October 2008 Newsletter

THE BAILOUT HAS PASSED, NOW WHAT?... "Experts say the bailout plan has a fair chance of stabilizing the market."  This is a headline from an Associated Press article from September 21^st.   Since that article, the bailout was rejected twice before finally passing, and yes, it does have a good chance of stabilizing the economy. Obviously there are many factors at play in the bailout that are interacting with various parts of our  somewhat sagging economy.  What we are concerned with is how it will affect the housing market.  First of all, it will circulate money back into banks for lending.  However, the availability of the "free money" that characterized the first six years of this decade is over.  Expect money standards to continue to tighten, but at least there will be some money.  You can also expect interest rates to stay fairly even, with the government being the primary lender.  According to that AP article, "experts say that the government's enormous plan to relieve Wall Street banks of their bad investments has a decent chance of stabilizing home prices, at least in theory."

                But don't expect instant relief for areas that had year over year of double digit appreciation, i.e. California.  We can expect another year of price decline, although experts agree that 2009 is likely to be the bottom.  And relief will mean different things to people with different scenarios.  One example is housing supply.  If you look at inventory for prices under $600,000, there is only a six month supply.  But if you increase that to homes listed around $1.2 million there is a twelve month supply.  Increase it again to listings at $2.4 million and there is an eighteen month supply.  It would appear that the upper price ranges may take more of a hit in 2009 than the lower ranges, which reflect a lot of bank owned properties.  If you are in those upper price ranges and wanting or needing to sell in the next two years, you might want to do it now or risk chasing the market downward. 

                 The other issue that may be affected by the bailout is interest rates.  Perhaps this is a subject no one wants to think about, but we should.  Certainly increases will not appear right away, in fact interest rates are still between 5 ½ % and 6 ½% (as of this writing) but it would seem difficult to infuse so much cash into our economy without some kind of safeguard to inflation and the chief response is to raise interest rates.  So conversely, if you are thinking of buying, now may be the perfect time.  Houses may drop a little further, but interest rates may be higher.

WHAT WERE THE ACTUAL NUMBERS... According to the Federal Housing Finance Agency, the drop in U.S. home prices in July was 5.3% compared with a year ago.  However, according to the S&P Case Shiller Composite Index, Los Angeles and Orange County combined plunged 26.2% in July '08 compared with July '07.  Of course the major reason for the drop in pricing is the prevalence of bank owned property sales.  If you look at all of Southern California nearly half of all sales were foreclosures, reflecting a total price decline of 34% according to Dataquick.  If you look at volume home sales jumped upward 57% in California for August.  Orange County showed an improvement of 18.7% comparing August '08 to August '07.  The total number of homes sold for August was 2,713, including single-family, condos, and new construction.  There was an unprecedented 1,057 sales in the under $400,000 price range, a whopping 276% increase over that price range in 2007.  This reflects the fact that the affordability index has risen from 11% at the market peak, to roughly 50% today.  That does promote the makings of a healthy recovery as soon as we clear away the bank owned properties and remove the financing jitters.  It will happen.  According to Economist Esmael Adibi of Chapman University, it will be, "at least the middle of next year and more likely 2010 before the economy kicks into gear again."  He cites job creation with being crucial to re-establishing the housing market and lending making a subtle comeback.  We all know that money will never be available like it was, nor should it be.  People should have to qualify for a loan and it should be a fully documented process.

WHAT TO EXPECT... No one can predict exactly what the future will bring.  Notices of Default crept up 6.4% from July to August after being nearly flat from June to July.  There were 2,469 NOD's for Orange County in August.  Actual foreclosures numbered 1,427.  So roughly one out of every two NOD's ends up in foreclosure.  California has not taken as hard a hit as Arizona, Nevada, Florida and Texas. These states have had 3 consecutive months of increase signaling that they have hit their bottom.  Can we be far behind?  

