THE ECONOMY MAY BE SPUTTERING, BUT THAT'S GOOD FOR REAL ESTATE

Here is the real scoop on what's happening in the real estate market.  First of all, don't just stand there...BUY!!  The whole reason the median price of a single-family property increased so rapidly the past 60 days, (more on prices in the next paragraph), is because interest rates jumped more than a full percentage point.  Between that increase and sellers demanding greater increases than the market could bear, sales slacked off in the price ranges most susceptible to interest rate increases, namely $250,000 to $750,000.  Without the volume of those sales to temper the million plus purchases, the median price shot up.  Many families were forced to the sidelines with the interest bump.  Now, they can return, because in case you didn't hear... rates are back down, low...really low.  Also, during the past 60 days, more property has hit the market, inventory levels are much healthier, creating more competition for sellers.  This will naturally keep prices in check to a normal appreciating market.  Don't miss out on the great rates again.  Go out and find your dream home!  The Federal Reserve has made it clear in recent articles and blogs that the U.S. economy still needs support from its low interest-rate policies, because it is growing only moderately.  After its policy meeting, the Fed also announced that it will continue buying bonds to the tune of 85 billion a month to keep those rates low and encourage borrowing and spending.  The question is:  does that mean through first quarter next year?  Or possibly second quarter?  If buying a family home, to raise your family, spend your quality time, now may be your time.

WHAT WERE THE EXACT NUMBERS?

According to all sources, including,  the LA Times, the OC Register and DataQuick, the So Cal area's home price gains for August and September are the highest since '05.  Before we get too excited, let's remember what we discussed in the last section of this newsletter.  The sheer number of deals in the upper price range and cash transactions in the multi-million dollar range had a lot to do with the increase.  Lack of inventory also drove up prices.  Expect them to soften somewhat because of the increased inventory we wrote about.  The number of sales in Orange County for September (the last complete month available) is 2,916.  That number was up 8.9% from the previous month year over year.  The median price for all properties was $550,000 up 22.2%.  However, the median price for a single-family was $612,000 and that is a 20% increase from the same month of 2012.  The median price for a condo was $380,000 and that was up 24.6%.  The volume for the number of sales for single-family was flat with 1,807 sales, but condos rose 16% in volume to 836.  The median price was highest for new homes at $696,000 but the sales were a paltry 273.

WATCH OUT FOR REAL ESTATE SCAMS ON VACANT PROPERTIES

A recent article in the OC Register reported a 5 year prison sentence for a man forging deeds on vacant properties and then renting them and collecting those rents.  The unfortunate part of this scenario is for the homeowner who may have moved out of a distressed property or simply moved and had not yet disposed of the existing property and now have to deal with tenant's rights, as well as a forged deed.  Fortunately, the ALTA Residential title policy protects against after close of escrow forgery.  Not all title companies issue this policy or do so automatically without Western Region Exceptions, but Fidelity National Title does.  Always check to make sure you receive this superior title policy when you are purchasing a home.

A LITTLE TENDER, LOVING, CARE GOES ALONG WAYS TO INCREASE YOU SALES PRICE

There are many cheap, easy (ok maybe a little effort involved), ways to help buoy your asking price when you sell your home.  Here are a few.  (For even more info, go to www.kcmblog.com)  First off, we are mainly talking about curb appeal, and a few cosmetic things inside your home.  Curb appeal is huge, because buyers always look at homes initially based on their visual, emotional, reaction to the home.  Make sure your roof is repaired and will pass for a one year roof certificate.  Gutters should be cleaned and repaired.  Invest a small amount of cash in really cool numbers for your address on your home's facade.  Windows and trim should look newer, with no cracked paint.  Wash your home's face, get the dirt and grime off it and add $10,000 to your sales price!  Upgrade your front door to a snappy color or etched glass or trim.  Replace old light fixtures for a more modern, with it look.  Brush up your landscaping with a few new plants or flowers.  Inside, think about replacing carpet with tile (if time or money), otherwise get your carpets cleaned.  These types of changes require mainly, time, a little money, but could result in better and more offers for you.  This is the last report for the year.  

