Sunday, December 1, 2013


Here is the real scoop on what's happening in the real estate market.  First of all, don't just stand there...BUY!!  The whole reason the median price of a single-family property increased so rapidly the past 60 days, (more on prices in the next paragraph), is because interest rates jumped more than a full percentage point.  Between that increase and sellers demanding greater increases than the market could bear, sales slacked off in the price ranges most susceptible to interest rate increases, namely $250,000 to $750,000.  Without the volume of those sales to temper the million plus purchases, the median price shot up.  Many families were forced to the sidelines with the interest bump.  Now, they can return, because in case you didn't hear... rates are back down, low...really low.  Also, during the past 60 days, more property has hit the market, inventory levels are much healthier, creating more competition for sellers.  This will naturally keep prices in check to a normal appreciating market.  Don't miss out on the great rates again.  Go out and find your dream home!  The Federal Reserve has made it clear in recent articles and blogs that the U.S. economy still needs support from its low interest-rate policies, because it is growing only moderately.  After its policy meeting, the Fed also announced that it will continue buying bonds to the tune of 85 billion a month to keep those rates low and encourage borrowing and spending.  The question is:  does that mean through first quarter next year?  Or possibly second quarter?  If buying a family home, to raise your family, spend your quality time, now may be your time.



According to all sources, including,  the LA Times, the OC Register and DataQuick, the So Cal area's home price gains for August and September are the highest since '05.  Before we get too excited, let's remember what we discussed in the last section of this newsletter.  The sheer number of deals in the upper price range and cash transactions in the multi-million dollar range had a lot to do with the increase.  Lack of inventory also drove up prices.  Expect them to soften somewhat because of the increased inventory we wrote about.  The number of sales in Orange County for September (the last complete month available) is 2,916.  That number was up 8.9% from the previous month year over year.  The median price for all properties was $550,000 up 22.2%.  However, the median price for a single-family was $612,000 and that is a 20% increase from the same month of 2012.  The median price for a condo was $380,000 and that was up 24.6%.  The volume for the number of sales for single-family was flat with 1,807 sales, but condos rose 16% in volume to 836.  The median price was highest for new homes at $696,000 but the sales were a paltry 273.



A recent article in the OC Register reported a 5 year prison sentence for a man forging deeds on vacant properties and then renting them and collecting those rents.  The unfortunate part of this scenario is for the homeowner who may have moved out of a distressed property or simply moved and had not yet disposed of the existing property and now have to deal with tenant's rights, as well as a forged deed.  Fortunately, the ALTA Residential title policy protects against after close of escrow forgery.  Not all title companies issue this policy or do so automatically without Western Region Exceptions, but Fidelity National Title does.  Always check to make sure you receive this superior title policy when you are purchasing a home.



There are many cheap, easy (ok maybe a little effort involved), ways to help buoy your asking price when you sell your home.  Here are a few.  (For even more info, go to  First off, we are mainly talking about curb appeal, and a few cosmetic things inside your home.  Curb appeal is huge, because buyers always look at homes initially based on their visual, emotional, reaction to the home.  Make sure your roof is repaired and will pass for a one year roof certificate.  Gutters should be cleaned and repaired.  Invest a small amount of cash in really cool numbers for your address on your home's facade.  Windows and trim should look newer, with no cracked paint.  Wash your home's face, get the dirt and grime off it and add $10,000 to your sales price!  Upgrade your front door to a snappy color or etched glass or trim.  Replace old light fixtures for a more modern, with it look.  Brush up your landscaping with a few new plants or flowers.  Inside, think about replacing carpet with tile (if time or money), otherwise get your carpets cleaned.  These types of changes require mainly, time, a little money, but could result in better and more offers for you.  


