Here’s the latest Orange County Housing Report from Steven Thomas, President of Altera Real Estate.

The Orange County Housing Inventory has inflated by 48% since the beginning of the year on the backs of unrealistic sellers.

Unrealistic Sellers

Overpriced homes have flooded the market.

Reports of tremendous competition among buyers have fueled unrealistic seller expectations.  Reports of multiple offers and homes selling quickly have fueled it as well.  Reports of an increase in the median sales price did not help either.  Yes, there has been a lot of demand and homes have sold quickly, procuring multiple offers.  However, none of this would have happened had it not been for a major increase in home affordability.  There has been a culture shift in the past few years where people have gone from spending frivolously (and often recklessly) to saving, paying off debt and making sure that every penny counts.  Five years ago home buyers were racing to buy homes at whatever price.  Today, buyers have become “spreadsheet” buyers, not wanting to pay much more than the last closed sale, regardless of the amount of competition.  Sure, after writing offer after offer after offer a buyer is more willing to up the ante a bit and pay a couple thousand dollars above the most recent comparable sale, but they are NOT going to pay an extra $25,000.  That is how we have experienced slight appreciation over the past year.  In the hottest ranges, buyers have been willing to pay a little bit extra to procure a home.  Over the course of the past year, the small incremental increases have amounted to a positive change in pricing.  But think about it; a 5% change in pricing did not happen overnight.  The reports in a change in pricing are YEAR OVER YEAR.  Back in the heydays of the mid-2000’s homes were increasing a lot faster.  That just is not the case this time around.  Homeowners have been fooled, thinking the market has not just bottomed, it has recovered.  There have been so many homeowners who have sat on the sidelines waiting for the market to recover so that they could finally sell.  These pent up sellers have been placing their homes on the market at ridiculous values.  They have taken an increase of 5% over a year to mean that they can price their home 5% above the most recent comparable sale.  Spreadsheet buyers are just not going to bite.  The economy is too fragile for this line of thinking.  Yes, there is a premium to selling a home with equity versus the short sale down the street; HOWEVER, a buyer is not going to pay thousands of dollars more.  The bottom line: sellers really need to take a hard look in the mirror and ask whether or not they really can drop to the realistic fair market value of their home.  If not, they need to stop wasting everybody’s time and pull their home off of the market.

Active Listing Inventory

The proof that unrealistic sellers have flooded the market, an unabated increase in the inventory.

This year the Orange County housing inventory has grown by 3,524 homes, a 48% increase.  In the past two weeks, the inventory has grown by 355 homes, a 3% increase, and now totals 10,817.  Last year at this time the inventory was at 8,946 homes, 1,871 fewer than today.  Every range has experienced growth, but the most substantial growth can be found between $250,000 and $1 million with a 71% increase.

Housing Demand

Independence Day typically marks a drop in demand, this year is not exception.

Since artificially peaking at the end of April due to the end of the First Time Home Buyer Tax Credit, an $8,000 incentive, demand has dropped 28%.  Demand, the number of new pending sales over the prior month, decreased by 247 in the past two weeks and now totals 2,860, levels not seen since January of this year.  From here, demand typically rises slightly and peaks at the end of August before slowly deteriorating for the remainder of the year.

Expected Market Time

After bottoming at the end of April, the expected market time for homes in the OC has increased to its highest level of the year.

With an increase in the active listing inventory and a decrease in demand, the expected market time increased from 3.37 months two weeks ago to 3.78 months today.  The overall market is still a “seller’s market,” but it is moving in the wrong direction.  Remember, this seller’s market is different.  There may be a lot of buyers and a lot of competition, but spreadsheet buyers are unwilling to pay much of a premium over the last comparable sale.  At the end of April, the expected market time was at 2.35 months.  Last year at this time the expected market time was at 2.66 months.  For homes priced above $1 million, the expected market time is 10.61 months.  Contrast that with homes priced below $1 million where the expected market time is 3.22 months.

Foreclosures and Short Sales

So far this year, the distressed inventory has grown by 29%.

The active distressed inventory has increased from 2,555 homes at the beginning of the year to 3,307, levels not seen since May of 2009.  The distressed inventory now represents 31% of the current active inventory.  Last year at this time, there were 2,766 distressed homes on the market, 541 fewer than today.  The number of foreclosures within the active listing inventory increased by 19 homes in the past two weeks from 559 to 578.  The expected market time for foreclosures is 1.73 months, an exceptionally HOT seller’s market.   Short sales, where a homeowner attempts to sell a home for less than the total outstanding loans against a home, requiring lender approval, increased by 71 homes over the past two weeks and now total 2,729.  The expected market time for short sales is 2.52 months, still a HOT seller’s market.

