MID-YEAR FORECAST UPDATE FOR THE CALIFORNIA REAL ESTATE MARKET

MID-YEAR FORECAST UPDATE

Following 13 months of sales below 400,000 homes, sales of existing detached homes in California in the month of May rose to 423,700 units on a seasonally adjusted and annualized basis. This corresponded to a 15.5 percent increase from the April figure of 366,720 homes, and an 18.1 percent year-to-year gain from the May 2007 figure of 358,640 homes. This was the second consecutive year-to-year gain, following a 30-month string of year-to-year percentage decreases that began in October 2005. Home sales now stand 14.6 percent below 2007 sales on a year-to-date basis.

Although sales have improved since reaching a low point last October, the median price of a home in California fell by yet another record-setting margin last month. The median price for May was $384,840, declining 4.7 percent from the April median of $403,870 and decreasing by a record 35.3 percent from the May 2007 median of $594,530. This was just the latest in a succession of record year-to-year decreases in recent months, beginning with a 9.9 percent decrease in October of last year that surpassed the previous record-setting 7.2 percent decrease of May 1993. The market has endured a string of unprecedented, ever-larger double-digit percentage declines in the months since October.

This pattern of declines may be explained in part by a set of recent developments in the market. First, all segments of the market have been adversely affected by tighter underwriting standards -- reducing the pool of potential buyers -- and by falling home values that have reduced the purchasing power of repeat buyers. Second, the mix of sales in the market has shifted dramatically since August of last year, with the share of sales under $500,000 climbing from 40 percent last year to 65% in May 2008. Third, homes within that price range have seen large decreases, both because of large numbers of distressed sales (short sales and REOs) and because of tighter underwriting standards as mentioned. Finally, market segments above $500,000 declined in their market share in part because of the liquidity or credit crunch that has cut off funds to the jumbo market to the point where even a qualified home buying household may see funding for its home loan fall through.

C.A.R. released its mid-year forecast update earlier this month. Annual sales for all of 2008 are expected to be 342,300 homes, declining three percent compared to the 2007 annual sales figure of 352,800 homes. Annual sales should bottom out in 2008, with 45 percent peak-to-trough decrease from peak sales of 625,000 sales at its peak in 2005.

As a rule, the median price bottoms out at some point after sales reach their low point. The median price for 2008 is expected to decline 28 percent to $402,000 from the 2007 median of $558,100. However, the market must still move large numbers of distressed sales through the pipeline in the coming months, possibly through the first quarter of 2009. This may result in a larger than forecasted year-to-year decline in price by yearend.

This information is reprinted courtesy of the California Association of Realtors.

TIMING ISN'T EVERYTHING IN THE COSTA MESA REAL ESTATE MARKET!

TIMING ISN'T EVERYTHING!

In light of declining sales and tougher loan requirements, many potential buyers are asking if they should buy now, or wait several months before moving forward with a decision.  The thing is, you can't time the real estate market any more than you can time the stock market.  Simply put, the best time to buy is simply when you need to do so.

Start searching now, targeting your preferred location in your community and getting a sense of the trends.  Call me to gauge listing times, list-to-sale ratios, and contract terms.  There's no such thing as a "national" market, and every area is going through its own adjustments, up or down.

Now isn't a bad time to begin your loan search as well, to determine how much home you can afford, and to start assembling the required paperwork.  If you're not pressured to move right now, securing loan pre-approval will give you the chance to immediately take advantage if an excellent purchase opportunity appears.

Owners who are pressured to sell for reasons like foreclosure or job relocation may be more willing to negotiate, but if you really love a particular home, don't lose it by haggling over a few thousand dollars.  A home is not a stock certificate.  In a buyers market, take your time, do your homework, and make the most of it.

Costa Mesa has several homes on the market right now that are available from the low $420,000 range on up to the $700,000.  Several programs still exist where you can purchase a home with a down payment as low as 3% of purchase price and in some cases even 1% down can be had!

We are starting to see over the last 3 months some firming in the prices in the low end of the market.  Many properties are experiencing multiple offers and even selling over list price.  The next few months will tell if we have hit bottom or if we are experiencing a false bottom. 

I welcome your calls or emails. (714) 241-4532 or Larry@TeamWeichman.com

IT TAKES MONEY TO SAVE MONEY!

IT TAKES MONEY TO SAVE MONEY!

Okay, you've found the home of your dreams.  You've determined how much you can afford because you've already been pre-approved by your lender, and your offer has been accepted.  But wait.  If you're financing the purchase, like almost everyone does, you'll actually be paying more than the final sale price of the home.

Many buyers don't stop to think about how much they'll really be paying for their home by the time they've reached the final payment.  It's worth considering, and it makes it evident that you should shop around and get the best loan terms possible.

Be sure to discuss your options with a trusted local real estate agent, who can provide mortgage information, illustrate different financing options, and even recommend lenders suited to your needs.  With literally hundreds, if not thousands, of options available, it's helpful to begin with the basic facts to help you whittle down your choices.

Determine how much is available for a down payment.  If you're putting up less than 20%, you'll need a guarantee that often comes in the form of PMI (private mortgage insurance).  This will add to the overall cost of your loan, at least until you've paid off a significant percentage. 

Again, discuss your loan options with your real estate agent before you make any offers, in order to avoid unpleasant delays and unexpected expenses.