Sunday, August 4, 2013


According to KCM Blog, a real estate blog, well documented with national sources and valid statistics, and a recent job report regarding wages, give great evidence that there is no bubble.  Talking about the possibility of a bubble has made for good fodder both in the papers and on cable newscasts.  However, take a look at the following and you will find some compelling reasons to keep an open mind and draw your own conclusions.  1) 41% - Percentage of homes being bought where payment is cheaper than renting.  2) 16 X's - The ratio of home prices to rents in the first  quarter of 2013 is slightly better than long-term average.  3) 8% - The percentage housing is still undervalued on a price to income ration.  4) 91% - Percentage of the country which is still undervalued.  5) Pent up demand / Low inventory.  6) Wages are rising.  We aren't even mentioning larger down payments, stringent loan qualifications and number of owner occupied versus investors is rising significantly.  Finally, has it been mentioned the renewed perception that home ownership is once again a great investment?



The entire Southland hit a sales high in May, the highest in 7 years.  The median price hit a 5 year high.  According to records kept by DataQuick, there was a total of 23,034 new and resale houses and condos sold in LA, Ventura, OC, SD, Riverside and San Bernardino.  That was up 7.6% from the previous month of April, and 3.8% up from  May 2012.  However, there is still room for growth, as May 2013's numbers are still off 10% historically of what May usually produces since DataQuick started keeping records in 1988.  The total number of sales for all properties in OC was 3,648, up 11% from May 2012 and the median price was $540,000 up 24% from a year ago.  The number of resale homes was 2,347, condos came in at 1,013 and new homes still lagged, from lack of product, at 288.  Million dollar homes are making a big comeback, recording the highest number of sales since 2007.  For all of last year, 2012, there were 26,993 homes sold at $1,000,000 or higher.  That is up 27% from 2011.



Reason #1 -- According to S&P/Case-Shiller, prices will continue to rise in 2013.  In fact, they adjusted their original forecast of 8% to 11%.  Reason #2 -- Mortgage rates will continue to rise.  According to Freddie Mac, 1/2 a point interest has already been factored in and likely will stay there for the time being.  But don't test providence.  Reason #3 -- It is time to make a decision.  The time for hesitation, waiting for the bottom of the market, has come and gone.



This was the headline in the OC Register on July 11th.  The true number of households in some stage of foreclosure, according to CoreLogic, was 4,300.  This represents a mere 1% of all households, and less than half the number of May 2012, which was 8,900.  Nationwide, 1 million US homes were in the foreclosure process for May, representing 2.6% of borrowers.  That number is down 29% from the previous year.  The point to glean from all that is that OC is stronger than the rest of the country, at least in avoiding foreclosure.  This is mainly a result of the appreciation of the last 2 years pushing more and more homeowners into equity positions, allowing them to either refinance or sell their home without it becoming a short sale, or facing foreclosure.



Yes, the notifications from the county tax assessor are making their way to your mail box as this is being written.  The boost is the result of a more robust market, solid appreciation, and new parcels which have sold, including commercial development as well as homes.  Prop 13 only allows 2% adjustment, so long time homeowners may get a notice of a slight uptick, but the most revenue will come from new housing developments, which allow for a fresh tax assessment based on sales price, broken down by land and improvements, and new commercial properties, factories, and shopping centers, to name a few revenue sources.  If you have questions about your tax bill, you should not hesitate to call the Tax Assessor and talk to one of their appraisers.  If you are in OC, you can view your tax bill online.  



Many investments, whether bonds, stocks, mutual funds, etc, are bought to hold and in fact become long term investment strategies.  Remember, we have been desensitized these past 10 years from one extreme to another.  First, from 2002 to 2006, the public saw real estate as a means to get rich quick. Investment  for  the short term.  Sadly, many people got caught holding the bag, and lost a lot of money, trying to make real estate something in their investment portfolio, it was never meant to be.  Then the other extreme hit, of no one wanting properties except the heartiest, cash flush, investor.  But if you take10 years, any 10 year period, after the great depression, there is no time that real estate did not do well.  Food for thought.


