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.

MEDIAN PRICE -- UP...INVENTORY -- WAY DOWN... SALES VOLUME -- UP

What a month it has been!  It's been chaos if you're a buyer trying to find a property, and a little déjà vu if you are a seller that is getting multiple offers on your property that's for sale.  That being said, however, we are not seeing the double digit appreciation that was present in 2005 and 2006.  That is a good thing, as that was the start of the bubble that burst and caused the subsequent crash and the very slow recovery we are now enjoying.  September numbers brought some interesting news for Southern Californians.  (More specific numbers to follow.)  The median price was up 5.9% versus September a year ago.  There were 23,977 sales and that was up 16.2% from the previous year.  October numbers that are found in the next section, were even better.  But a really interesting fact from the last month of the third quarter was that local zip codes showed improvement in 53 of 83 for the county.  That shows that there isn't a concentration of business or growth in just hard hit areas such as Santa Ana, or south Orange County, where investors are flipping properties.  In fact, sales for October, the last complete month available, show that move up buyers, that elusive quadrant, has finally reemerged and these buyers are entering the market.  Obviously we need more to do so, because of inventory limitations, but it has started.  The upper end of properties over 2 million is moving more robustly than it has since 2006.  Finally, a last bit of good news is that home construction is finally on the rise, seemingly for good, not just a sputter of one or two developments, but begun in earnest by multiple builders.  In fact, 1,700 construction jobs were added as compared to September 2011, according to the Employment Development Department. This is good news, because without that vital addition of new homes, we would really see an inventory bog down in the next 2 years.  

WHAT WERE THE ACTUAL NUMBERS?

According to DataQuick, southern California home sales rose sharply in October as the previously discussed move-up buyers joined investors, shifting the mix of homes selling from the first time buyer, or investor looking for rental scenario.  Foreclosures hit a 5 year low, as short sales continued to move front and center as the primary distressed listing.  Make a note, however, that standard, or equity sales, are making a comeback as non-distressed owners may enter the market in an effort to sell and move up, or exit Orange County to become a retiree and move elsewhere.  The October total was 21,075 homes sold in Los Angeles, Orange, San Bernardino, Riverside, San Diego, and Ventura counties.  That was up a whopping 18% from the 17,859 sold in September.  The median price for the Southland was $315,000 in September and October, and that was up 16.7% from the $270,000 of September 2011.  Short sales made up an estimated 26% of the resale market in the Southland for October.  The total number of sales for Orange County was 3,148, which was up 40% from the same period a year ago.  The total number of resale houses was 2,066 and condominiums had 882 sales. New homes came in at 200.   The median price for all homes was $455,000 and for single-family it was $511,000.  The median price for condos was an even 300. Interestingly, buyers paying with all cash hit a near record 32.1% for southern California.  A final number which is somewhat sobering... 57% of all homes for sale, had multiple offers.

ORANGE COUNTY ECONOMY REBOUNDS IN FORECAST

 So read the business section headline of the Orange County Register on October 25th.  Specifically, it was talking about the Cal State Fullerton economic forecast for next year.  They expect a continued rise in home prices, and lots of construction jobs in 2013.  The next highest sector will be professional and business services, followed by leisure and hospitality.  What's really interesting is that earnings of large companies have outpaced their own forecasts, yet no one really seems to feel really good about it.  More jobs were added in September than originally forecast for the nation, and Orange County seems to be holding its own in this parameter.  Interest rates are at a 15 year low, home prices throughout California have risen for 8 straight months, and the job sector is looking positive.  Recovery?  You didn't hear it here, but could it be Orange County's dirty secret?

INVENTORY SLIDES, GEN X AND Y, WANT TO BUY, AND THE SMALL INVESTOR

Los Angeles inventory is down 37.1% and Orange County is about there too.  The city taking national honors for the biggest slide is our own San Diego with 40.7% (according to the national KCM Blog.)  Generation X and Y, in a recent survey, were asked, "what is a fundamental indicator of success?"  A whopping 75% said it was owning a nice home and only 12% said an extravagant vacation.  Home ownership is in America's DNA.  Should the small investor attempt to buy a single-family property as a rental.  Only a discussion with your financial planner can tell you what's right for you, but here are some thoughts... 1) Nationally, rental leasing volumes were up every month for 2 years.  2) Supply of available rentals is down 11% in the same period.  3) Rent growth is expected to increase at a very strong clip in 2013.  

THE TALK OF THE TOWN IS LACK OF INVENTORY...IS HOUSING THE COMEBACK KID?

If any of us paid any attention at all to all the various headlines in Augusts' business sections in any newspaper in southern California, then you noticed a couple of items.  Firstly, we are grossly below seasonal averages for inventory.  In fact, many cities in Orange County are below 2 months.  The city with the largest inventory, not surprising with the high end prices, is Newport Beach, with 5 months.  Some very skeptical economist are wading into the shallow end of opinion, that housing is making a recovery.  Not only is it making a recovery, but in fact it is one of the most solid pillars of the current, albeit weak, economic recovery.  July's housing sales volume jumped 25.7% from year over year 2011 to 2012.  In fact, according to an article in the Los Angeles Times business section, home prices are highest since 2008 and posted a 2% rise in July.  According to research firm Data Quick, the region's median home price hit $306,000, reflecting that 2% rise from June and 8.1% year over year.  Supply and demand will once again factor in the region's prices.  According to Data Quick President John Walsh, "There's growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale."  There are many positive factors for housing's comeback besides shrinking inventory.  Also fueling the market is financing, overall stable housing affordability, and pent up demand for many people who have sat out the market for years.  They are coming back in droves.  Don't expect a substantial rise in inventory any time soon.  The time for sellers and buyers to act, may just be right now.