New Tax Credit for Mission Viejo Home Buyers

There are 183 homes for sale in Mission Viejo today that will qualify for the new and expanded Home Buyer Tax Credit program. The new program, which goes into effect December 1, 2009 applies to any home for sale in Mission Viejo, or anywhere in Orange County, that you buy for less than $800,000.00 The expanded offering also has higher income limits, is not restricted to just first time home buyers, and is available until April 30, 2010. This short video will give you more of the details.

Mystery Home of the Week

Can you identify this modest Orange County home?

Posted via email from Paul's posterous

New Expanded Home Buyer Tax Credit

New legislation has extended and expanded the old “First Time Home Buyer Tax Credit” – it now applies to people who already own home as well. The picture of the chart from NAR has the details.

Here are the main points:

· First time buyers are people who have not owned a home in over 3 years

· Credit for first time buyers is $8,000

· Credit for current home owners is $6,500

· Current home owners must have lived in the home being sold for 5 consecutive years out of the last 8 years

· The income limits are increased to $125k/$225k single/married

· You must be under contract by April 30 and close escrow by July 1, 2010

Ready to start shopping? Try looking here or here!

Posted via email from Paul's posterous

Bank Owned Listing Update - 2 Closed Sales

Here's a little status update on our Bank Owned Listings:

2834 W Bridgeport Ave, Anaheim - In Escrow, accepting backup offers

215 Knox Street B, Costa Mesa -

• Price reduced $50,000 - offers have been received, so there's no time to waste if you're interested in this one

11 Villa Valtelena, Lake Elsinore - Sold for all cash, 15% above asking price

21331 Bristlecone, Mission Viejo - Sold for full price



If you'd like more info on any of these, or any of our other listings, just contact me or Leslie directly!

Market Time of Orange County Homes Continues to Fall

The "Market Time" benchmark tracked by Steve Thomas of Altera Real Estate has fallen below 2 1/2 months for all Orange County homes, and below 1 1/2 months for homes priced between $250,000 and $500,000.

Market time is the number of months that it would take to sell all homes currently listed on the MLS at the current transaction rate. Here's a chart that shows the picture:

Watch Out for Loan Mod Sharks

We all know there are lots of people struggling to keep their homes today. Unemployment, layoffs, bailouts, foreclosures, and loan modifications are probably some of the most common words in the news, and have been for a while.

Shouldn't You Get Professional Help?

For some people who have certain types of loans a loan modification is a real option, but large numbers of people in distress tends to bring out the scammers. Who can you trust to help in your loan modification negotiation? Normally, the safest answer would be to consult with an attorney.

Pros Gone Bad

That's what makes today's announcement by the State Bar of California so disturbing. They've publicly identified 16 attorneys who are under investigation for misconduct related to loan modifications. The charges against them include taking a fee for services and then failing to perform those services - or even further communicate with the client!

The Office of Chief Trial Counsel experienced a 58% increase in active investigations compared to 2008, and 25% of them involve loan modification.

What to Watch Out For

If you or someone you know is having trouble making mortgage payments loan modificaiton might be a good option - but just be sure you are working with someone you know you can trust. Get references, and check them! In addition, the State Bar has identified a list of "red flag" circumstances that could be a sign something isn't right:

• Advertisements of the office do not expressly identify by name the attorney who is responsible for the business.
• Office staff will not readily identify by name the attorney responsible for oversight of the business.
• The attorney in charge of the office is too busy or not willing to meet personally with prospective clients.
• The firm advises a consumer to stop paying the existing mortgage.
• The business, through its advertisements or claims of its representatives, makes claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved.
• The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value.
• The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

Are There Other Options?

One thing to keep in mind is that a loan mod may not even solve the matter for a home owner in distress. Check out this list of all the various options, as well as a FAQ on Short Sales, and remember to work with someone you know has a track record of success!

