( Depending on the price range.) while offering 2.5% to the buyer’s side of the transaction.  You can quickly lose more than that 3.5% to 4.5% – that the buyer expects at least 2.5% of – by making mistakes in pricing and marketing.

A real estate agent will have access to resources you don’t, such as information on buyers looking in your neighborhood. An agent will market your home, make sure it is priced accordingly and set up showings. It is worth your time and money to call an agent experienced in selling homes in your neighborhood who can give you a free market evaluation.

In South Orange County, that agent is Bob Phillips, with over 38 years of local, professional real estate service.  Why not give me a call or text today, at             949-887-5305, or shoot me an email to BobPhillipsRE@gmail.com.  I’d love to talk with you about your real estate plans.

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