Thursday, May 9, 2013


Let’s start with a quote from a veteran real estate analyst of Southern California, G.U. Krueger, “If home prices and jobs are an indication, prosperity may be re-emerging in California”. In fact, according to analysts with Clear Capital, home prices in February this year grew by double digit rates from a year ago in nearly every metropolitan area deemed important for statistical reasons. Probably some of the best news was that inland areas, hard hit by the foreclosure and short sale wave, also showed serious growth and promise. This is significant because jobs in these regions are more about growth stability, workers and manufacturing as opposed to high tech and Internet or stock market; job divisions sometimes seen as leading vocations along the coast.

UCLA also posted predictions that Orange County would see strong gains and continuing job growth. Their current prediction is that OC should return to pre recession job levels around 2016. Unemployment is expected to drop to 6.8% this year compared with 7.6% a year ago and level off at 4.6%. In 2016.

No doubt everyone has read about or personally experienced the tight inventory, yes a serious lack of homes for sale. Not only is the desire to buy right now so high because of the low prices, signaling the bottom of the market that we hit last year; but also, more importantly, is the historically low interest rates. These rates are allowing the buying public to get up to as much as 30% more house for their money with no fear of a bubble. WHY?...Because these are real loans for people who have been strenuously qualified. If you have gotten a home loan recently, you know that this is true. That is real qualification and the loans being fixed versus ridiculous stated loans and interest only 3 year adjustables, which have gone by the wayside, thankfully. Now is the time to try and find and buy your dream home.



The number of OC homes facing foreclosure fell 55% over the previous 9 months ending in February, a decrease of nearly 5,000 properties that were previously in some form of foreclosure, according to CoreLogic. Another data provider, DataQuick, had a similar report. Southern California, comprised of Ventura, LA, San Bernardino, Riverside, Orange, and San Diego counties, reported 20,879 Notices of Default for 4th quarter 2012 as compared with 34,013 for the same period 2011. Orange county went from 4,297 to 2,169 and that is how the 55% decline is figured. Part of the decline is in response to new foreclosure laws which require an additional 30 day warning period in writing before the NOD can be placed on a property. Lenders are preferring to have properties go through a short sale. Thankfully, lenders are catching up with the learning curve and most now have procedures in place which actually can expedited the short sale process.



The total number of sales in Southern California was 15,945. The overall median price was $320,000 which is up 20% from the $264,750 of a year ago for the same month. (February is the latest full month available for statistics). Orange County had total sales of 2,252 which was up in sales volume by 6.7%. However pricing was up overall 22.3% with the median overall hitting $477,000. Part of the reason for the large gain, however, is lost when you just look at statistics. Last year, 2012 saw mainly investors flipping houses and cashes buyers buying distressed properties to flip. The market was largely devoid of the upper end seller or buyer. They are now back in force and so some of the price hike should not be seen as a worrisome bubble, but rather a welcome addition to the real estate market of 2013. Every county posted sales volume gains of around 5% except the Inland Empire, which lost a little ground. Every So Cal county posted double-digit pricing gains.



This brief newsletter can hardly accommodate the many subjects that could be discussed. Here is a brief look at some other points to ponder. A recent article mentioned on CNBC has Zillow’s economist worried about housing affordability. Something to watch is how quickly the housing prices are rising compared with wages. This newsletter has addressed the same concerns in previous months. What is keeping home buying in the game plan for most is the historically low interest rates. The Fed announced they could likely stick around until 2016, which coincides with pre recession employment gains. A recent article by Jonathan Lansner (April 10, 2013), economist for the Register newspaper, was asking where inflation is? It appears to be MIA. Gas topping the list, durable goods, food, all seem under control. If we mix the economic cocktail correctly, perhaps job growth will spur wages, before interest rates rise, and when inflation does return, the consumer’s purchasing power will be status quo. There is always room for optimism, even in economics.


Sunday, March 3, 2013


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! 



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.



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.



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.



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.


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