South Orange County Blog from Bob Phillips

Why October is the Best Time to Buy a House

4_Tips_To_Save_For_That_Down_Payment (1)

Posted by Staff Reporter at Realty Today (media@realtytoday.com) on Oct 05, 2015

Buying a house is no walk in the park. There are many things to consider, not to mention your bank account. But if you’re in the house-hunting phase in your life, now may be the time to make the call. Specifically, this month.

RealtyTrac recently conducted a research to find out when is the best time to make a house purchase. Analyzing more than 32 million real estate transactions since 2000, they discovered that most buyers have gotten the best deals during the month of October. During this month, the average sales price turned out to be less than 2.6 percent than the estimated full market value of the property.

This may be attributed to the fact that around this time, families are focused on getting their kids settled into the school season. Moving to a different location will disrupt this schedule, so there’s less competition in the market. This means sellers are more likely willing to negotiate.

Also, according to Time, a property’s wear-and-tear issues likely surface around fall, as temperatures drop. It’s important to inspect a home’s insulation, heating and drainage systems to make sure you are getting the right price for the house.

In contrast, RealtyTrac found out that the worst month to buy a house if you’re on a tight budget is in April, where prices soar at 1.2 percent. ( End of article.)

From Bob Phillips:  Actually, any time between now and January 15th should be a great time to buy a house, before the buyers return in droves by February.

Thinking of buying? Drop me an email ( BobPhillipsRE@gmail.com ) or give me a call, ( 949-887-5305 ) and let’s talk about your best options.

Advertisements

Comments Off on Why October is the Best Time to Buy a House

Orange County Housing Report: Here We Grow Again!

Part of the normal summer housing cycle, the active inventory continues to grow without pause.

Increase of inventoryA Growing Inventory: the active inventory has grown by 42% since the beginning of the year.

Quietly, one house at a time, the active inventory has been growing. In order for the inventory to rise, homes have to come on the market faster than they are coming off. Homes come off the market for one of two reasons: either they are placed into escrow or a seller opts to pull their home off of the market. So, in order for the inventory to blossom from 5,000 homes at the beginning of 2015 to 7,116 homes today, homes have to sit on the market without success.

But how can that occur when we have heard so much about the extremely hot market this year? Quite simply, too many overzealous homeowners inaccurately priced their homes outside of reality and sat on the market until they came to their senses. It’s no wonder that 10% of the housing inventory in Orange County reduces their asking price each and every week.

Don’t get me wrong; the market is a lot stronger this year compared to last year. There were a similar number of homes placed on the market so far this year compared to last year, but the active inventory last year was 6% higher. The inventory was higher because demand was not as strong during the Spring Market. When fewer homes are placed into escrow, the inventory rises.

In spite of the robust market, the inventory is still rising. A hotter market is not a free pass to price a home wherever a seller wishes. Those sellers realize the error in their ways after sitting on the market without reviewing a single offer. Now that summer is almost over, the Orange County housing market is beginning its annual transition into the Autumn Market. Have you seen more Open House directional arrows at busy cross streets? That’s a definitive sign that there are fewer buyers in the marketplace, that homes are not selling as quickly, and that too many homes are not priced accurately.

April 9th of this year was the absolute peak of the spring selling season.  The expected market time was at 1.81 months, or 54 days. The market was a very hot seller’s market and prices were rising, homes were flying off of the market, and offers were coming in above the listing price. Since then, the inventory has grown by 27%, 1,792 homes, and demand has dropped by 13%, or 409 pending sales. When supply rises and demand drops in housing, the expected market time that it would take for the average home to be placed into escrow rises, the higher the expected market time, the slower the overall market. It has climbed to 2.64 months, or 79 days, moving from a deep seller’s market to a slight seller’s market.

The expected market time is marching its way to three months. When it is between three and four months, it is a balanced market, one that does not favor a buyer or seller. At its current level, sellers are able to call the shots, but appreciation has slowed to a crawl. Without appreciation, proper pricing is vital in order to succeed. At this point, sellers wishing to stretch the price will simply sit on the market until they finally wake up to the reality that they are overpriced and will attract no offers.