                What I can tell you is that real estate always comes back.  It is an historical fact that from the 1970's forward, real estate has consistently doubled every 10 years.  But houses were never meant to be day traded and that's where our last market took us, perhaps leaving a bitter taste that is not totally deserved.  If you have questions, please give me a call and let's talk about your situation and what is best for you.  You may be thinking of selling, or be thinking now is a great time to invest. (Donald Trump has gone on record that he would be buying everything he could in California.)  Perhaps you just want to know what the market is in your neighborhood.  I would love to hear from you.  Have a great month!

September 2008 Newsletter

SALES SLUMP ENDS AFTER 33 MONTHS... It was hard to miss this August 19th headline in the Orange County Register.  In fact, it was an end to the longest home buying slump on record.  Never mind that the slump ending is directly attributable to still increasing foreclosures, and a still decreasing median home price.  After all, the buyers had to live through the first half of the decade, so sellers will have to live through the second half of the decade.  The real estate market is usually comprised of 3 types of markets; seller, buyer, and neutral.  So what exactly has been happening to generate the positive press?  First of all and possibly most important is affordability has made a comeback.  At the end of the selling frenzy and sub-prime debacle, affordability was a scant 11%.  No housing market will remain healthy when only 11 out of 100 people can afford to buy a home.  We have now risen back above 50%.  Secondly, there are screaming deals out there and even though there are a lot of them, there are not as many as there were.  In other words, according to the Orange County Register (August 26^th 2008), Orange County home demand is up 103% versus a year ago.  A report by Steve Thomas shows that, "fresh pending sales from the past month rose 51% in two weeks to 2,991.  One year ago, demand was 1,475."  But the really interesting part is that supply is at its lowest level in 16 months. (OC Register)

                The Associated Press ran a similar headline, "Sales of Existing Homes in U.S. rose in July, Realtors Group Says."  In fact, sales increasing are a national phenomenon of the moment.   At the end of August, according to Jonathan Lansner' column, who was quoting Steve Thomas' Market Update, supply, or active listing inventory in SoCalMLS, fell 289 homes in two weeks to 14,059, the lowest level since April 5^th, 2007.  Even though another wave of foreclosed properties is definitely on the way, for the first time in months the number of distressed properties to hit the market fell in July.  Finally, First American CoreLogic reported that prices are not falling as fast as they once were. (Lansner: OC Register)  This may suggest that although prices are likely to continue to drop into 2009, it probably won't be nearly as fast, as prices are leveling off. 

DON'T WAIT TOO LONG; THE BOTTOM WILL HIT 3 MONTHS BEFORE YOU KNOW IT...  So what does all this mean?  Well, for one thing it does take 60 days to accumulate most data and another 30 to spread it around to the media and the public.  This does make it difficult to ascertain the exact bottom of the market.  So what a consumer really needs to do is prioritize your motivation.  Meaning?  Houses are not stocks, even though we may have confused that for a time.  Houses are where you live, raise your family, and get shelter and all that good stuff.  Everyone needs to have one.  Therefore just make sure it's the right time for you.  The market for sure has corrected in a big way.  Expect much smaller adjustments from here out. 

                MORE IMPORTANTLY, understand that there are some very good reasons to get into the market now, if you have been waiting.  Here they are: 1) Selection.  You saw it said above, inventory is shrinking.  2) Increased competition.  Right now, you have a good shot at getting the home you want, even though the average number of offers on bank owned properties is 10 to 20, yes you read correctly, 10 to 20.  Most agents who work with bank owned properties will tell you that most of those offers are coming from people who plan to occupy the property, in other words, not investors.  That will not last forever.  Investors do try to time the market and I would plan on them coming back sometime in 2009.  3) Interest rates.  Have you been reading the papers, listening to the news?  Do I really need to harp on that fact that interest rates are still in the 6 to 6 ½ range and that this may not be the case for 2009? Also, there is that amazing FHA package with a $7500 tax credit.   4) Home Ownership.  Can you say tax savings?  Talk to your CPA about the advantages.  It's just way cooler to own than rent. 

WHAT WERE THE ACTUAL NUMBERS... The total number of sales for Orange County in July, (the last month available) is 2,799, a staggering 45% increase from June and up 17.1% over July a year ago.  The overall median price is $461,000 and that is off 6.9% from June and down 28% from a year ago.  The most amazing number is the number of sales under $400,000 which came in at 972. That is an increase in that price range of 275% from a year ago.  Every price range increased in the number of sales by at least 20% and the $500,000 to $600,000 price ranged increased by 39%.  This is important to note because it means that sales have increased in all price ranges not just the lower end.  This gives credence to the sales slump being over.  The number of properties entering into default increased slightly to 2,320, which is only a 1.7% increase.  This would indicate that foreclosures may have peaked or are close to doing so in Orange County.  All these factors are positive indicators of the beginning of recovery.

HOUSING RECOVERY LIKELY IN 2010, (BUT WAIT) EXPERT PREDICTS BEGINNINGS COULD START IN 2009... Real estate economist Richard K. Green, director of the USC Lusk Center for Real Estate, was interviewed by Jeff Collins of the OC Register.  For a complete transcript of his interview, just give me a call and I will email to you.  Essentially Green thinks 2010 is still about right for the recovery, but believes there is some chance for next year because prices have fallen sufficiently.

Green also was enthusiastic about the raising of the conforming loan limits and changes with FHA and the positive impact it would have on Southern California in particular.

IMPORTANT!  I ALSO HAVE A GREAT ARTICLE ON HOW NOT TO GET SCAMMED IF YOU ARE FACING FORECLOSURE!  THIS IS A MUST READ IF YOU ARE IN A DISTRESS SITUATION.  Give my office a call and I will email it over to you.   Have a great month and give me a call with any real estate related questions.  It's my pleasure to serve you and your referrals.

August 2008 Newsletter

IT'S IMPORTANT TO UNDERSTAND THE HOUSING MARKET REGIONALLY AS OPPOSED TO NATIONALLY... This is probably the biggest hurdle the real estate industry has to get over in the minds of consumers.  Unfortunately a lot of the news out there is the dismal outlook for national housing.  Regions such as the mid-west, specific cities such as Detroit, or sub-prime havens such as Riverside and San Bernardino or even Las Vegas and Phoenix, have many more problems than we do here in Orange County and Los Angeles.

                That is not to say that prices are not poised for a further drop, because they are.  There is more on that in the next section.  But it does mean that when you try to apprise yourself of what the facts are, in order to make a decision as to whether right now, is a good time for you to sell or buy, you should compare apples to apples.  For example, if you have a compelling reason to sell your home, i.e. a job transfer, divorce, a health issue, than now is definitely the right time because experts agree, there is more loss on the way before we are done.  But if selling is optional, consider your benefits.  If you want to sell and capitalize on a move up, then maybe now is good.  You need to talk to an expert and gather all the facts.  If you are looking to buy, what are your financing needs?  Will what you need in a loan program be there in 12 months to make waiting worth while.  Is the price drop of 10% worth waiting for over the need for a place to live, especially if you have found the "right house" as a 25% decrease over its high?  After all, houses are not meant to be day traded.  That was a bad habit that most of the country and certainly Californians partook of for a few years. Read on to see why regional knowledge is good when it comes to real estate.

EXPERTS SEEM TO AGREE ON HOW MUCH FURTHER PRICES WILL DROP... Real Estate Economics, a homebuilder consulting firm in Irvine has this to say about the Orange County housing market: "Opportunity/Risk Index currently resides slightly below equilibrium, but the trend is toward equilibrium.  Any O/R index above equilibrium represents market opportunity, and any index number below equilibrium represents market risk... Within 12 months, (the O/R) index should reach equilibrium... There is a need for an additional 5.6% drop in housing prices before equilibrium is reached in the Orange County market.

                The Kiplinger Report thought the drop would be 10% in 2009 saying, "Home prices have a ways more to drop before leveling off late next year, then staying flat during most of 2010.  Difficulties will vary by region.  The Inland Empire and Central Valley are sure to have the biggest price drops.  Orange County and San Diego prices won't fall as much.  Bargain hunters will spur sales, probably by year end."  We are definitely experiencing that right now.  Sales picked up for the first time from May numbers to June. (The latest numbers that are available for a full month.) 

