OC Real Estate Report_10_2010

8/8/2019 OC Real Estate Report_10_2010

http://slidepdf.com/reader/full/oc-real-estate-report102010 1/4

1October 2010 | OC dwellings

the

housing m a r k e t is better than you

think

I f you’re a bargain hunter, you naturally

want housing prices to go lower. So it

may seem like a good strategy to ride

the housing recession all the way to the

bottom before you jump in and buy.

The problem is... no one knows where the

bottom is. Just when it seems prices won’t go

any lower, buyers jump in, and interest rates

rise. You may get the house for less, but you

pay a little more in interest. Or sale volumeimproves and you end up competing with

other buyers and paying a little more to get the

house.

Consider what’s happening right now in one

Southern California County: Orange. Housing

sales were reported down 9% in August

from a year ago, suggesting that buyers were

waiting for prices to drop further. Instead, the

opposite happened prices rose 2.9% over the

same period a year ago, according to the latest

DataQuick report.

If you’re waiting for prices to go back down,

you may be right. But then again, you might

not.

It’s much smarter to weigh the advantages of

a current market with generous inventory, low

interest rates, and low prices. If you plan to

stay in your home a long time, buy within your

means, and buy the best house you can afford,

you should make out very well.

If you think you’d still like to try your hand

at timing the market, consider the following:

■ Economists like Robert Shiller have said

a double-dip recession is possible…

but the world’s most successful stock

market investor, Warren Buffett, said

on September 14, 2010, that the threat

has passed and that his businesses are

growing.

■ Gross Domestic Product grew 1.6% in

the second quarter, down from 3.7% in

the rst quarter, but still moving forward.

Retail sales rose two months in a row —

in August by the largest amount in ve

months, according to the Commerce

Department. That suggests economic

growth is still underway.

■ Interest rates are hovering at all-time

lows with nowhere to go but up. When

good economic is reported, rates respond

instantly.

■ The stock market crossed into positive

territory for the rst time in mid-

September 2010.

■ Pending home sales rose by over ve

percent in July, and mortgage applications

to purchase homes rose 6.3%, reports the

National Association of REALTORS®.

Many 2010 buyers were pulled forward

into closing their purchases by May to take

advantage of federal tax credits. The incentives

caused a brutal backlash in plunging sales

volume, which most economists agree is

temporary.

July seemed to be the pivotal month. Home

sales dropped 27.2% month-to-month, but

pending home sales rose by over 5 percent

the same month. Mortgage applications to

purchase homes climbed 6.3 percent in July,

suggesting the rebound is already underway.

orange county real estate report | october 2010

Laguna BeachVictoria Beach




Orange CountyOrange County homes priced under $1 million are selling briskly, while upscale homes are settling

into a more balanced market. Upscale homes aren’t expected to sell at the pace of more affordable

homes, so higher inventory levels are not unusual. Only when prices rise above $2 million do

inventories start to build, and the market turns to favor buyers.

*A balanced market is widely accepted as having six months of inventory on hand with market conditions favorableto both buyers and sellers. A buyer’s market is characterized by conditions such as high inventories, falling prices,concessions by sellers, and incentives among other indicators. A seller’s market has low inventories of homes for sale,escalating prices, and keen competition between buyers, including multiple offers.

Even while sales volume slacked off, prices

rose 0.7% higher in July than the previous

year.

Economists expect sales volume to continue to

be soft, giving new buyers a chance to enter

the marketplace to snap up affordable homes.

Lawrence Yun, chief economist for the

National Association of REALTORS®, says

2010 should still end with enough sales to

meet or exceed historical norms. “To place

it in perspective, annual sales averaged 4.9

million in the past 20 years, and 4.4 million

over the past 30 years,” he said in NAR’s July

monthly sales report.

Dr. Alex Villacorta, senior statistician for Clear

Capital, says prices look poised to decelerate,

and might drop into negative territory by the

end of the year. “But keep in mind,” he notes,

“the price gains we experienced over the past

two years are providing a cushion against

prices going into double dip territory, meaning

it is unlikely we’ll see prices below their 2009

lows this year.”

Dr. Mark Dotzour, chief economist for the Real

Estate Center of Texas A&M University, says

that because of the effects of the tax credit,

getting a “true reading of the housing market

may not be possible until June or July 2011.”

California Outlook

July was also pivotal for California home buyers and sellers. The California Association

of REALTORS® reported that, like the rest of

the country, housing sales in the state declined,

but remained well under the national average.

Sales volume decreased 20.8% year-over-

year, but sales prices rose 10.4% for the same

period.

California sales prices hit bottom in February

2009, at a median of $245,230. In July 2010,

prices were 28.4% higher than the “trough,”

at $314,850.