Success today can be achieved a lot swifter with the sound strategy of pricing a home as close to its Fair Market Value. This cannot be determined by any online tool or valuation calculator, as they can be off by 20%, or even more. Instead, it is best to utilize the expertise of a seasoned REALTOR®, an expert who is able to take into consideration location, condition, upgrades and amenities, carefully comparing a home to the most recent pending and closed sales activity to determine the price.

The bottom line: price is the determining factor in successfully selling and stretching the price is a strategy that will not work for the remainder of 2015.

Active InventoryThe inventory increased by 7% in the last month.

The active inventory increased by 469 homes in the past month and now totals 7,116. October of 2014 was the last time the inventory was above the 7,000 home mark. Last year at this time the inventory totaled 8,057 homes, 941 more than today, with an expected market time of 3.16 months, or 95 days. That’s 16 additional days compared to today.

From here we can expect the listing inventory to continue to grow through the end of the summer before turning lower in September as fewer homes come on the market and sellers start to throw in the towel with both the Spring and Summer Markets in the rearview mirror.

DemandDemand decreased by 9% in the past month.

Demand, the number of new pending sales over the prior month, decreased by 271 homes in the past month and now totals 2,698 homes, its lowest level since February. Demand will remain at these levels for the remainder of summer before it downshifts again after the kids go back to school.

Last year at this time there were 149 fewer pending sales, totaling 2,549. The year over year difference has diminished substantially. On July 2nd there were 492 more pending sales compared to 2014, 20% more. The current difference is the smallest since February, just 5%. 

Distressed Breakdown: The distressed inventory increased by 12 home in the past couple of weeks.

The distressed inventory, foreclosures and short sales combined, increased by 12 homes in the past two weeks, but for the month it is actually down by nine. Year over year, there are 31% fewer distressed homes today. With a sharp turnaround in prices in the past few years the number of distressed homes has fallen appreciably. Only a few percent of all mortgaged homes are upside down. During the Great Recession, the number was as high as 25% of all mortgage homes. The distressed market has been reduced to an asterisk of the current Orange County housing scene.

In the past two weeks, the foreclosure inventory increased by 10 homes and now totals 68. Less than 1% of the inventory is a foreclosure. The expected market time for foreclosures is 51 days. The short sale inventory increased by 1 homes in the past two weeks and now totals 139. The expected market time is 48 days. Short sales represent just 2% of the total active inventory. ( End of Report.)

This report is from my longtime friend, Steven Thomas, Orange County’s own real estate market guru, and the above is his latest “Orange County Housing Report” which can be found at ReportsOnHousing.com

Comments Off on Orange County Housing Report: Here We Grow Again!

What’s Your Outlook on the Real Estate Market?

An article by Colin Robertson, of TheTruthAboutMortgage.com, 7/23/2015

crystalball-610x250

So here’s a true story. Yesterday, a good friend of mine asked the following question via text message: “What’s your outlook on the real estate market…we are looking to buy a place soon.”

That’s the exact message he sent over last night; there weren’t any emoticons by the way, sadly.

I saw the message but did my best to avoid answering it for about half an hour. Then I finally cracked and responded with the following:

“In a word, overpriced. But if you really want to buy a home that’s your deal. It’s not always about the investment.”

Now in the past I may have just left it at “overpriced,” but I’ve learned that such remarks are often met with resistance. I also don’t want to ruin anyone’s grand plans.

And it’s true, buying a home isn’t just about the investment. It’s not simply about timing the market and making a killer profit, that is, unless you’re a real estate investor.

For most people it’s a home. It’s a place to live. There are reasons to buy other than turning a profit.

So my outlook has changed, or perhaps broadened, to include benefits beyond making money.

But my point was basically that it’s not an ideal time to buy in terms of investment, but it could be a great time to buy a home if there’s one you really like and want to own.

At the end of the day, if he gets the home he wants, he’ll probably be happy, even if it doesn’t double in value in five years. Even if it flat lines or drops, he’ll probably still be happy if he truly loves the home.

And over time, he’ll surely build equity and come out ahead as home prices reach new heights.