                Broker and local economist Tom Moon's predicted price drop for next year, also 10%.  Obviously these projections are on top of the already 20% to 25% we've seen, depending on the location of the property.  So we are looking at a grand total of approximately 35% before we are done.  Is there anyone reading this that doesn't see what impact this will have on the affordability index and how it will spur sales with old fashioned supply and demand.  Don't forget we still have people arriving here that need to buy, we still have a lot of people who were left out of the sub-prime run up and if you read on, you will see that we still have decent economic prospects in Orange County.

MOST OTHER INDUSTRIES ARE IN GOOD SHAPE, AVOIDING THE DOWNTURN... Again, The Kiplinger Editors have interesting data on Southern California.  It is important to mention because again, they are experts on California and their information is regional, not national.  What do they say?  Tourism is getting a huge boost because of how strong the Euro is right now.  "High tech will benefit from consumer demand for cell phones, games, and software."  Kiplinger believes agriculture will benefit from foreign consumers buying more food.  Entertainment is counting on strong ad dollars for TV this fall.  Some areas will lag such as retail shopping centers and state and local governments.

THE NUMBERS ARE ENCOURAGING IF YOU UNDERSTAND THEM...This is a buyer's market so obviously the numbers are encouraging to them, not sellers.  But, if you think the market is stagnant, if you think people are sitting around waiting, you would be wrong.  It is not unusual for any property under $600,000, but especially for a bank owned one to have 6 to 12 offers or more. Orange County had 1,184 bank owned properties in the MLS as of July 11.  How many were bought in May? Just about half of them sold with a total of 570.  Time needed to sell all foreclosed homes?  That was a low number of 44 days.  We are nearing the end of loan adjustments for sub-prime loans, which means we are nearing the foreclosure peak and the end all at the same time.  Please feel free to call my office at any time and I will let you know current listing counts and the total number of listings that are bank owned.  Remember, no one can predict the bottom.  People need to decide based on their own circumstance if it is time for them to act.  But what is really happening in the market is a far cry from what you read.  Affordability increases every day.  Congress has passed the "Homeowner Rescue."  Fannie Mae and Freddie Mac are stable and FHA is a phenomenal opportunity, all made permanent with the new $625,500 loan limits.  Expect real estate to be what it has always been: a cornerstone of our local economy, for better or worse.  But you can bet on this; there is opportunity here right now that may never be here again.  There is no question that investors are eyeing the market very carefully.  If you need information, look no further as it is my pleasure to serve you.

July 2008 Newsletter

HOUSING MARKET HAS ITS WOES, BUT HAS ITS OPPORTUNITIES AS WELL... Every cloud has a silver lining and the real estate market is no different.  Sales volume took a jump in May (the latest full month available) over April, although sales were still off approximately 10% from May of '07.  However, most agents who are actively working the foreclosure market will tell you that 8 to 20 offers is not unusual for any house priced under $500,000.  The papers will tell you the market is dead, the economists are predicting doom and gloom for another 18 months.  I'm here to tell you, don't believe everything you read.  Having said that, yes this is a market to approach with caution.  You should know exactly what you want, and what you can afford.  But, there are definitely deals out there.  You need a real estate professional to help you.  There is definite navigation required and you will need negotiating power.  I am here to help you.  This is a radical market full of possibilities.

HOW DID WE GET HERE?  WHAT DO ECONOMISTS THINK?... Well, we got here in a variety of ways.  First and foremost the way was paved with cheap and available money.  The blame for this goes all the way to Greenspan, Wall Street and the White House.  Without getting into the fray, let it be known that the Associated Press reported on June 19^th that more than 400 real estate industry players have been indicted since March, in a Justice Department sting dubbed, "Operation Malicious Mortgage."  It is believed that mortgage mishandling, at best, and fraud at worst, is responsible for most of the nation's housing crisis. 

