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August Orange County Real Estate Update

Bart Smith — Thu, 12 Aug 2010 04:07:01 +0000

Low mortgage interest rates continue….At this writing, interest rates for a 30 year fixed rate mortgage are at about 4.5%, or 4.75 % with no costs, the lowest in 50 years. Will this continue, you ask? Only time will tell, but we see indications that for the short term, rates will likely stay pretty low. Between low prices and low rates, it is an obvious time to buy if you are remotely considering such a thing. We can help.

HAFA programs begin…. The “Home Affordable Foreclosure Alternative” programs have now been rolled out. This process is intended to provide a way for distressed homeowners to bow out gracefully, with minimum damage to their ability to buy another home within a reasonable period of time (2-3 years). It also provides minimal relocation assistance. There are very specific guidelines, so call if you have questions.

Housing Inventory increases again…. Active resale listings topped 11,000 by the end of July, the highest level since April, 2009. With 2870 homes entering escrow (prior 30 days), there are 3.91 months of housing supply vs. 2.69 months of supply a year ago. The reason? More “standard” sellers have their homes on the market today, with their homes priced above market value in many cases, hoping to entice buyers to pay more.

Is it time to re-finance?….Let’s do the math. As an example, if you have a $400,000 home loan at 6% interest, you could likely re-finance to a 4.75% rate with no costs, saving about $312 per month, or about $3,744 per year in interest expense. If you would like to re-finance to a shorter term, the rates are even better! ! ! You can call your current lender or I can refer you to someone who can help you.

The National Housing Market….is not faring as well as OC. Housing inventory sits at about 9 months of supply (compared to less than 4 months in OC), making it a soft market in most places. Investors are gobbling up properties that have great “upside” potential. Historically, housing markets have recovered, giving great returns to those brave enough to step up and buy properties in a down cycle. We have connections across the country and can refer you or your friends/family, so don’t hesitate to call and discuss any real estate needs.

Christian Real Estate Network….webite (www.Hismove.com) is up and running. Check it out and let us know how we can help.

Until Next time,

Bart Smith

July Orange County Real Estate Update

Bart Smith — Thu, 12 Aug 2010 04:02:50 +0000

FED holds the line on interest rates….

The recent FED meetings resulted in “no change” in interest rates. Recent rates are in the 4.5% range for a 30 year fixed rate mortgage. Can you believe it? Call if you want to re-finance (or purchase). I’ll connect you with a seasoned mortgage professional who can get it done !

Nationally Speaking….

there is an 8.3 month inventory of homes for sale. The OC picture is much brighter, with only 3.37 months of inventory. The national figure is 3.89 million homes for sale. Orange County has 10,462 for sale (as of June 25), and 3107 went “pending” in the past 30 days.

Market time drops for expensive homes….

Homes in OC priced between 1.5 and 2.0 million dollars are selling more quickly. Today, they enjoy 6.85 months in market time, down from 11.62 months supply one year ago. Lower rates and better financing for Jumbo Loans have played a significant part in these results.

Statistics can be misleading….

for example, the drop in demand after the April 30 Federal Tax Credit expired actually reflects the fact that more people bought homes in March and April to beat that expiration. So, when you read in the paper that demand is down and a double dip is coming, they may have neglected to account for the artificial demand preceding that drop.

We believe the real estate recovery is….

right on track in Orange County. In fact, various sources have projected that values will increase anywhere from 2.5% to 8% in the next 12 months. We agree that prices will show increases. Investors are in the market along with regular buyers, a signal of stability in the marketplace.

What are Median Prices, you ask?….

In a given period of time, the property in the middle reflects the median price. So, if more expensive homes sell during that time period, the median price goes up. The median price tends to reflect the general direction of prices, but don’t get caught up in the percentage of the change, as it rarely is accurate. We can provide trends in your specific area if you are interested.

Until Next time,

June Real Estate Update

Bart Smith — Thu, 12 Aug 2010 03:59:25 +0000

Interest Rates keep falling….

As offshore investors place money into US Treasury Bonds for safety, rates on mortgages continue to fall. At this writing, a 30 year mortgage on a primary residence can be as low as 4.75% (or lower). This is near the lowest in 50 years and could even go a little lower. But, what goes down, must go up….or something like that. That being said, it’s a perfect time to lock in on a very low rate.

Housing Market begins its slow recovery….

Prices are finally inching up. Not at the 13+% you see in the paper (reflects median prices), but more like 1.5% this year. Yes, you can still buy at or near the bottom. Upper price ranges (over 1 million) are still soft, but that inventory is beginning to move as well. Homes in Orange County under $500,000 are selling quickly with multiple offers. So, if you are considering buying, be sure to have a qualified, experienced Broker help you (how about me?).

Calculating an investment return on real estate….

There are two components to return on investment. The first is the cash return. The second is appreciation. If you put 20% down on a property and it increases by 2%, your yield on that appreciation is not 2%, it is 10%, based on your down payment, not the purchase price. Even if you break even on the cash flow, you would yield 10% return based on this example. And so far, we get capital gains treatment on the sale of an asset if held the proper amount of time. With Certificates of Deposit yielding somewhat less than 10%, maybe real estate should be included in your future!

May housing demand slows….

The number of new pending sales in May declined by 17% over April pending sales. Pending sales are the properties put into escrow. This slow down was very likely due to the fact that the Federal Tax Credit of up to $8000 for first time buyers was only applicable to those entering escrow on or before April 30, 2010. The May pause will probably correct in June/July, as the underlying demand is still there.

Distressed properties still significant….

At May 28, there were 2991 active listings which were foreclosures or short sales in OC. This represents 30.4% of the 9839 total active listings. Pending sales in May revealed about 50% of those going pending were foreclosures or short sales. So, the “standard” listings did not capture their “fair share” of the transactions. This likely means that standard sales tend to be priced higher while buyers are searching for bargains. If you are a seller, don’t over price.

Until next time,

Bart

May Real Estate Market Update