National Median Sales Price Reaches All-Time High

Yesterday, the National Association of Realtors reported that the national median sales price reached an all-time high.

The price of a median existing home climbed to $236,400 in June, a 6.5% increase from a year earlier, enough to surpass the previous peak median sales price reached in July 2006 ($230,400).

For the record, the median sales price has increased year-over-year for 40 consecutive months, so yes, home prices have been on a tear.

Home sales have also been white-hot, with existing sales hitting their highest level in over eight years (February 2007).

Properties are also being scooped up faster than ever, with the average time on market only 34 days in June, down from 40 days in May, making it the shortest amount of time since NAR began tracking in 2011.

I also got word from a real estate agent friend that new home sales are picking up again. Recently, builders were offering discounts, but now that inventory is so low, they’re increasing prices and slashing discounts.

This is basically a testament to the supply/demand imbalance that is causing home prices to keep rising, and making bidding wars a common situation.

It’s for these reasons that I don’t love the current market as a buyer. At the same time, selling isn’t ideal either because there’s a good chance home prices will continue to increase.

In fact, if you look at real prices adjusted for inflation, home prices aren’t really at new all-time highs. In today’s dollars, the median would have to be closer to $260,000.

So buying because you love a home still makes sense today, as it always will. And you’ll probably do just fine if you can afford the home and stay in it for several years.

But if I had to take a side, I’d say that home prices are bloated and the competition is fierce. That certainly makes it a lot less attractive to buy today than in the very recent past. I’m taking a wait and see approach. ( End of Colin’s article.)

Comments Off on What’s Your Outlook on the Real Estate Market?

Signs of a Neighborhood on the Rise

prices-upA neighborhood on the rise offers things you definitely want: a great space at a good price, and the promise of improvement (and rising home equity). But how do you know when a neighborhood is getting ready to take off? There a few signs to look for that can steer you to the next hot zip code. (Remember, Brooklyn was once considered highly undesirable!)

It’s near another hot spot.
Location, location, location! If you can’t afford the prices in the currently desirable metro area, then look at the neighborhoods adjoining. It’s likely the amenities you’ll find there will be creeping into the adjoining neighborhoods, and yours could be next.

You can get there from here.
Excellent public transportation and freeway access generally mean young people moving in, which in turn leads to…

…Independent business and trendy shops popping up.
A young demographic in a neighborhood generally attracts bars and restaurants that are chasing millennial dollars. Look for store and restaurant trends that you’ll find in the already hot neighborhoods — farm-to-fork, wine bars, even vape bars. And of course an uptick in the number of hardware and home improvement stores is always a good sign.

Upscale chain stores are also encroaching.
These businesses spend a lot of money tracking demographics and conducting market research before they begin to move into an area. Let them do some of the groundwork for you. Stores catering to a higher income clientele, such as Trader Joes, Whole Foods, and of course Starbucks are the ones to watch.

Homes are selling faster and faster in the area
If you notice a lot of houses undergoing renovations or new home construction, and more For Sale signs, it’s time to ask your real estate agent the average time a home in that area spends on the market. As the number of days on the market declines, the housing market in the area will be heating up. If you can get in at the beginning of this trend, you’ll probably get a great price on your new property.

Looking for a neighborhood on the rise is always taking a chance. There’s no guarantee you’ll be getting in on the next most desirable place to live in your area. But by looking at the signs listed above — and having a great real estate agent who knows the area and can offer guidance — you could be getting a great place for a much lower price. With over 38 years of continuous service in South Orange County, I not only know the area, but have the experience to guide you well.

Give me a call, ( 949-887-5305 ) or shoot me an email, ( BobPhillipsRE@gmail.com ) and let’s go house shopping!

Comments Off on Signs of a Neighborhood on the Rise

Four Excellent Reasons to Buy a Home So You Can Get out of the “Renting Rut”

Three Excellent Reasons to Buy a Home So You Can Get out of the Renting a home is a good option for some, but buying a home just might be the best thing for you.

There are some big advantages to buying a house that will help you get out of your renting rut and focus more on your future.

