REPORTS ARE IN, 2013 WAS A SELLER'S MARKET!

Please don't misunderstand, buyers that took action, still bought 20% below the high of2007, but due to tight inventory, sellers enjoyed many multiple offer opportunities and bids were sometimes over list price.  As a result, the 2013 housing market had its biggest gains since 2004.  Increase demand coupled with limited supply resulted in a 19.7% jump in home prices.  Having reported that, December was still a very slow month for sales for the resale home in Sothern California.  In fact, they were at a 6 year low in volume, according to Data Quick,  even as prices jumped, for precisely that reason, low inventory, more demand on  the housing that was available. (More on the exact numbers later).  What is the outlook after one month of 2014?  Decidedly, it is a mixed bag: 1) Inventory remains tight, although listings are already starting to hit the post-Super Bowl market pick up.  Sellers who list early without waiting until the official spring season will be rewarded with a brisk and busy market.  The O.C. jobless rate dropped to 5.2% reportedly at the end of January.  The Fed has trimmed back another 10 billion a month in its commitment to buy bonds.  The response overall has been favorable which means expect interest rates to continue to inch upwards.  If you are a buyer looking to keep as much purchasing power as possible, pay more attention to interest rates than housing prices, because therein lies your true north.  You qualify for a loan based on what you can pay, so be cost sensitive more than price sensitive.  There has been some solid economic news reported, such our 4th quarter 3.2% annual rate of growth, based largely on consumer spending which is usually a signal that people are feeling better about their own personal economic outlook.  Consumer confidence is a key to any serious turnaround coupled with hiring trends and housing.  But the strength of the report also came from the type of spending; durable goods such as cars, technology, and appliances.  Spending on services also rose significantly meaning traveling, dining out, and other non-essentials are also coming back.  There is a ways to go yet, hiring being the key and still lagging behind the high of 2006.  Expect as those numbers increase, so will the housing market continue to heat up.

WHAT WERE THE EXACT NUMBERS?

The total number of houses sold in Orange County for December, (the last full month available), was 3,089.  That number shows a .6% increase in sales volume, but is very deceptive.  The number of single-family resale homes was 1,730 which was a 13.9% decrease from December of 2012.  Condos came in at 777 which was down 2.4%.  It was not hit nearly as hard because entry level buyers often find themselves in a condo, and that market segment has been very steady.  Million dollar plus homes have also seen record numbers, as reported here last month.  The missing segment has been the move up buyer or move down buyer.  As more and more homeowners get their equity position back, and new construction ramps up, giving those specific buyers a new place to go to, expect to see the middle price range come into its own in 2014.  Speaking of new homes, the number of sales for December was 582, a 120% increase year over year.  Distressed sales accounted for 24% of the December 2012 market, while in 2013, distressed sales numbered only 14%.  The median price for all house rose 21.3% to $570,000.  Separating out the condos, the median price was $372,000 a 22% rise and single-family resale was $639,000, rising 21%.  All figures are comparing December 2012 to December 2013.  More information is available at www.dqnews.com.

FIVE REASONS NOT TO BE A "FOR SALE BY OWNER"

It's always tempting to do something yourself.  Get rid of the middle man, save yourself some dough.  Most people would never fill their own cavity, paint their own house, or fix their fender after an accident.  Yet with their greatest investment, people can be downright cavalier.  There are many problems to selling your own home, which are detrimental to your peace of mind and certainly to your pocketbook.  You may save the twenty or thirty thousand on commission, but you may lose two or three times that by mispricing your home or tying it up with a buyer who can never close, but that gets you under contract and keeps you from selling to someone who could buy.  Here are the top 5 reasons: 1) There are too many people you have to communicate within a real estate transaction, whose job description you know nothing about and therefore cannot properly represent yourself, i.e. , Home Protection services, termite, appraiser, lawyers for the buyer, the lender, the loan underwriter, the escrow agent, a home stager  (properly staged homes can get up to $50,000 or more for your home.), to name a few .  2) Qualifying a buyer - as already stated, once under a signed contract, you are obligated for an escrow period, even if the buyer can't buy.  A preapproved letter means nothing, you're looking for a prequalified buyer.  If you don't know all the differences, it's trouble waiting to happen.  3) Negotiating on your own home.  This is a dangerous area; overprice it and sit forever, under price it and you'll be sorry forever.  Knowing not only comparable sales, but all the attributes that add to your homes price is paramount.  4) Pricing your home.  As already stated, price is a sensitive topic.  Ask too much, and the perception is already out there that your home is overpriced.  How do you know when an offer is legitimate or a lowball offer, looking to capitalize on your lack of knowledge.  5)  Most importantly, keeping your family, your home, and its valuables safe from real predators, and cyber predators.  Where will you advertise? Craig's List, Angie's List?  The Penny Saver, somewhere else online?  How will you hold open houses?   What will you do when 10 or 15 people come at once?  And what if all those people are not actual buyers?  How do you qualify them, how to you control them once they step into your home?  These are not scare questions.   These are very real scenarios that Realtors deal with every day and have professional procedures to protect you, your home, and to sell your home for the highest price, with the least amount of inconvenience.  Truly, this is something to think about.