AS MORE INVENTORY HITS THE MARKET, JULY SALES JUMP

Southern California home sales surged in July, rising to an eight-year high for that particular month, as there were more properties for sale.  Prices did not increase significantly from the previous month, but for July, year over year, there was a 26% increase in pricing.  This is the seventh month in a row, according to DataQuick, that prices have risen 20% in year over year comparisons.  That being said, housing is just at the 2004 levels, far below the high of 2007, just prior to the pricing crash and housing slump.  What is interesting is that people have already forgotten these encouraging numbers and were noticing the significant slowing of new sales for August.  Let this column be the first to encourage the consumer not to be discouraged.  August has always been notoriously slow compared to the spring season.  June is slow because of the advent of summer; graduations, weddings, early vacationers.  August is slow with heavy vacationing, the coming school year, and families getting ready for one or the other, or both.  Exacerbated this year, by many school districts staggering their start dates, August appeared to be one long back to school month.  Having said that, look for September to be stronger than usual, because so many schools did start earlier, allowing people to return to routine and start to think about the fall selling period.  There are many advantages to selling in the fall.  Less competition for buyers, so they have more selection, and because of the tight inventory this year, sellers should also find themselves in decent position.   There is frequently more flexibility on close of escrow time frames and an easier time getting to see those properties.  Buyers and move up sellers should not wait too long, read on for what may be in store for interest rates... This question is asked and followed immediately with the comment, "maybe I should wait for them to come back down."  The fact that interest rates have been at historic lows for so long, may cause some to forget that they have been held there artificially.  One mustn't be lulled into the common myth that after a quick hike, they will settle back down.  Although rates will remain fantastic, all agree for at least another year, 3 1/2% is likely not coming back unless you get a 10 year fixed rate loan, or buy it down through escrow.  In fact the following entities all agree rates will rise: 1)The Mortgage Bankers Association  2)Fannie Mae  3)Freddie Mac  4)National Association of Realtors.  How much?

FANNIE MAE PUTS TOGETHER SOME PROJECTIONS FOR SALES, PRICE, AND INTEREST RATES (NATIONAL OUTLOOK)...

The following projections are for 4th quarter 2013 versus 2nd quarter 2014.

Housing Sales -- 2013 - (in thousands) 5,592  -- 2014 - (in thousands) 5,794

Prices -- 2013 - $189,000  -- 2014 - $213,000

30 Year Mortgage -- 2013 - 4.6%  -- 2014 - 4.8%

WHAT WERE THE ACTUAL NUMBERS?

Orange County saw a total number of sales of 4,402; this includes resale single-family, condos, and new homes.  That was a change of 42.6% upward from the previous July (the most recent complete month available).  There were 2,851 single-family resale homes, 1,283 condos, and 268 new homes.  The median price for all of Orange County, for all housing types combined was $539,500 and that is an increase of 19.9% from July 2012.  Resale single-family median price was $611,000, with condos coming in at $380,000 and new home median price was $706,000. All of So Cal (Ventura, Los Angeles, OC, San Bernardino, Riverside, and San Diego counties) had sales totaling 25,419 which was up in volume 23.50% and the median price for So Cal was $385,000, up 25.80%, both comparing July 2013 with July 2012.

5 ESSENTIALS A REALTOR MUST HAVE FOR THEIR CLIENT

1) Tell the client the truth about price.  Whether buying or selling, it is wise to know what the market will bear, and what price reveals about motive on both sides of the transaction.  2) Understand the family's timeline.  When and how are very important in serving the client.  3) Remove Challenges - There are many during the course of a transaction, and all must be explained and overcome.  4) Help with Relocation.  Whether across town or across the country, every available resource will be made available to assist the client.  5) Get the home sold.  This is what a real estate agent does.  Never lose sight with all the hype of search engines, the Internet, social media, etc.  Get the home sold.  For the best price possible with the least amount of hassle.  Done.  

PROOF THERE IS NO BUBBLE -- 6 REASONS

According to KCM Blog, a real estate blog, well documented with national sources and valid statistics, and a recent job report regarding wages, give great evidence that there is no bubble.  Talking about the possibility of a bubble has made for good fodder both in the papers and on cable newscasts.  However, take a look at the following and you will find some compelling reasons to keep an open mind and draw your own conclusions.  1) 41% - Percentage of homes being bought where payment is cheaper than renting.  2) 16 X's - The ratio of home prices to rents in the first  quarter of 2013 is slightly better than long-term average.  3) 8% - The percentage housing is still undervalued on a price to income ration.  4) 91% - Percentage of the country which is still undervalued.  5) Pent up demand / Low inventory.  6) Wages are rising.  We aren't even mentioning larger down payments, stringent loan qualifications and number of owner occupied versus investors is rising significantly.  Finally, has it been mentioned the renewed perception that home ownership is once again a great investment?

WHAT WERE THE ACTUAL NUMBERS?

The entire Southland hit a sales high in May, the highest in 7 years.  The median price hit a 5 year high.  According to records kept by DataQuick, there was a total of 23,034 new and resale houses and condos sold in LA, Ventura, OC, SD, Riverside and San Bernardino.  That was up 7.6% from the previous month of April, and 3.8% up from  May 2012.  However, there is still room for growth, as May 2013's numbers are still off 10% historically of what May usually produces since DataQuick started keeping records in 1988.  The total number of sales for all properties in OC was 3,648, up 11% from May 2012 and the median price was $540,000 up 24% from a year ago.  The number of resale homes was 2,347, condos came in at 1,013 and new homes still lagged, from lack of product, at 288.  Million dollar homes are making a big comeback, recording the highest number of sales since 2007.  For all of last year, 2012, there were 26,993 homes sold at $1,000,000 or higher.  That is up 27% from 2011.

THREE AWESOME REASONS TO BUY A HOUSE NOW!

Reason #1 -- According to S&P/Case-Shiller, prices will continue to rise in 2013.  In fact, they adjusted their original forecast of 8% to 11%.  Reason #2 -- Mortgage rates will continue to rise.  According to Freddie Mac, 1/2 a point interest has already been factored in and likely will stay there for the time being.  But don't test providence.  Reason #3 -- It is time to make a decision.  The time for hesitation, waiting for the bottom of the market, has come and gone.

OC HOMES IN FORECLOSURE DOWN BY HALF

This was the headline in the OC Register on July 11th.  The true number of households in some stage of foreclosure, according to CoreLogic, was 4,300.  This represents a mere 1% of all households, and less than half the number of May 2012, which was 8,900.  Nationwide, 1 million US homes were in the foreclosure process for May, representing 2.6% of borrowers.  That number is down 29% from the previous year.  The point to glean from all that is that OC is stronger than the rest of the country, at least in avoiding foreclosure.  This is mainly a result of the appreciation of the last 2 years pushing more and more homeowners into equity positions, allowing them to either refinance or sell their home without it becoming a short sale, or facing foreclosure.

PROPERTY TAXES SEE BIGGEST JUMP IN FIVE YEARS

Yes, the notifications from the county tax assessor are making their way to your mail box as this is being written.  The boost is the result of a more robust market, solid appreciation, and new parcels which have sold, including commercial development as well as homes.  Prop 13 only allows 2% adjustment, so long time homeowners may get a notice of a slight uptick, but the most revenue will come from new housing developments, which allow for a fresh tax assessment based on sales price, broken down by land and improvements, and new commercial properties, factories, and shopping centers, to name a few revenue sources.  If you have questions about your tax bill, you should not hesitate to call the Tax Assessor and talk to one of their appraisers.  If you are in OC, you can view your tax bill online.  

ALL REAL ESTATE LOOKS GOOD 10 YEARS LATER

Many investments, whether bonds, stocks, mutual funds, etc, are bought to hold and in fact become long term investment strategies.  Remember, we have been desensitized these past 10 years from one extreme to another.  First, from 2002 to 2006, the public saw real estate as a means to get rich quick. Investment  for  the short term.  Sadly, many people got caught holding the bag, and lost a lot of money, trying to make real estate something in their investment portfolio, it was never meant to be.  Then the other extreme hit, of no one wanting properties except the heartiest, cash flush, investor.  But if you take10 years, any 10 year period, after the great depression, there is no time that real estate did not do well.  Food for thought.  See you next month.

WAIT UNTIL YOU HEAR THIS STATISTIC...IT'S A DOOZY.

This is a real estate newsletter.  It goes without saying that there is always an advantage to selling or buying in almost any market, depending on personal need and motivation.  But right now??  A staggering 96% of Americans currently looking in today's market, say home ownership is "very important."  It is particularly high for women and Gen X and Gen Y.  Another 74% of those polled said, "interest rates are at historic lows and now is a great time to buy."  But let's look beyond the hype of those who are enthusiastic, to see if there are other signs that So Cal is in an upward trend and that the recovery is more than momentary.  We don't have to look far.  The end of April and beginning of May have given us lots of ammunition.  First off, nationally, solid job gains have eased apprehension about the recovery.  The U.S. economy added a solid 165,000 jobs in April.  Unemployment scooted down to a four-year low of 7.5%.  Does anyone else remember when it was double digits?  Not only that, but the job gains were higher in February and March than originally thought, and the gains came despite a global slowdown.  The Orange County Register noted that if you track the three major moving companies, collectively the van lines fell 9% in moves out of California, comparing 2011 with 2012, the first drop since 2009.  Plus in 2012, the state added 296,000 jobs, the nation's biggest job boost, by the way, and unemployment in the state fell to 10.5% from 11.8%.  All in all, this means not only are people feeling better about their financial situation, they are better.  This paints a rosy picture that explains tight inventory and so many buyers out there.  Add three other factors: 1) low interest rates.  2) Pent up demand.  3) back to the survey, 46% of prospective sellers feel the need to find another house first, creating a big blockage of homes and 43% are waiting to make bigger profit.  There is definitely some buyer gridlock happening on the housing front.   Good ways to avoid this are be ready to buy and be prepared to offer your highest and best because you will most likely have stiff competition.  Sellers will be able to peruse through the offers.  Writing a letter to the seller, explaining why you want the house and what it means to you and your family is another great tool.  It isn't always just about the money, believe it or not.  Finally, some people still feel some skepticism over the recovery.  Is it too much, too fast?  Let's remember, prices may have risen sharply compared with the last 6 years, but this is real money this time, real loan qualifications, real down payments, real appraisals.  Prices could level off, if interest rates rise, or if more supply hits the streets.  But the people who already bought, could afford it, and will be sitting with a home whose price may have fallen, but are making a fixed payment at 3% interest.  They are not going to default and they are not going anywhere.

HOW WERE THE NUMBERS FOR THE FIRST QUARTER 2013?

The overall median price for the first quarter was $485,000, a 22% gain.  Resale homes came in higher at $540,000, an upward tick of 18.7%.  Condominiums median was $325,000, a 27.5% rise.  New homes, although much lower in volume were higher in price at $667,500, climbing 20.4%.  The total volume of all homes sold was 7,746.  There were 5,018 single-family resale, 2,203 condos and 525 new homes.  All numbers were higher than 2012.  Specifically for the month of March, there were only 108 homes that made it to a trustee sale auction/foreclosure, and only 574 Notices of Default recorded.  Indeed, CoreLogic reports that Orange County's foreclosure rate fell to less than1% in February.  Those that are 90 days or more delinquent dropped to 3.3%.

WHY DO PEOPLE BUY HOMES

The real estate blog Keeping Current Matters wondered about that and reported some recent reasons from a Gallup Poll.  Not all the reasons are financial.  In fact, below are the 5 most compelling reasons to buy, financial/non-financial.  First let's look at financial: 1) See owning as an investment  2) Chance to build equity and credit  3) Smarter than renting  4) More cost effective (3% interest and leveraging money)  5) Financial security/stability.  And now, non-financial:  1) Belief in home ownership  2) Don't want to rent  3) Better for family  4) Ability to do what you want with the property  5) Pride of ownership.  Gallup went on to give results that 8 of  10 of all people own or plan on owning property.  Here is their own quote regarding their results; "Our data on home ownership provide strong support for the idea that the American Dream of owning a home continues to be alive and well."  Finally, people were asked, regionally, where they thought prices were headed.  The results for the West?  62% said prices were going up.  25% said they would stay the same.  12% said they would go down.   What do you think?  Historically? Always up.  For more interest on Gallup polls, visit their website, www.gallup.com.  