#1.)  Build Equity

Did you know that when you rent a home, you help someone else build equity? Any changes that you make with your landlord’s approval puts money back in his or her pocket. Keeping the yard clean and taking care of routine maintenance builds equity in that property. When you buy a home of your own, you have the chance to build equity of your own, which can add significantly to your net worth.

#2.)  Save On Your Taxes

When you rent a house, you cannot deduct the money you spend on your taxes. Though some states will let you make a small deduction based on the total amount you spend in rent each month, you cannot make any deductions on your federal taxes. When you buy a home, you can save with a few different types of deductions.

The federal government lets you make a deduction if your home is worth more than what you currently owe on your taxes. If you purchased your first home, you can make a deduction in regards to your property taxes. You can also deduct money that you spend on some renovations and energy saving appliances.

#3.)  Put Your Personal Touch On Things

As long as you continue renting, you live in a home that belongs to someone else. Your landlord has final say over what you do and do not do. This often means that you cannot make repairs or significant changes without seeking approval first.

Renting a home lets you put your personal touch on things. You can paint the walls any colors you want, rip out the carpet to add hardwood flooring or even make significant changes outside to turn your new home into your dream home.

#4.)  Interest Rates Are STILL Incredibly LOW!

One factor that has contributed to home affordability has been the incredibly low interest rates that have been available for the last couple of years.

Now that you know more about the benefits of buying a home and how that purchase can get you out of the rental rut you’re in currently, isn’t it a good time to give me a call? I would be thrilled to assist you in becoming a homeowner. Let’s go home shopping!

Comments Off on Four Excellent Reasons to Buy a Home So You Can Get out of the “Renting Rut”

Three Tips for Reducing Your Closing Costs if You’re Looking Forward To Buying a Home in the Spring

Three Tips for Reducing Your Closing Costs if You're Buying a Home in the Spring Spring is approaching fast and it is usually the busiest time of the year for home buying. After a long and cold winter, many people are ready to enjoy the nicer weather and begin to shop for a new home. Spring is also the perfect time for home buying for families with children because it allows them to move during the summer without interrupting school.

Home buying has costs associated with it other than the mortgage itself. Known as closing costs, these fees are a part of the home buying process and they are due at the time that the mortgage is finalized. Buyers, however, can negotiate these costs and reduce the expense with a little bit of effort and with the help of a good mortgage professional.

If you are thinking of buying a new home in the spring here are three helpful tips to reducing your closing costs.

Compare All of Your Mortgage Options

If you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage adviser to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Third Party Fees

Some of the closing cost fees will be associated with third party vendors that must perform required services. Home appraisals, title searches, and costs for obtaining credit reports are some of the items included in this area. While these may be a little harder to negotiate because the lender uses specific companies to perform these services, it does not hurt to ask if you can use your own appraiser or title search company.

Zero Closing Cost Mortgages

Buyers may also wish to inquire about a no closing cost mortgage. This type of mortgage eliminates all closing costs. The lender covers all of the closing cost fees in exchange for a slightly higher interest rate on the loan. In most cases the increase is less than one-quarter of a percent. This type of loan can be very helpful to buyers. Buyers can then use the money that they saved on closing costs to help with the move.

With a little preparation, you can find the best mortgage product for the up-coming spring season. Be sure to contact your experienced mortgage professional, as they will be able to help you find the right mortgage for your specific needs with the lowest out-of-pocket expenses.

Compare All of Your Mortgage OptionsIf you’re using mortgage financing to cover some of the up-front purchase cost of your home you’ll have other closing costs to pay including lender fees, mortgage insurance and more. Be sure to compare all of your options with your trusted mortgage advisor to ensure that you’re getting the best possible deal and paying the least amount in fees and interest.

You may also be able to save a bit on your closing costs by choosing a “no points” mortgage. In this type of mortgage you’ll end up saving on closing costs but you’ll be left paying a higher interest rate. Spend a bit of time doing the math to determine the best course of action.