Home prices in Southern California are also

higher than they were in 2009. San Diego

and Los Angeles prices are 19.2% and 17%

higher respectively than their March 2009

lows. Orange County home prices are 21.5%

higher than in January 2009. And Riverside/

San Bernadino prices are 21.7% higher than

their April 2009 lows.

Advice for BuyersDon’t try to time the market. It’s rare that high

inventories, low interest rates and low prices

align any better than they do right now. In

August, 2010, mortgage interest rates reached

the lowest levels since the housing recession

of the 1990s, hitting 4.43%. The previous

year, interest rates averaged 5.19%, according

to FreddieMac.com, so you’re still way ahead

of the game.

Advice for Sellers:Consult with your nancial advisors and

engage a Prudential California Realty real

estate professional to help you determine

the best pricing strategies for today’s market

conditions. In many price ranges, there is more buyer demand than homes for sale, indicating

a quick sale is possible. Consider moving up to

the home you’ve always dreamed about.

In the higher end, your home is competing with

many others that may be newer and in better

condition than yours. Rather than reducing

your price, you may be better off bringing your

home up to date and then pricing it to sell.

kendra stevens REALTOR ® License #01845227

[email protected]

independently owned and

operated




Detached homes in Orange County are

selling faster than most other parts of

Southern California.

Attached homes are selling nearly as

well as detached homes. Once prices

rise outside of conforming loan ranges,

inventories slowly build.

The gap between detached home listings

prices per square foot and those of solds

underscores the heated seller’s market in

the affordable ranges.

Detached Properties - Inventory in Months

Attached Properties - Inventory in Months

Detached Properties - Pricing Realty for Sellers, per square foot

9.2

4.5

5.0

4.53.8

3.5

3.1

3.0

0.0 2.0 4.0 6.0 8.0 10.0

$900K and over

$800K - $899K

$700K - $799K

$600K - $699K

$500K - $599K

$400K - $499K

$300K - $399K

Under $300K

$303

$337

$339

$309

$465

$0 $200 $400 $600

PENDING SALE

HOLD DO NOT SHOW

CLOSED SALE

BACKUP OFFERS

ACTIVE

Sellers should carefully consider current buyer

demand when pricing their home for sale.

When list prices per square foot of Backup

and Pending status properties are below that

of Active properties, sellers should ask for

pricing counsel from their Agent.

11.7

9.6

7.4

7.9

4.8

4.3

3.9

3.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

$900K and over

$800K - $899K

$700K - $799K

$600K - $699K

$500K - $599K

$400K - $499K

$300K - $399K

Under $300K




Attached home listings prices per square

foot are not as far aeld of those of closed

sales as detached homes, possibly due to

fewer homes for sale.

New detached home listings reached a

peak in July 2010. Fortunately for sellers,

absorption rates are keeping pace.

Attached home absorption rates are

nearly outpacing new listings entering the

market.

Attached Properties - Pricing Realty for Sellers, per square foot

Detached Properties - Monthly Listings Taken and Absorbed

12 Months through March 2010

Attached Properties - Monthly Listings Taken and Absorbed

12 Months through March 2010

2,3062,3332,222

1,9652,0972,092

1,6511,665

1,200

1,057

1,4591,401

0

1,000

2,000

3,000

0

500

1,000

1,500

2,000

New Listings Listings Absorbed

New Listings 1401 1459 1200 1057 1665 1651 2092 2097 1965 2222 2333 2306

Listings Absorbed 1497 1374 1266 1074 1136 1305 1645 1725 1496 1596 1543 1806

2009/09 2009/10 2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08

$231

$268

$267

$255

$305

$0 $50 $100 $150 $200 $250 $300 $350

PENDING SALE

HOLD DO NOT SHOW

CLOSED SALE

BACKUP OFFERS

ACTIVE

Sellers should carefully consider current buyer

demand when pricing their home for sale.

When list prices per square foot of Backup

and Pending status properties are below that

of Active properties, sellers should ask for

pricing counsel from their Agent.

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

1,3261,380

1,419

1,1901,2471,257

1,042

1,122

824 715

983930

0

200

400

600

800

1,000

1,200

1,400

1,600

0

500

1,000

1,500

New Listings Listings Absorbed

New Listings 930 983 824 715 1122 1042 1257 1247 1190 1326 1380 1419

Listings Absorbed 947 929 768 720 880 883 1114 1186 876 1018 943 1201

2009/09 2009/10 2009/11 2009/12 2010/01 2010/02 2010/03 2010/04 2010/05 2010/06 2010/07 2010/08

independently owned and

operated

OC Real Estate Report_10_2010

Documents

Transcript of OC Real Estate Report_10_2010