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:

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!

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.

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.

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

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.

Home Sales Heating Up, Distressed Inventory Down

Read about it on Leslie's site.

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!

CAR Housing Market Report not all gloom

The California Association of Realtors released a new Housing Market Report this week which highlights the huge impact of the global financial crisis, with the chief symptom being the continued and increasing number of short sales and bank owned home sales. Never the less, there are some signs of positive news in the numbers.

Sales generally improved over last year in all parts of the state, with significant price declines leading to sharp increases in the Central Valley and Southern California. Sales of existing detached homes hit bottom in the last quarter of 2007, and have since risen in year to year comparisons. Following two years of steep declines exceeding 20 percent, annual sales in the California housing market are expected to increase 12 percent to 395,600 in 2008, with a further 12.5 percent annual increase projected for 2009.

The real distressed segment of the market continues to be the lower price range, as shown by a comparison of the number of sellers selling their home at a loss:

Homes Sold at a Loss
Price Range	2007	2008
Under $500k	16%	28%
$500k - $1Million	9%	20%
Over $1Million	8%	5%

Another point which is often overlooked is that ground zero for most the distress in the real estate market is centered on those who purchased recently at the peak of the market. In 2008 a whopping 47% of sellers who had purchased within the last 3 years and a net cash loss, while only 97% of sellers who held there home more than 5 years did not experience a loss.

Interested in taking advantage of what may be a once-in-decades investment opportunity? Check out the bank owned deals available in Mission Viejo, Rancho Santa Margarita, Ladera Ranch, even Coto de Caza, or all of Orange County.