Proposed Legislation Would Expand Tax Credit

Senator Johnny Isakson has introduced new legislation that would significantly expand the existing first-time home buyer tax credit. Isakson is a Republican from Georgia, but he was joined by a bi-partisan group of co-sponsors, including Senators Chris Dodd, a Democrat, and Joe Lieberman, an Independent.

Here are the key provisions of the bill:

• The maximum amount of the credit would be increased from $8,000 to $15,000
• The credit would be available to all home buyers, not just first timers
• The current $75,000 and $150,000 income limit for individuals and couples would be eliminated
• The credit would be extended one year from the date of passage
• Buyers could claim the credit on 2009 tax return, even if the purchase was in 2010

Another group of senators, including Harry Reid and John Ensign, are pushing for a six month extension of the existing tax credit for first-time buyers.

As for support for extending the credit from the White House, Michael Cohn of WebCPA.com writes that spokesman Robert Gibbs has indicated that the administration is the administration’s economic team was evaluating the impact on new home sales and would make a recommendation to the president.

The likelihood of the bill's passage is unclear, but it's already had an impact on the market. At least one potential buyer has told me that he's "crossing his fingers" that it will pass - which could translate to buyers adopting a "wait and see" attitude in the short term. If the bill does pass in anything like it's current form, it will eventually add incredible motivation to buyers and increase demand for homes.

Bank Owned Home Update

Here's a little status update on our Bank Owned Listings:

New Pre-Listing Flash!

2834 W Bridgeport Ave, Anaheim

215 Knox Street B, Costa Mesa - Open House this Saturday 11-4

11 Villa Valtelena, Lake Elsinore - Multiple offers received, pending investor approval

21331 Bristlecone, Mission Viejo - In Escrow, accepting Backup Offers

If you'd like more info on any of these, or any of our other listings, just contact me or Leslie directly!



Late breaking update: we now have fully ratified contracts on 11 Villa Valtelena and will open escrow tomorrow.

Orange County Homes UNDER Valued by 10%?

Jonathan Lansner at the OC Register reports today that, according to a model developed by IHS Global Insight, Orange County homes are under valued by 10.6%.

Here's the chart showing the historical movement of the formula:


IHS uses a blend of regional economic data to calculate the over/under valuation of homes. By this model, the peak of the "bubble" was in the first quarter of 2006 with overvaluation estimated at 34.6%.

This is clearly a broad-brush picture, and doesn't deal with various market subtleties. For example, no distinction is made between homes priced under $500,000 vs homes priced over $1 million, which are like two different universes right now. Nevertheless, it's one more small indication that the worst has been seen and Orange County Real Estate is showing signs of a comeback.

Insider Info on Bank Owned Homes

Interested in finding out about Bank Owned properties before they hit the market?

Once a home goes through the foreclosure process it takes a little time for the bank to get the property ready for market. Wouldn't it be nice to be in the loop and have a jump on other potential buyers and investors?

Check these out:

• Newport Heights area of Costa Mesa

• Single Family Home in Mission Viejo

• Single Family Home with Views of Canyon Lake

Check back regularly - we'll provide updates as these and other properties are prepared for the day they hit the MLS.

Want to be sure to always have the inside scoop on these kinds of deals? Check out Leslie's new video - she'll make you her Top Priority!

Bank Owned Home - Pre-Market Scoop

Interested in info on Bank Owned properties before they hit the market? I've created a new blog to keep you up to date on one of Leslie's newest assignments from IndyMac / One West Bank.

Here's some video of my first walk through the property - stay tuned for more!

OC Real Estate Now a Seller's Market?

Steve Thomas of Altera Real Estate tells the OC Register that the number of homes on the market has fallen to just a 2.5 month supply based on his "market time" model. That's down from a 16 month supply at the end of 2007 when the credit crunch hit.

The chart below shows the picture:

What this means is that the market for homes priced below $1 million has heated up, and under $500k it's red hot - multiple offers, cash offers, selling prices above list, and homes selling in 4 weeks or less.

Keep in mind, though, that "seller's market" doesn't mean the seller can name his price. It seems that a bottom has formed and prices are no longer dropping, but there are still a significant number of "distressed" properties on the market. Homes that are priced correctly are flying off the shelf, but homes priced above the market comparables are not.

Interested in what's on the market in your area? Try searching for homes for sale here!

OC Home Sales Climbing - Inventory Falling

The intense buyer competition for homes priced under $500k continues. The latest numbers from HousingTracker.net show that the median price has stabilized and is gradually rising, and that inventory (homes listed for sale) is down more than 27% from a year ago. Meanwhile, the number of homes sold each month continues to climb.

Do you think the tide has turned? Check this out if you'd like to find out more about the opportunities for first-time home buyers. Thinking about buying investment property? Sign up for a free home search and find your bargain!

Home Sales Continue to Improve

Home sales in Orange County continue to show signs of recovery, and the good news is spreading up from the super-hot under-$500k market into the higher price ranges.

DataQuick reports that the number of homes sold in Southern California has jumped to it's highest level since 2006, and that the median price was up for the second consecutive month.

Perhaps the most encouraging tidbit in the report is this:

Resales of single-family houses priced $500,000 and above rose to 19.6 percent of all existing houses sold in June, up from 18.0 percent in May but still down from 29.2 a year ago. The last time the $500,000-plus market made up more than 19 percent of sales was last October, when it was 19.9 percent. Sales of $500,000-plus houses dipped to as little as 13.4 percent of sales in January this year.

The recent shift toward higher-cost markets contributing more to overall sales has put upward pressure on the region’s median sale price...

Foreclosures and Short Sales continue to be a significant portion of the active market, but most of that activity continues to be in the lower price ranges where homes are in extremely high demand.

What's the hottest spot in the OC? The Register reports that sales in Huntington Beach were up 19% in June compared to last year, topping the overall Orange County increase of 16.5%.

Interested in what's on the market in your neighborhood? Check out the Orange County Deal Detective - where you can customize a search for exactly what interests you.

Down Payment Help From Surf City

If you currently live or work in Huntington Beach and would like to become a home owner, the city has a new program that may help you get there.

The city council just voted to scrap their controversial "foreclosure purchase" program in favor of a new initiative that provides down payment assistance for low-to-moderate income families.

The program provides over $1,000,000 to be loaned to qualified home buyers, with a maximum loan amount of $100,000 per buyer. The loans are "interest free", but call for a portion of any future profit from appreciation in the value of the home to be shared with the city. This "equity increase sharing" is phased out over time. If the buyer stays in the home for 30 years only the original loan principle would be due.

There are several qualification requirements, including residency and income limits, but for the right family this could be a real boost.

The program will be administered by the Affordable Housing Clearinghouse, which also administers several other programs.

Interested in what's available in Surf City? Click here to search for homes for sale in Huntington Beach.

Mello-Roos Follow-Up

Sharon Whaley at Disclosure Source reminds me that Mello-Roos taxes are not fixed - they can rise, and sometime at significantly more than the 2% annual rate that applies to the base property tax rate. The home seller and agent have a legal responsibility to disclose the maximum amount that the Mello-Roos tax can reach, which is why it is critical to obtain a compliant Natural Hazards Disclosure (NHD) Report with a Mello-Roos determination from a reputable company!

Property Tax Info at Your (Cyber) Fingertips

While homes in Orange County are more affordable than they've been in years, there's a potentially expensive trap out there for the unsuspecting buyer.

Property Tax Basics

California's Prop 13, passed in 1978, capped property taxes at 1% of a home's value, and also limited the amount of increased assessment as a property's value rises to 2% per year. Of course, a home's value is reset each time it is sold, so no matter what the seller's property tax was, a home buyer can expect an annual property tax bill of 1% of the purchase price.

Sounds simple, but there's a catch. The "property tax" is not the only liability that shows up on your property tax bill. It may also include a wide array of "special assessments" for various voter approved bonds or other initiatives. The most notorious special assessment is the dreaded "Mello-Roos" Tax, which is typically a fixed amount rather than a percentage of the home's value. Mello-Roos taxes can range from a few hundred to thousands of dollars per year, while in some communities there are no Mello-Roos taxes at all.

What Will Your Tax Bill Be?

How can a buyer determine what the tax bill will be on a home he or she is considering buying? Obviously your Realtor should have this information at his or her fingertips, but it's at your fingertips too! Most counties make such information quickly available online, and Orange County's website is particularly easy to use.

The Orange County Treasurer/Tax Collecter Search Page allows you to search for a specific home by parcel number or address, as well as various other criteria. Once you've found the right home, you can "drill down" to see a summary of the tax assessment - but don't stop there. A the bottom of the page under the summary is a link in small text: "Click Here for Details". This is where the real meat and potatos are hidden.

A Tale of Two Cities

Let's take a look at the "details" for two home currently listed for sale - one in Misson Viejo, the other in Ladera Ranch.

28292 La Caleta in Mission Viejo is currently listed for sale for $699,990. Here are the tax details from the Tax Collector's website:



You can quickly substitue the assessed value of $447,754 with your purchase price to determine what your new tax bill will be, but what we're really interested in are the special assessments - those that are fixed amounts regardless of the value. In this case there are four special assessments totalling a whopping $33.81 per year.

30 Bedstraw Loop is a similar home located in Ladera Ranch, listed for $700,000. Tax details:


Mello-Roos rears it's ugly head - those two special assessments add over $4,500 to the annual tax bill, no matter what price you pay for the home! That effectively adds $375 to the monthly cost of owning the Ladera Ranch home.

Knowlege is Power

Obviously there may be many reasons a buyer would prefer a home in spite of a higher tax bill, but the key is to be aware of the difference in advance so that you can make a well informed decision and not face any unpleasant surprises late in the buying process.

OC Median Price Up Again in May

Median Increases 3rd Month Out of 4

As reported in the Orange County Register, "By one measure, Orange County home prices increased for a third time in four months, perhaps indicating that housing is ricocheting off the bottom of the worst recession since the 1930s." The median home price rose about $20,000 to over $400,000. That's the same measure that they most frequently site, even though by their own admission, it is easily skewed by the number of homes sold in a given price range rather than actual price changes for a given market.

Price Per Square Foot

Let's take a look at what I feel to be a more accurate measure of actual market value, the sales price per square foot. In the same article linked above, the Register said "one local broker predicted that the price per square foot of Orange County homes could fall another 10 percent in the next nine months", but provides no further evidence or even explanation for why this might happen.

In 2006 Orange County's average price per square foot stood at $532, and it peaked in 2007 at $540, just before the 'bubble burst". Since then, there has been a steady and continuous decline to the bottom reached in February of this year at $246 per square foot - a drop of 53% over 2 years. That all seems pretty grim, but let's look at the monthly data:


The Good News

As you can see from the above chart, the average price per square foot for all homes sold in Orange County has held steady for 4 consecutive months at about $248. That flattening of the trend is not surprising considering the feeding frenzy for homes priced below $500,000, as well as the continual drop in available inventory. When was the last time that Orange County homes were selling for less than $250 per square foot? The first quarter of 2003! Prices are at a 6 year low, almost 50% of households can now afford to buy a home, the number of homes sold has increased year over year for 11 consecutive months, and interest rates continue to hover around 40-year lows.

The Time to Buy is Now

The message is clear - the current housing market represents a once-in-decades buying opportunity. First-time buyers may never see conditions this favorable, especially taking into account the Federal $8,000 Income Tax Credit. Investors have recognized the opening, and are bidding up lower priced homes with multiple all-cash offers.

The Move-Up Market

There's another group that has an excellent opportunity, and some are beginning to recognize it - homeowners with equity. Yes, they've taken a hit from the peak value of two or three years ago, but for those who didn't "cash out" the depressed prices and excess inventory of larger homes represent a unique chance to "move up". Let's say you bought your 1500 square foot home 8 years ago for $350,000 with 20% down. Through all the ups and downs, it's still probably worth $100,000 more than you paid, and your loan balance as actually fallen some. That $200,000 or so in equity represents the chance to buy a home in the $500,000 to $1,000,000 range at a time when such homes are priced at 6-year lows, and there are hundreds of motivated sellers to choose from!

Industry Leaders Push Congress to Help Housing

The Housing Working Group of the Business Round Table recently released detailed recommendations for Congress and the White House aimed at jump-starting the housing market and the economy in general.

One key action the group is pushing for is expansion of the existing $8,000 tax credit for first-time buyers to a maximum $15,000 tax credit for all home buyers, with no income limitations, and the removal of several other restrictions.

Other recommendations of the group include:

• Keep mortgage interest rates at historically low levels (below 5 percent) for at least one year
• Conduct a thorough review of current foreclosure mitigation and loan-modification programs in light of rising loan-modification re-default rates
• Make permanent the current temporary conforming loan limits
• Continue to review and strengthen government efforts already underway to review and refine mortgage lending practices

Where Have All the REOs Gone?

Check out this chart:

	Jan 09	May 09	June 09	Active
All OC	1,681	2,409	603	9,357
Short Sales	306	428	223	2,610
Bank Owned	736	743	60	417

In January of this year, Bank Owned homes accounted for 44% of all the homes sold in Orange County. In May, that number had fallen to 31%, and the trend continues. Bank Owned properties currently make up only 4% of all homes on the market, and for the first week of June only account for 1 in 10 of the properties sold or placed in escrow for sale. RealtyTrac reports that foreclosures are still happening at a record pace, but they have not yet hit the market. The net impact has been a firming up of prices and intense competition for homes priced below $500,000.

First Time Buyer Information Page

Thinking about taking the plunge and buying your first home? We've created a new web page just for first time buyers. Check it out to learn some of the details of the Federal Tax Credit and the new CAR Mortgage Protection Plan. You can also visit our Home Buyer's Quick Start page.

Low End Hopping - High End Slow

Say, the topic of discussion on this OC Register blog sure sounds familiar....

Here's a quote from the Insider Update newsletter we sent out this month:

It's been a wild ride for Real Estate over the last two or three years, but there are some signs that the market is beginning to stabilize. Although the much-reported Median Price continues to drift downward, homes are selling at a faster clip - April was the 13th month in a row of year-over-year sales increases.
One big reason the median price is still dropping is price pressure and less activity on homes over $500,000. Homes priced above the $1,000,000 mark are selling slowly, but for those priced under $500,000 it's an entirely different story. Buyers in that price range are faced with a defacto "seller's market" - reduced inventory, multiple offers, offers above asking price, and intense competition for Bank Owned and "Equity Sellers", as opposed to Short Sales. A few months ago, Bank Owned and Short Sale homes each made up about one-third of the homes for sale, but those REOs are almost gone. Rumours abound of a coming wave of new foreclosures and Bank Owned properties to hit the market, but for now there aren't many to be had.

Want a copy? Just shoot me an email or register at www.leslieeskildsen.com.

Use Your Tax Credit to Lower Closing Costs!

First-time home buyers got another boost from HUD last week, when it was announced that buyers who qualify for a one-time tax credit of up to $8,000 can now apply that credit towards closing costs on an FHA loan, or to increase their down payment from the required 3.5%.

Thinking about taking the plunge? Check out our home buyer's quick start tips!

Real Estate Activity for May 2009

Check out the latest Real Estate activity for the month of May:

Saddleback Valley (Coto, Rancho Santa Margarita, Mission Viejo, Trabuco Canyon, Ladera Ranch, and Lake Forest)

Coto de Caza

Rancho Santa Margarita (including Dove Canyon, Rancho Cielo, Robinson Ranch, Wagon Wheel, Las Flores, and Walden)

Mission Viejo

Help Coming On Short Sale Woes?

