Low Inventory in Orange County is Still the Story

June 23, 2010 by Mark Roknich

There’s no getting around it…the Orange County real estate market is a slave to basic economics.

Supply and demand, the basic principle we all earned in Econ 101, still applies in the real world. Right now, using Dana Point as an example, and four neighborhoods as a snapshot, you’ll notice that there are twelve (12) homes in escrow, but only seven (7) available for sale. That’s low inventory.

Now, with uncertainties in the market (war, BP oil spill, foreclosures), one could argue that demand is also low, or in balance with supply. From an agent’s perspective, we can tell you that those seven available listings are NOT enough of a selection for the buyers we are working with currently, who are looking for a single level home in one of these same four neighborhoods in Dana Point. Low inventory again, and this same condition exists in most other coastal cities in Orange County.

Buyers: is this summer a good time to buy? Yes, interest rates are phenomenally low….under 5%! Prices are also way, way down from their 2005 peaks – in some cases, home prices in South Orange County are down 30-40% from their previous highs. Low prices, and low interest rates.

Sellers: does this mean that now is a bad time to sell? Not necessarily. Remember, if you are planning to buy down, buy laterally, or buy up, there really isn’t a bad time to sell since you are also buying simultaneously. For most families, a sell-and-buy event can be thought of as simply moving one’s mortgage from one house to another (don’t forget the closing costs, though).

Want more insight? We’re out there “in the trenches” every day! Call us at (949) 240-5892, or contact us via email.

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Sales in Orange County on the Mend!

September 7, 2009 by Mark Roknich

Each year, sales and closings in the three months of September, October and November are typically strong. This year should prove to be no different.

Despite some ongoing concern about the US housing market, especially in commercial real estate, I have noticed an uptick in interest here in Orange County, based upon closed sales, and in particular, upon inquiries by first-time and move-up buyers in the lower price ranges. Inventory is dropping.

Prices have stabilized over the summer in most prices. For single family homes in the $300-500,000 range, prices have actually risen off their bottoms! But the lower prices, combined with still low mortgage interest rates, continue to offer buyers improved affordability and much lower monthly payments.

Multiple offers are common when homes are priced right, as measured by condition and comparable properties. Equity sellers are affected, of course, by competing short sales and REO’s, but buyers prefer “traditional” sales when possible, and will pay a premium for the confidence that can be had by buying from a seller not in distress.

Call me right now at (949) 240-5892. It’s a great time to purchase a rental property, your first home, or an extra condo for that child just graduated from college. Move-up buyers also benefit in a market such as this…keep your current home, convert it to a rental, and purchase that next California dream home!

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The New Housing Bailout Plan

February 24, 2009 by Mark Roknich

The press is buzzing about the Obama Administration’s new foreclosure prevention plan. So what’s it all about?

Restructuring: part one of the plan makes available $75 billion of U.S. Treasury funds to restructure the loans of homeowners who are behind, or likely to fall behind, on their mortgage payments. The intent is for lenders to lower the borrower’s monthly payment to 31% of the borrower’s monthly gross income. This does not imply a principal reduction, but could include a reduction in interest rate.

This plan does not apply to investors, or those of us with jumbo mortgages, and the Treasury will not subsidize any mortgage adjustments that require an interest rate below 2% to get to the aforementioned 31% threshold.

Refinancing: the second part of the plan helps homeowners refinance into cheaper loans even if the homeowner is “upside down” on his mortgage. Fannie Mae and Freddie Mac, the quasi-government housing agencies, will refinance up to 105% of the value of the homes already held or guaranteed by Fannie and Freddie.

Recapitalizing: part three adds $200B to the money allocated to Fannie and Freddie in order to keep all this going.

So there you have it: the three-part plan from our national government. Now, of course, the Federal Reserve Bank is working through its monetary policy to backstop and stimulate with trillions; the Congress has also just approved a stimulus/bailout/spending plan for another trillion, so bucks are being borrowed and spent in order to soften the already hard landing we have been feeling in the real estate market.

Conclusion: does any of this directly or indirectly affect you? The answer is maybe directly, and probably indirectly. Neighborhoods with low turnover since 2005 have been less affected by foreclosures and short payoffs, as compared with other neighborhoods where turnover was high near the top of the market. If you and your neighbors have been in your homes for many years, that’s probably a good thing for all!

Some of us may be able to take advantage of the new bailout plan, which is supposed to be available beginning March 4th, when additional details are also supposed to be available. If you are interested in finding out how this all applies to your home mortgage – give us a call at (949) 240-5892, or drop us an email.

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