Comments Off on Three Tips for Reducing Your Closing Costs if You’re Looking Forward To Buying a Home in the Spring

Looking for Luxury? How to Upsize Your Next Home Without Upsizing Your Costs

Looking for Luxury? How to Upsize Your Next Home Without Upsizing Your Costs Size matters when you are buying your next home. Whether you plan to expand your family, need more room for your stuff, or are concerned with resale value, you want to get the most space for your money. Also, if you want to add a feel of luxury to your home, one of the best ways to do it is to create open spaces rather than cramming all your furniture in rooms so tiny you can barely walk around without knocking something over.

Traditionally speaking, the larger a home is, the more it costs. If there are two newly built houses side by side in a subdivision, the bigger one is likely to cost more. However, there are some tricks to finding spacious houses that are affordable.

Choose Emerging Neighborhoods

Houses in this year’s trending neighborhood are at their peak prices. Clever buyers look for neighborhoods that are in the process of being gentrified, buying at the bottom rather than the top of the market, to get more house for their money.

Fix It Up

Houses in perfect condition, that show well, sell for a premium. If you want to get more house for your money, choose something that needs a bit of TLC. A house that has pink walls and orange shag carpet might appear just too ugly to consider when you first view it, but it might just need a few coats of paint and some new carpet to become a spacious dream home.

Do Some Finishing

Unfinished areas such as attics and basements can be finished to create additional living spaces. The basement could become a family room and the attic an extra bedroom or study. An unfinished space can become the extra bathroom you need to make morning more manageable.

Consider an Addition

Contractors can add rooms to a house. If you have a large lot, you can build an extra wing. With a one story ranch house, it may be possible to raise the roof and add a second story.

The more stuff you have, the smaller your home appears. Reduce clutter and invest in smaller condo size furniture to give even the smallest home the appearance of spaciousness.

Ready to Go Bigger? ( Or Maybe Even Smaller?)

Give me a call – (949) 887-5305 or shoot me an email BobPhillipsRE@gmail.com  and let’s talk about your options.

Comments Off on Looking for Luxury? How to Upsize Your Next Home Without Upsizing Your Costs

Be Prepared for Your Mortgage Pre-approval Interview by Having Answers to These 4 Questions

Be Prepared for Your Mortgage Pre-approval Interview by Having Answers to These 4 QuestionsSo – you’re thinking of buying a house and now you’re ready to take the next step and meet with your lender or mortgage advisor for the pre-approval interview. Are you ready?

At this stage of the application process your lender will dig into your financial background to ensure that you’re fully capable of making your mortgage payments and that you don’t present too high a risk. Let’s take a quick look at a few questions you should know the answers to before you go in for a mortgage pre-approval.

Do You Have a Specific Home in Mind?

If you’ve already picked out the perfect new home, be sure to bring along some of the details when you meet with your lender. At minimum you’ll want to know the price range that you’re expecting to buy in so that your mortgage advisor can try to find a mortgage that allows you to purchase the home and still meet your other financial goals.

What is Your Current Income from All Sources?

Your income (and that of your spouse or significant other, if you have one) will be a major factor in the size of your mortgage, your payment terms and the interest rate that you qualify for. If you have a significant income and it’s clear that you will have little trouble making the mortgage payments you’ll likely qualify for a shortened amortization period that includes a lower interest rate. Conversely, if you can only afford to make a bare minimum monthly payment you’ll be facing a longer mortgage term.

Do You Have Any “Black Marks” on Your Credit?

If you have any negative spots in your credit history you’ll want to ensure that you’re able to answer for them, because your lender will certainly ask about them. Be honest and confident, and remember that the lender wants your business as much as you want to receive a pre-approval for mortgage financing.

What Are Your Plans in the Next Five to Ten Years?

Finally don’t forget that interest rates will continue to fluctuate and that may have an impact on your mortgage in the near future. Be sure to share any major financial plans that you have with your mortgage advisor as they can keep you appraised of any refinancing opportunities that come about.

Buying a home is an exciting time – one that will be far less stressful if you are fully prepared for the many steps along the way. Contact your local mortgage professional today to learn more about how you can get pre-approved for mortgage financing. If you don’t have one, I have a couple of lenders I’ve worked with over the years, whom I can wholeheartedly recommend.