The US Department of the Treasury announced yesterday new details about its "Foreclosure Alternatives Program", which is part of the "Making Homes Affortable" program. Short Sales make up about one-third of the homes currently listed for sale in Orange County, and have been a source of frustration for lenders, sellers and buyers because of the lack of any standardized process for handling a short sale transaction. A typical Short Sale can take up to 3 months or more to complete once an offer has been made on the home, and this can often be a problem when the foreclosure is happening at the same time.

The purpose of the Foreclosure Alternatives Program is to streamline the Short Sale process by providing a standardized process flow, establishing minimum performance time frames and standard documentation, and offering incentives to both sellers and lenders to persue a Short Sale as an alternative to foreclosure. Other issues tackled by the program will include standards for establishing the value of the home to be sold, minimum time allowed to market the home for sale before a foreclosure can be completed, standards for fees and commissions, and more. There's more in the fact sheet here.

It's too early to tell whether this program will help provide needed standardization to a long and complex process. There is always a danger with government intervention that the program will have unintended consequences and do more harm than good, but most of the stated goals of the program would be a much needed improvement over the status quo.

(Cross posted at www.leslieeskildsen.com)

Has the OC Housing Market Bottomed Out?

The Orange County Register reported that the median price of a home in OC climbed for the second consecutive month. The March median was $385,000, up from $375,000 in February and $370,000 in January. Another bullish sign is the continued climb in the number of homes sold. March was the ninth consecutive month of year-over-year sales increases, with 2,433 homes sold - a 46% jump from March of 2008.

There are still plenty of concerns in the market, with homes priced over $500,000 selling slowly, and short sales accounting for about 30% of the homes on the market. One interesting wrinkle is that bank owned homes have become a scarce commodity. Just a few months ago bank owned properties also made up about a third of the transactions, but today only represent 5% of the homes for sale. REOs, especially in the lower price ranges, are in huge demand because of the relative simplicity of the transaction compared to a short sale, and the market is hot. Most bank owned homes are selling within a few days or weeks, and often at full price or higher. The Wall Street Journal has even dared to use the term "bidding war"!

There has been talk for months about a so-called moratorium on foreclosures related to the Federal financial bailout, TARP, and consolidation of banks, with speculation that it would soon end. This, of course, could lead to a new round of foreclosures and another influx of REO inventory on the market. That might lead to more downward price pressure, but it also might signal the final phase of a long and painful process.

Leslie Eskildsen Selected as Top Orange County Realtor by Home Inspector

Leslie is honored to have been select as one of the Top 100 Realtors in Orange County by JLC Inspections. You can read Leslie's comments here.

Straight Talk on Short Sales

Short Sales are a big part of today's Real Estate market in Orange County, but what exactly are they, and what does it mean to me? Here's a little Q&A.

What is a short sale?

A short sale is a sales of Real Estate in which proceeds of the sale are less than the amount the seller owes, and the lender agrees to accept a payoff of less than the balance due on the loan. The lender may also agree to pay other costs associated with the sale. There may be more than one lender on a property - if any of them agrees to accept less than the full amount owed it is called a "shor sale" or "short pay".

How long does a short sale take?

It can take anywhere from one to six months, or even more. Short sale transactions have to go through several phases that may normal sales don't, and they take time. Any normal sale of a home can happen quickly, or take up to 180 days or more. Once those normal negotiations are complete, the short sale process starts in earnest. The homeowner must establish eligibility for the short sale by showing hardship and providing a comprehensive picture of financial condition to the bank. The "package" with the negotiated offer is sent to the lender who will evaluate it from a financial perspective. If they agree to the sale in principle, the real negotiations then begin.

Should I try to sell my home in a short sale?

If you are struggling with house payments and considering a short sale, you need to know you have other options - and get professional advice. Some alternatives to short sale include:

• loan modification / refinance
• deed in lieu of foreclosure
• foreclosure
• bankruptcy

These are serious decisions and have serious, long-lasting implications. There are non-profit counselors available to advise homeowners about these options - check out the directory at www.hud.gov. In addition, you should always consult your attorney and tax professional before (and during the process) choosing any of these options.

Why would a lender agree to a short sale?

For the lender, it is purely a financial decision. Foreclosures are expensive and take a long time to complete. Once the foreclosure is complete, the house may be worth less than what they could sell it for now. If the homeowner is in a true hardship situation, a short sale may be the best financial outcome for the lender.

I would like to buy a short sale. Where do I start?

Choose a REALTOR® who has the ability to identify a short sale property that is likely to result in a successful transaction. There are many homes listed on the market as short sales that are not likely to sell before forclosure. We can help you find the ones that will work, and we can work through any difficulties that may arise during the buying process. Take a look at some of these, then let us help you find the gems. It's not a simple process, but the potential reward is high.

Cross-posted from www.leslieeskildsen.com

Where Do Home Buyers Come From?

The Internet is the Tool of Choice

As in most industries, the Internet has revolutionized the Real Estate business. According to the National Association of Realtors, in 2003 just 8% of home buyers started their property search on the Internet. By 2003 that number had grown to just 11%, but in 2008 the number had more than doubled. Today 28% of buyers start their search on the Internet, and most consider it a critical tool in finding the home they want to buy.

When you list your home for sale, you need to do everything you can to ensure that it will sell quickly and for the highest possible price. There are many actions you can take to ensure success, and one of those is to make sure the Realtor you hire has a great Marketing Plan the recognizes the power of the Internet to attract buyers that are ready, willing, and able to buy your home.

Cross posted from www.leslieeskildsen.com

Home Sales Heating Up, Distressed Inventory Down

Read about it on Leslie's site.

$787 Billion Stimulus Bill Set to Pass

The House of Representatives passed the modified bill today and the Senate is voting as I type. The key spending provisions of the bill are summarized here. An provision in an earlier version which would have offered a 10% tax credit to home buyers, up to $15,000 per household, was removed during conference negotiations.

Update: The tax credit survived as an $8,000 credit for first-time buyers.

Some Heat at the Lower End

The newspapers continue to be filled with doom and gloom, largely focused on the steady fall in the median price of homes sold in Orange County. As we all know, prices do continue to fall, but reduction in median price exacerbated by the dynamic of slow-moving expensive homes and fast moving homes at lower prices.

Let's take a look at Bank Owned homes under $500,000. Since January 1, 2009, just over 1,400 REO houses and condos have sold below that level. Of the 1,400, fully two-thirds were on the market as an REO for less than 60 days, and of those the average time on the market was less than 30 days! Not only did they sell quickly, but about 36%, more than 500 of the 1400, sold for over the final list price!

The message is clear - once a home under $500k is priced properly there are multiple buyers prepared to act quickly.

Homes priced below $500,000, combined with incredibly low interest rates, represent an opportunity for first-time buyers that hasn't been seen in years, but it is critical that once you've made the decision to buy you do all you can to be ready to act when the right deal appears. Get your lender approval letter, your source of funds for the down payment, and earnest money deposit check into your agent's hands. Then, when that perfect little house has a price reduction that catches your eye you'll be in the driver's seat and won't lose it to someone who was better prepared.

For a sampling of bank owned homes currently on the market, check out these links:

Coto de Caza
Ladera Ranch
Mission Viejo
Rancho Santa Margarita
All Orange County

Housing Inventory as a Market Indicator

One common way to measure housing supply is "Months of Inventory" - a calculation of how long it would take to sell all the homes on the market if no new ones were added. A high number indicates over-supply, and downward price pressure - since buyers have many homes to choose from. A lower number indicates under-supply, and a so-called seller's market - buyers competing for a scarce commodity.