CALIFORNIA IS FOR SALE...SORT OF

Let's put it this way, California hasn't looked this good to buyers in 8 years.  All of us who live in the Golden State, and who own or have owned property, have borne the brunt of a grueling recovery.  Actually, it was a market in free fall, that caused all kinds of pain, wrecked havoc not just in our fair state, but the shot heard round the world.  But a lot has changed in the last 8 years.  Part of the pain of a recession is that there seems no way out but to just grind it out.  Time, stamina, and determination have been local themes to Californians and in fact citizens of real estate everywhere.  Now we find builders are back in a big way, inventories are at historic lows (and by low, try less than half of the top of the 2006 market), money is cheap, and our state especially, is drawing buyers from all over, particularly cash buyers.  In fact, according to DataQuick, one in three Orange County buyers in 2012 paid cash.  Not surprisingly, the number of deals-- greater than 10,000, was the highest since California's last down market of 1992, twenty years ago exactly.  Why this insistence on history repeating itself?  Some would say it is because real estate is cyclical.  Others would say it is because people never learn that what goes up must come down.  Cycles do happen in real estate, and the cause for each generation's ups and downs do differ.  But germane to the process is a bubble, expanding for that economy's purpose, driven by that unique component of that expanding market.  But purely speaking, it is supply and demand driven.  The fuel to the fire this last time around was free loaded lending, irresponsible at best, and many would argue borderline illegal at worst.  Recovering from that has been painful and difficult for not only sellers and buyers, but the professionals left behind to deal with the cleanup of the heyday.  It is safe to say that we have today, a much healthier housing market, real lending standards, and the current pace of selling is based on legitimate pent up demand, from both move up buyers, first time buyers, and investors who still recognize the bottom of a market, although quickly rising.  They are coming in with cash from all over the world, some to stay in the market, holding properties as rentals, some still trying to "flip" properties to the many buyers out there, and some buying luxury second homes.  Read on and you'll learn some interesting information on current numbers, sales, foreclosures, and tips on buying and selling, and why the perfect time to do both is right now!

WHAT ARE THE ACTUAL NUMBERS?

The last full month of numbers available is December.  The total number of sales was 3,070.  That number is up 19.4% from December of 2011.  The median price of homes rose in Orange County 9.2%, which outpaced the country's uptick of 5.5%.  There were 2,010 total single-family resale transactions, 796 condominiums and 264 new homes that closed escrow in December.  The rise in new homes was 31% from the same period a year ago, and watch for that number to expand rapidly over the next 5 years.  The total number of Notices of Default for all of So Cal for the fourth quarter was 20,879.  Compare that to the same quarter of 2011 and that number jumps to 34,013.  Orange County's number plummeted 49.5% from 4,297(fourth quarter 2011) to 2,169 for 2012.  A point of interest: million dollar home buying reached a 5 year high in 2012.

FIVE REASONS TO LIST YOUR HOME NOW

The first reasons to list now jump out at you... 1)Demand is high--everyone has been waiting for this moment, so perfect a combination is low interest rates, and a bottomed out market.  2)Supply is low--just not enough to go around.  Your home has a multiple audience, and that's a good thing.  3)New construction is just under way.  Your home has a head start in the fact that it's ready to go now.  A resale home in competition with a shiny, bright, brand new home, will frequently lose out.  List now, while that competition is still low.  4)Interest rates--Does anything else have to be said about 3.5% ??? It won't last forever.  The higher interest rates go, the more buyers are priced out of your homes price range-- that means less competition and fewer multiple offers and that means less $$$ for your home.  5)Timelines are shorter--the pipeline is not as full this time of year.  Shorter escrows mean less time for things to go wrong.  And that's a good thing.

FIVE REASONS TO BUY NOW

1)Prices are on the rise.  The Home Price Expectation Survey polls 100 economists, investment strategists and housing market analysts.  All report to expect rising prices for the next 5 years.  2)Mortgage rates will increase.  They are being kept artificially low to keep our economy moving.  Inflation is a concern and is hovering nearby.  They can't stay low forever.  3)Rents are continuing to skyrocket.  And you can't deduct your rent.  Interest deduction on your primary home remains one of the very best write offs for the average tax payer.  4)New Mortgage Regulations to be announced--6 regulators, including the Dept. of Housing and Urban Development, the Office of Comptroller of the Currency, and the SEC are currently drafting the new Qualified Residential Mortgage (QRM) rule.  It will concern minimum down payments and minimum FICO scores.  Buying could get a lot tougher.  5)Timelines will be shorter.  

TAKE ADVANTAGE OF THE "NOW"

Who knows what the future holds.  The economy seems to be recovering, but there are a lot of causal factors that could derail progress.  But this author thinks in a positive light.  Corporate earnings posted extremely well in the last report.  Jobs are being added.  Foreclosures are down.  And it would seem world over, that there is more stability and forward movement.  In light of your circumstances of what is best for your family and your economic goals, look to see what real estate can add to your investment portfolio.   Rentals, second homes, and your primary home remain great investments because of the ability to leverage.