Comments Off on Be Prepared for Your Mortgage Pre-approval Interview by Having Answers to These 4 Questions

Southern California Rents Are UP

prices-upShould You rent or buy? This is a question many would-be homeowners ask themselves. All too often You are left with the thought that owning is simply unaffordable. Fortunately, I have news for anyone who is “on the fence” about buying or renting; the decision to buy might become a little easier, as a new study from USC  predicts that rents will rise over the next two years.

According to the research performed by USC’s Lusk Center for Real Estate, rents across Southern California are expected to rise significantly by 2016 – the latest reminder of growing affordability difficulties throughout California.

In Los Angeles County, it’s expected rents will jump by 8.2% by 2016, increasing to an average monthly rent of $1,856. Similarly, rents are expected to increase by 8.6%, 9.9% and 6.9% across Orange County, the Inland Empire and San Diego County respectively.

On average, the SoCal region is expected to see an 8% bump, increasing faster than the 3%-4% rise we’ve seen this year, or more than 10% since January 2013.

What impact will higher rent have on the housing market? While the study from USC suggests that rental vacancy rates will slightly decline, many RE professionals are certain that this bump will be enough to drive some renters back into the buying market.

Richard Green, director of the Lusk Center, commented on the matter saying, “Though the economy and employment have improved, renters’ incomes are stagnant. So while net absorption and occupancy rates are moving in the right direction, affordability continues to worsen.”

In South Orange County, we are presently entering the Fall buying season, during which prices tend to become more negotiable. ( I usually recommend this time of year – until the end of January – as THE best time of the year to buy a house.)  Softer, more negotiable prices, combined with historically low interest rates, make for an unusually good environment, for buyers.  If you’re even just in the thinking about it stage, this might be a good time to get serious, and give me a call.

Comments Off on Southern California Rents Are UP

Lowballing 101: How to Avoid Insulting a Home Seller when Making a Low Offer for Their House.

Posted in Home Buyer Tips, Home buying, Homebuyer Tips, Orange County Real Estate, Real Estate Tips by southorangecounty on August 20, 2014

buyersBuying a home is a huge step for people who are ready to make an investment in their future. Getting a great deal on a home is just as important and knowing how much to offer could be confusing. It is important to make sure   the home seller is not insulted by a low offer and is ready to negotiate to make sure everyone wins.

Make a List of Necessary Improvements

One of the best ways to validate a lower offer on a home is to list improvements that need to be made to the property. If the home needs a new roof or a new heating and air conditioning system, these are reasons to offer less than the asking price. Sometimes a home may also need new flooring, paint, or matching appliances which all cost money. The buyer can make a lower offer stating the additional expenses of making sure the home is move in ready.

Explain Any Issues with the Location

Another option when considering a lower offer is to point out problems with the location. If the home is on a busy street or close to something equally undesirable, the buyer has legitimate concerns. In the offer, list the potential problems of living too close to fast food restaurants, train tracks, or airports. A less desirable location could equal a great buy on a new home.

Provide Pricing for Comparable Homes in the Area

A knowledgeable real estate agent can help compare homes that have sold in the area. When you are writing up a lower offer, look at the lower priced homes that have sold in the same neighborhood. A seller will quickly realize that if he wants to sell the home, he will need to accept a reasonable offer or risk letting his house sit on the market for weeks or months.

Consider the Seller’s Reasons for Selling

Finally, the seller’s situation can also be key in getting a good deal on a home. If the seller is anxious to sell because of a job relocation or if he has already bought a new home this can be the perfect reason to make a lower offer and take the home off the seller’s hands. Without insulting the seller, the buyer can make an offer for less than the asking price and agree to a quick closing.

The Right Agent Can Make a Huge Difference

I’ve been successfully representing buyers in South Orange County since 1976 – almost 38 years! In that time I’ve been able to negotiate some excellent buys, for most of my buyer clients. If you are thinking of buying your next home, I would be honored to be considered as your agent.

Comments Off on Lowballing 101: How to Avoid Insulting a Home Seller when Making a Low Offer for Their House.

%d bloggers like this: