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.

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.