Mystery Home of the Week

Can you identify this modest Orange County home?

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:

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.

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 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.

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!

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.

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.

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.