HAPPY NEW YEAR...WHAT TO EXPECT IN 2014

Most key analysts expect a slightly better market in 2014 than we had in 2013.  There are several reasons for this; improved employment, better and easier financing, a stabilizing economy with growth in the right direction and finally, a larger and improved inventory.  There is a certain unknown quotient in a changing Fed Chairman, but by all accounts, Janet Yellen's direction of the Fed aims to keep monetary policy, "highly accommodative."  In fact, it appears that Yellen gets the fact that real estate drives the economy, and most experts expect her, "to continue on Beranke's path," so stated Karl Case, co-founder of the S&P/Case-Shiller home price index.  Any projections of doom, are very tempered, the only one found at press from economist Essie Adibi from Chapman University, who said the probability for housing doom was "low."  It would have to come, according to him, from high inflation and low productivity, both of which are very long shots.  In fact, inflation has not even been a blip on the economic screen and is not projected to occur in 2014.  John Karevoll of DataQuick foresees, "the welcome decline into deserved obscurity of real estate naysayers and their canned think-tank narratives...the naysayers will become irrelevant as they doubt the housing's continued march to more normal, positive conditions.  Good riddance to them."  Rather strongly worded, but isn't it about time we stop doubting a shred of positive news and rather, embrace our economy for what it is and settle our lives around it, which includes buying homes for our families and our lives.

WHAT WERE THE TRENDS FOR SO CAL AND THE O.C.?

The housing numbers were off in November, the last full month available, but there are several good reasons.  First and foremost, inventory slipped as demand outbid sellers entering the market.  Secondly, investor transactions slowed down, and that is actually is a good thing, for the owner occupied integrity of neighborhoods and for the bidding wars to stop both run ups in pricing and frustration for bona fide purchasers.  Finally, distressed properties really dropped off the radar, dropping what had been a huge segment of the purchase market.  The frosting on the cake was the usual housing slow down at the holidays.  Expect a big engine to start humming early, as many sellers waited for 2014 to put homes on the markets.  Financing may become easier, and even though we've had some slight rises to interest rates, expect them to stay under 5% for at least the first 2 quarters of 2014.  But buyers will come to the market place early to avoid higher rates.  So Cal, comprised of L.A., Ventura, O.C., Riverside, San Bernardino, and San Diego had a total of 17,283 new and resale houses and condos.  That was down 14.2% from October.  The typical seasonal decline between the 2 months is 7.6%.  The median price for all So Cal was up 19.9% from November 2012 and has risen for 20 straight months.  To keep things in perspective, this rise is still 23.8% below the highest high of spring/summer 2007.

WHAT WERE THE ACTUAL NUMBERS?

The total number of homes sold in Orange County for November, (the last full month available), was 2,632.  This was down 8.6% from November of 2012.  The overall median price was $560,000, which is up 24.4% from November 2012.  There were 1,591 single-family resale, and 668 condo sales.  New homes came in at 373, up 78% and clearly illustrates a rebounding new home market.

NATIONAL ASSOCIATION OF REALTORS WEIGHS IN WITH NEW STATISTICS

The following figures are from data gathered 12/19/2013 with prior year comparisons and are national.  Sales were down 1.2% from a year ago and prices were up 9.4%, indicating a rebounding and stabilizing market.  Perhaps the most important stat is that inventory has risen 5% and experts expect more in 2014.  Distressed sales are currently 14% of sales as compared with 22% previously.  The million dollar home market rose drastically nationwide, with the smallest rise here in the west at 25.4%.  A paltry increase when compared with the northeast market which rose 45.3%.

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.