 Larry Weichman is President/ Broker for Costa Mesa based Weichman Realtors. His company has served Costa Mesa since 1976.  Please direct your questions to Larry@TeamWeichman.com or call 714-241-4532. You may also visit www.TeamWeichman.com, www.OCHomeTracker.com, www.OCRepoBroker.com.

Get Serious!

GET SERIOUS!

Familiar with the law of supply and demand?  In real estate right now, it may seem like the supply of homes for sale is much greater than the numbers of buyers demanding those homes, forcing prices down and decreasing activity.  But what's really in shortage may be serious, legitimate sellers.

A committed seller is willing and able to accept the best offer in the current market, and be motivated to do so.  Receiving a fair offer is inextricably connected to pricing your home fairly.  The best way to arrive at an attractive price is to aggressively challenge the competition.  Using past prices, your investment in the home, or even appraisals may not produce the ideal value factor for your home.

If you're serious about selling, let an agent describe to you how an appropriately priced and aggressively marketed home will always generate interest and offers, and will ultimately sell for exactly what it's worth in the current market.  All other factors being equal, a home that languishes on the market is simply overpriced, and a seller willing to wait for more than fair price would be better served by waiting until the market catches up before entering the fray.

 Remember this Golden Rule: There is a buyer for everything.  Any home can be sold in any market when proper pricing is combined with effective marketing.

Larry Weichman is President/ Broker for Costa Mesa based Weichman Realtors. His company has served Costa Mesa since 1976.  Please direct your questions to Larry@TeamWeichman.com or call 714-241-4532. You may also visit www.TeamWeichman.com.

Knowledge Is Power!

KNOWLEDGE IS POWER!

You know that real estate agents help you to move.  Did you know that agents can also help you stay where you are?  This has become quite an issue in light of the recent rise in loan defaults.  Real estate agents provide critical information and a link between lenders and buyers. 

Subprime loans, in and of themselves, are not bad.  They provide financing for substantial numbers of people who cannot otherwise qualify under standard lending practices.  However, buyers must be informed and realistic about what terms they can actually afford to accept.

No one - not banks, not agents, not homeowners - sees foreclosure as an acceptable option.  It hurts everyone, including the communities where vacancies lead to declining prices.  This is where a trusted local real estate professional can provide assistance. 

Real estate agents are advocates for smart lending practices, and they stay in touch with local lenders.  Agents also work with state and local governments, as well as local non-profit organizations that can help homeowners facing trouble meeting their mortgage payments. 

Perhaps most importantly, realty professionals work closely with buyers to educate them about resources and options.  This helps homeowners and prospective buyers keep their homes and build their equity.  The key to it all is education and reason, and a strong desire to preserve the quality of our lives and our communities.  

Larry Weichman is President/ Broker for Costa Mesa based Weichman Realtors. His company has served Costa Mesa since 1976.  Please direct your questions to Larry@TeamWeichman.com or call 714-241-4532. You may also visit TeamWeichman.com,OCHomeTracker.com or OCRepoBroker.com.

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Mesa Verde- Less Than 10 Years Old, Costa Mesa, California

Country Club A Local Gem

As Published in the Daily Pilot: Friday, May 30, 2008 

Every community has hidden gems. Whether it's a locals-only restaurant, a small park or community event, they are what make every community special.

Usually they are small and out-of-the-way places. In this case, the hidden gem may be out-of-the-way, but at more than 100 acres it is not small. What I am talking about is the Mesa Verde Country Club, which turns 50 this January.

Many of the non-golfers in the community confuse it with Costa Mesa Country Club, which is off of Mesa Verde East but just south of Adams Avenue. Mesa Verde Country Club is north of Adams just off Mesa Verde West. You can understand the confusion.

The land where the golf course sits was sold in 1956 to investor Adolph Sleceta, who planned to work with the developers Ray Watt and Walter Gaynor to build more housing in Mesa Verde.

Due to terrain and utility issues, however, they could not build homes. They instead decided to fund construction of a golf course and clubhouse. Not so good for them, but lucky for us.

Over the years, the club passed though several corporate owners until 1975 when the members bought it from Japan Golf Promotion for a whopping $2.1 million. Today, even in a down market, many of the homes on the course sell for more than that.

The golf course has a very rich history. It has been home to many PGA and LPGA tournaments. It hosted the first Orange County Open, a PGA Tour event in 1959 and continued that event until 1962. Starting in 1979 it hosted LPGA tour events for six consecutive years.

This club rates high among golfers. Steve Rhorer, club vice president, avid golfer and Mesa Verde resident, joined in 2000. Prior to that, he had been a longtime member of the Virginia Country Club in Long Beach.

"I have played every private course in the county and from a pure golfing standpoint; this course is second to none," he told me. "You will use every club in your bag, and with the tree-lined fairways, you better be accurate."

More than 600 local families are associated with the club as golf, tennis or social members. Seventy percent of the families used to be from Costa Mesa. Now it is composed of almost equal parts Costa Mesa, Newport Beach and Huntington Beach residents.

I talked with past board member Pete Daley, who joined in 1977. Daley, now residing in Aliso Viejo, lived on the bird streets for more than 20 years. He told me it is a very family-friendly club.

"Our three kids went through all the swimming and tennis programs," he said. "The club played a big role throughout their youth."

For the past 50 years, Mesa Verde Country Club has been one of those hidden gems that make up Costa Mesa and Newport Beach. It has not just been a place to play golf and tennis, but a place that makes you part of a community. It is where your kids learn how to swim and where you make friendships that last a lifetime.

Article Reprinted Courtesy of JIM RIGHEIMER