                Economists' views seem to be two-fold.  First off is the belief that housing prices had to fall because they ran up so much faster than income.  Obviously incomes were left in the dust, particularly in Southern California.  Economist Chris Thornberg has said, "Southern California home prices likely will continue falling until mid-to-late 2009... The reason prices are falling is because of gravity.  The run-up in home prices over the past decade was ludicrous and wasn't accompanied by a comparable increase in income."

Thornberg's estimate of a 50% decline was different than that of the Chapman economists who predict 16% in '08 and then another 9% in '09. Many industry insiders blame the stark decline in prices on foreclosures.  Well yeah.  But you cannot exclude them from the housing mix to create a different percentile.  That would be voo doo math.  Excluding the foreclosures from any statistic is like saying if you hadn't gone swimming, you wouldn't be wet.

                Bottom Line:  No one can predict the bottom of the market.  But the edict BUY LOW would seem to be in operation here.  Just make sure you consult your own advisors as to what is best for you.

WHAT WERE THE ACTUAL NUMBERS, INCLUDING FORECLOSURES... A total of 33,024 new and resale houses and condos were sold statewide in May.  That was up 6% from April and down 10% from May of last year.  Southern California sales volume from Ventura County to San Diego County was 16,917 as compared with 19,874 a year ago.  Orange County's total number was 2,266 which was a 15% downturn from May '07.  The median price went from $635,000 to $485,000.  Yes there was another jump in California foreclosure activity.  Southern California had a total of 65,309 Notices of Default issued the first quarter of 2008.  Orange County had 7,082 which when compared with Los Angeles County at 20,339 and Inland Empire at 26,171, doesn't seem so bad.  All of these numbers for Southern California, broken down by county are available to you.  Simply call me and I will get them to you. (Source:Dataquck)

FINAL NOTES FOR THIS MONTH ON RECESSION, PRICING AND THE FUTURE... There was an Associated Press article whose headline read, "US Housing Slump a Prelude to Recession."  It was a brief article and had 3 main points: 1) if history is any guide, a recession is most likely around the corner because a recession followed 6 of the last 7 housing downturns.  2) Housing stats are at all-time lows since after WWII 3) after the recession ended, housing starts typically rebounded strongly after inventory fell and home sales picked up.

                What I would add to this equation for Southern California in general and Orange County specifically should inspire hope.  I'm not trying to be naïve.  I know we are months from a full recovery.  Obviously we have economic woes beyond housing, i.e. food and gas, to name just two.  However, let me add that the Associated Press also noted that immigration growth would be a key factor in rejuvenating the market.  We also have tremendous economic diversity that is currently being overshadowed by the mortgage meltdown but won't be forever.  Prices falling every month mean more buyers that can enter the market each month.  All these first time buyers are planting the seeds for the first true move up market in almost a generation.  We need these buyers to start the cycle in a recovering housing market.  Finally, generation "Y" is the first generation to be as big as the boomers.  Expect them to fuel a housing market as they turn 25 to 35 in the coming years.  With mortgage practices returning to normal, money should be available to those who qualify and expect a return to normal appreciation.  With as much trepidation as the next year may bring, it will also bring the same level of opportunity for many.  I am always here to answer any questions you may have.  See you soon!

June 2008 Newsletter

SALES REBOUND AS PRICES FALL... That was the headline of the Orange County Register on Tuesday, May 20^th 2008.  The accompanying photo was a very crowded entry to an open house.  What's happening?  The bottom of this market is approaching, that's what.  This is exactly what was reported in this newsletter last month.  Prices have gone down so far, so fast, that it's hard for waiting buyers to resist.  We saw an upward trend in open escrows as mentioned last issue, but the main ingredient is the upward swing of the affordability index which is growing every month to a higher percentage of people who can now buy a home.  This correction in the market was not only inevitable, it was necessary.  When the market topped out in 2006, we were down to 11% affordability.  When only 11 people out of 100 can afford to buy a home, that market is in trouble.  According to Dataquick sales were still off 19% from the same period last year, but that is a lot better than 36% off the mark.  But still, there is a long recovery period ahead.  The OC Register reported, using Dataquick numbers, that April (the latest complete month stats available), was 46% below the average April since 1988.  According to the article, "Sales for the January through April period were down 57% compared with the 20 year average." 