Interpreting these numbers is as much an art as a science, but here are some suggested parameters from Steve Thomas of Altera in Orange County:

Buyer's Market - 6 or more months of inventory
Equilibrium - 5 to 6 months of inventory
Seller's Market - 2 to 5 months of inventory
Hot Seller's Market - less than 2 months of inventory

In February through August of 2005, there was less than a 2 month supply of homes on the market in Orange County - right before the bubble burst. As troubles in the sub-prime mortgage market grew, housing inventory also grew - to almost 8 months supply in January of 2007, and then and incredible 16 months of inventory in September of 2007! Since that month, inventory has fallen dramatically and leveled off to between 4 and 5 months supply, where it currently stands.

It is impossible to predict where the bottom of any bear market will be, but this is yet another indication that the housing market in Orange County is settling down into a less volatile state.

Home Value - Price per Square Foot vs Median

One of the most common ways to evaluate the real estate market is by watching the sales price per square foot of homes sold ("sp/sqft"). Let's take a look at the results of homes sold in four local towns for the month of December 2008:

City	Homes Sold	Low SP/SQFT	High SP/SQFT	Average SP/SQFT
Coto de Caza	12	$222	$450	$319
Ladera Ranch	31	$207	$276	$242
Mission Viejo	92	$186	$362	$267
Rancho Santa Margarita	49	$204	$309	$264

For the expanded area including Lake Forest and Modjeska, Silverado and Trabuco Canyons in additon the the four above, the average price per square foot in December was $234 for attached homes (condos & townhomes) and $262 for detached single-family homes. This represents a drop of 20% for condos and 15% for single-family homes from January's average - a significant reduction, but not quite as catastrophic as is portrayed in the media. Year-over-year reductions of 25% or even 35% are often quoted, but these are based on changes in the "median" home value. The median is the value at which half the homes sold were less expensive and half were more expensive. Since an extremely high proportion of sales are occuring at the lower end of the market, the median home value is skewed significantly lower than the reduction in sales price per square foot!

Market Snapshot Customized for You

We all know that the Real Estate market has been in turmoil, largely due to the sub-prime mortgage melt-down and related credit crunch. Have you wondered exactly what it all means for the specific value of your home? Sign up for our free Market Snapshot - just enter the basic information about your home's location and size, and you'll receive a monthly email link to a customized report with all kinds of specific data and nifty graphics. It's very informative, and of course there's no obligation of any kind - you can opt out and stop receiving the updates any time you like.

If you have questions that the report or would like a more detailed analysis of your home's value, just give me a call!

Polo field update

Here's a pic of the planned site for the new arena, off Via Pajaro and adjacent to the Equestrian Center. In addition to concerns of local residents in The Village and Los Ranchos Estates, boarders and trainers at the Equestrian Center have voiced concerns about the loss of turnouts to the polo ponies and incompatibilities between the way polo ponies are exercised versus hunter/jumpers and trail horses. "Polo players need to 'pony' their horses, cantering around in groups of 3 or more - not much of a match for kids on jumpers in a nearby arena or folks on a quiet trail ride", said one boarder who asked not to be named. Could be interesting times ahead.

Foggy morning in Coto

New Polo Field Approved for Coto Equestrian Center

The Orange County Register is reporting that construction of a new arena has been approved by an OC zoning administrator. The arena will be built on previously undeveloped land adjacent to the existing Coto de Caza Equestrian Center on Via Pajaro. The project is the culmination of 3 years of negotiations and discussions between Silver-Bronze, the group which ownes the land, and members of the Orange County Polo Club, which will lease the facility. The field has been opposed by local residents because of concerns over parking and impact on views.

Silver-Bronze plans to use the lease revenue generated to upgrade the existing facilities they own, including the Equestrian Center, the Coto Valley Sports Club, and Gentilles at Coto de Caza. Ken Agid of Silver-Bronze says he expects the new polo arena to be completed and in use by April 2009.

Neighborhoods potentially impacted by the new construction include parts of The Village, one of Coto's earliest developments, consisting of all custom or semi-custom homes set among the hills and oak groves of Coto's north-eastern section.