What's happening in Orange County Real Estate: Market Update

July 2008 MORE HOMES ARE SELLING TODAY! The big story for the Orange County real estate market is that the pace of closed sales has accelerated! According to residential resale data, there were over 220 additional closed sales in Orange County, 11% stronger than last year. We have had a slow, continual increase in demand over these first six months. Fantastic news! The market has been aided by the increased conventional and FHA loan limits and enormous improvement in home affordability. Right now Congress is looking to create a temporary first-time home buyer tax credit, increase the conventional and FHA loan limits permanently, and expand the FHA program to provide additional authority to refinance at-risk homeowners and help prevent foreclosures. BUYER DEMAND IS HIGHER! Today’s demand, the number of homes placed into escrow within the prior month, is now at 2,682 homes. That demand is 51% better than 2007 and 26% better than 2006. The bottom line is that demand is much healthier today due to increased home affordability and the wave of first time home buyer activity. HOMES ON THE MARKET ARE SELLING FASTER! During the summer months, the active real estate inventory typically grows. In the last two weeks, the active inventory has dropped by 139 homes, bringing the total to 14,701, the lowest point of the year. Last year, there were 2,633 additional homes on the market. The expected market time TODAY is now approximately 5 ½ months. The expected market time was at 9.73 months last year and 7.2 months two years ago. A major improvement in my book! WHAT ABOUT FORECLOSURES & DISTRESSED HOMES? The distressed homes, foreclosures and short sales, grew by only 7 homes in Orange County in the past two weeks and remains at 40% of the overall active inventory. (Yes, that’s right, I said 7 homes! ) For those looking for a distressed property “deal,” remember that lenders are in the driver’s seat and there is tremendous competition with multiple offers and homes fetching above their asking price. I was just informed of a large home in Ladera Ranch that was grossly under priced as a foreclosure. After procuring a hoard of offers, the home is now a pending sale for a ridiculous amount over the asking price. In essence, the agent and lender created a “mini-auction” on their home with a successful outcome. IF YOU ARE A SELLER, HOW DO YOU COMPETE? The secret to success is a great price and great condition. As a seller, the danger of overpricing is that as prices drop, there are only two options: chase the market and drop the price or pull your home off the market. To avoid chasing the market down in price, CAREFULLY arriving at the initial asking price is CRUCIAL. Lower price ranges are subject to increased competition from foreclosures and short sales. However, non-distressed home sellers have a way to differentiate from most distressed properties, condition. Most foreclosures and short sales are in poor to average condition. Non-distressed, traditional home sellers have the ability to showcase their homes in move-in condition. A home that is clean from top to bottom with lush green landscaping, a fresh coat of paint and even new or newer carpeting stands out. Distressed homes often have dead or no landscaping and are in need of many cosmetic fixes. Most buyers require a major discount in price to compensate for the trouble to fix up a home. Sellers need to be in tune with the changing market conditions and strategically position their homes for success. This is a terrific year for investing! Please let me know if you are interested in real estate, have questions, or are just curious as to what’s out there. I’m here to help when you need me! Direct 1-800-845-8588, reynolds@socal.rr.com www.lindareynolds.com. Linda Reynolds