                But the upward trend is significant.  Both investors and homebuyers are on the hunt for the perfect deal.  Certainly the raise in FHA loan limits has helped significantly as well as FNMA interest rates remaining at their near historic lows.  Should you buy?  That's up to each individual to decide according to their need.  But it should be mentioned that THE TODAY SHOW aired a segment on real estate the last week in May.  Their conclusion: DON'T WAIT!  BUY A HOUSE!  This is the same morning show, viewed by millions that 2 years ago proclaimed, "Whatever you do, don't buy a house right now."  So the fact that they are on board with a bottoming market, is at the very least, interesting.

FORECLOSURES ARE UP AND BANK OWNED PROPERTIES ARE HERE FOR A WHILE... The total number of foreclosures for April, the latest complete month available was 898, including houses and condominiums. That number was up 29% from March and 284% from a year ago.  Now obviously all those homes did not hit the market for sale all at once.  They must be processed, sometimes rehabbed, and gotten ready for sale by the asset management company.  In fact, the bank owned properties are staggered into the market.  There are several ways to buy bank owned properties.  One method is auctions and you have probably seen the advertisements for these.  The other way is to buy a traditional listing from a listing agent where the property happens to be bank owned but otherwise you process through the transaction with a normal escrow period.

You definitely need to give me a call if you are thinking of purchasing a home.  You should not try to buy a bank owned, especially a short sale listing (you could be tied up for months with no foreseeable conclusion) or even a traditional sale, without representation.  Today's transactions are just too complicated.  It looks like foreclosures will be around a little longer as the Notices of Default; the first leg of a foreclosure hit a record in April, totaling 2,598.  According to Dataquick, nearly 3 out of 10 sales in April was a bank owned property.

WHAT WERE THE ACTUAL NUMBERS...  The total number of sales was 2,166 for all properties including single- family resale, condominiums and new homes.  The median price hit $500,000 and the median price for a condo was $390,000.  The most significant of the numbers is where the sales fall by price range.  This is most telling of a market that is close to the bottom.  The most sales are happening in the lowest price ranges.  There were 549 sales under $400,000 and another 424 from $400,000 to $500,000.  There were only 194 sales from $600,000 to $700,000 and only 518 over $700,000.  That is not a large number for the over $700,000 when you consider the number includes all the coastal parts of the county.  The positive spin on these numbers is that we are planting the seeds for the next "normal" real estate cycle.  All these entry level buyers will become move up buyers in the next cycle.

FOR REAL ESTATE NEWS, STICK WITH ME... This is not a market for the inexperienced.  I am here to answer your questions regarding selling your home or buying another one or entering into real estate investments.  There was a lot I didn't get to cover this month.  Like the fact that agents are seeing multiple offers out there, particularly on bank owned properties.  They are discounted so heavily to move them off the banks books that they are at fire sales levels.  You may lose a home you really would like to buy because you try to low ball the already low price when 10 other offers are also vying for the property.  There was a great article about in the Wall Street Journal, "Where Home Prices Are Holding Up" that stated cities, real cities, are hedging the market fairly well. (Answer: Boston, Chicago, New York, and San Francisco)  Los Angeles was not mentioned because it is an urban sprawl, as is Orange County. If you would like a copy of this article or another WSJ article on bank owned properties just give me a call.  But we may find a great silver lining, which is our weather, labor pool, diversified economy, and best of all; we are nearly built out on space.  I predict supply and demand will make a comeback.

  HOME PRICES ROLL BACK TO 2004 LEVELS... Sales data for the first quarter has arrived and for March specifically, prices have hit the 2004 watermark.  That means the median price is down almost 20% from a year ago.  Both the Los Angeles Times and the Orange County Register reported the Dataquick findings.  Obviously a huge contributor to price adjustments is the absorption of bank owned properties that are finally matriculating into the general real estate population.  The other factor is that sellers that previously were "testing" the market have wisely taken their homes off the market and only serious sellers remain.  That means that motivated sellers realize that their home must be priced to sell and that it will have competition from the bank owned sector. According to Dataquick, the bank owned property typically sells at least 15% below "normal" market prices.  Although it could be argued that the housing downturn is artificially deflated because of the bank owned properties, this writer does not agree.  That's like saying if you hadn't driven the car, you wouldn't have gotten in the accident.  Bank owned properties are germane to this market and will be here for some time.  This is not an overnight correction as people are beginning to realize.  Don't misunderstand, there is light at the end of the tunnel.  These distressed properties are beginning to move.  Read on for the optimist's view...

PRICES ARE DOWN, BUT SALES ARE UP... The next paragraph will have the exact numbers of sales which will still be down from the previous year, but up from the previous month.  The fact is sales are way up from February.  March sales (the latest month available) in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties were up 18.8% from February.  According once again to Dataquick, that's still not great as the average increase from February to March for the previous 20 years has been 38%.  Yet I think it's a number worth looking at.  Why?  Because most brokers reported their highest monthly sales in 15 months, which means this March was a heck of a lot better than March of '07.  The current inventory levels have not only stabilized, but they have hit a neutral plateau meaning they don't really favor sellers or buyers.  According to the OC Register (April) supply is hovering at about 6.77 months, meaning if not another house was listed it would take 6.77 months to sell every home currently listed to reach 0% inventory.  This is not a bad number considering the affordability index is rising monthly.  In fact, it's risen from a low of 11% at the height of the market to around 30%.  That's the number of people that can afford to buy a home at current prices.  Even though the emotions of the market favor buyers and because of that supply favors buyers, activity is slowly growing.  Are we out of the woods?  No, let's be realistic and truthful.  But, investors are sneaking back in and there are some great deals out there.  If you need to buy, you need to call me.  There are not a lot of great reasons to wait because the single factor that should sway you is interest rates and they are still at near historic lows.

WHAT WERE THE ACTUAL NUMBERS... The total number of sales was 1,663 which was up 13.1% from February. (Orange County only)  The new median price for the county is $506,000 down from a high of $673,000.  That number includes single-family, condos and new homes.  This is the first time since this newsletter's history that more properties sold in the lowest category than the highest with 402 sales under $400,000 and 398 over $700,000.  The average down payment stayed steady at 22% and the adjustable loan share is down to 34% after peaking well above 70% at the height of the market.  The monthly payment index is 2,645 and that is 10% lower than the same time last year.  That number should keep falling as prices continue to adjust.

BUYING BANK OWNED, FHA LOANS AND THE WHOLE ENCHILADA... There is a lot of conflicting information out there.  Have foreclosures peaked?  Maybe not everywhere, but Orange County is getting close.  The banks took possession of 698 properties in March, down 4% from February and down 13% from January. (Source:Dataquick)  They could spike again, slightly, over the next few months but indications would be that the number is stabilizing.  Some reasons are that more and more lenders are developing work out programs, loan modifications and loan relief.  Short sales are still out there but frankly they are the riskiest bet for a buyer.  You could be tied up for weeks waiting for a response from a lender, unlike a bank owned which is listed for a set price and is ready to go.  Remember, however, that most bank owned properties are sold "as is" and "buyer beware."  They will need work and patience. Don't expect to lowball these properties either as multiple offers are starting to make an appearance on these already price adjusted homes.  I want to say a word about FHA loans.  The loan limit on this product has risen to $729,000 in Orange County.  It allows for a 3% down payment or 5% if it's a "jumbo lite."  The money can be gifted and need not be seasoned.  It is available for refinance up to 97% loan to value for rate and term.  This is a viable option for refinances if some of your equity has been lost.  Please call me for any questions on any real estate matter.  I am your expert on "the whole enchilada!"  See you next month!

P.S.  For a look at how the county shapes up with foreclosures by city, give me a call and I will send you the map which appeared in the OC Register.