Copyright 2010 – Steven Thomas, Altera Real Estate – All Rights Reserved.   This report may not be reproduced in whole or part without express written permission by author.

Orange County Housing Report: Hey Sellers, Get Realistic!! is a post from: Orange County Real Estate-Orange County Homes For Sale

The drop in demand ever since the end of the Federal first time home buyer tax credit on April 30th is slowing and leveling off.

Housing Demand

The 4% drop in demand in the last two weeks is much better than the 12% posted two weeks ago.

At this point, looking in the rear view mirror, the end of the Federal tax credit definitely had an impact on Orange County housing demand.  It is also safe to say that demand prompted many first time home buyers to purchase sooner than originally anticipated.  Had the credit not been in place, demand would have been curtailed in both March and especially April.  Demand in May and June would have been stronger as well.  March and April’s surge due to the housing credit robbed May and June of normal activity.  There is nothing cyclical about the recent swings in demand, but it is making its way back to normal.  It should be back on track by July.  Demand, the number of new pending sales over the prior month, decreased by 136 in the past two weeks and now totals 3,167.  That is after a 603 home drop two weeks ago.  For the first time since March 2008, demand is less than the prior year with 485 fewer pending sales.  Hold your horses if you are a buyer; this does not mean that it’s going to get much easier for buyers anytime soon.  The demand trend is now going to change back to a more normal pattern.  The expected market time for all homes priced below $1 million is still a very hot 2.71 months.  Five months is equilibrium.  Anything less than five months is a seller’s market.  You may ask, “How can we have a seller’s market without rampant appreciation?”  The answer is quite simple: with so many distressed homes on the market, they are keeping a lid on any real, significant appreciation.  Anything higher than five months is considered a buyer’s market.  For homes priced above $1 million, the upper end, the expected market time is 8.89 months, the higher the price range, the slower the market  If you are a buyer, carefully consider the local market conditions and the price range you are looking.  For example, homes priced between $1 million and $1.5 million, the expected market time is 5.59, not really a buyer’s nor a seller’s market.

Active Listing Inventory

For the first time since April of last year, the inventory has crossed the 10,000 home mark.
Last year, after increasing by less than 400 homes in the first three months, the total active inventory steadily dropped from a height of 11,606 homes to 7,381, a 4,225 drop or 36%.  This year the Orange County housing market has experienced the exact opposite phenomena, increasing unabated by 39% to 10,117.  In the past two weeks, the inventory has grown by 278 homes, a 3% increase.  This also marks the first time since April 2008 where the inventory is higher than the prior year.  Last year the inventory was at 9,313 homes, 804 fewer than today.  What is going on?  The answer is quite simple: there are more and more unrealistic homeowners placing their homes on the market at unrealistic levels.  They have learned that the market is hot in the lower ranges with buyers competing for homes that generate multiple offers and ultimately sell for their full asking prices.  However, buyers are just not ready to pay substantially more than the last comparable closed or pending sale.  Sure, given the heated demand, they may pay $5,000 more than the last buyer, but no buyer is prepared to pay a $40,000 premium for a home.  Many of these homeowners have been sitting on the fence, unable to sell, waiting for the market to turn so that they can finally achieve what they have been putting off for a while now, moving.  The Orange County market was blessed in 2008 and 2009 with discretionary homeowners.  They knew that buyers would not pay a premium, so only homeowners that had to sell placed their homes on the market and, most importantly, at realistic levels.  If you are a seller and your home is not generating enough activity and not procuring offers, now is a great time to take a careful look at PRICE.  Keep in mind; just because you are an equity seller, buyers are not going to pay you a substantial premium so that they don’t have to deal with all of the hassles in purchasing foreclosures or short sales.  Again, a $5,000 premium is more realistic.  Many foreclosures and short sales have a ton of upgrades, part of the excess of the last run-up in values.  So, as a seller, it is absolutely imperative to do your homework by carefully considering three important factors: location, condition and amenities.  A buyer is going to do the same thing.  It is important to be able to take a step back, pulling out the emotion of “yeah, but this is my home,” and objectively arriving at the fair market value.

Foreclosures and Short Sales

30% of the current active inventory is distressed.
The distressed inventory continued its slow climb this year, adding an additional 89 homes in the prior two weeks and now totaling 3,080, a 3% increase.  The inventory has not surpassed the 3,000 mark since June of last year.  Last year at this time, there were 3,062 distressed homes on the market, representing 33% of the active inventory.  The number of foreclosures within the active listing inventory dropped by three homes in the past two weeks from 533 to 530.  The expected market time for foreclosures is 1.45 months, an extremely HOT seller’s market.   Short sales, where a homeowner attempts to sell a home for less than the total outstanding loans against a home, requiring lender approval, increased by 92 homes over the past two weeks and now total 2,550.  The expected market time for short sales is 2.09 months, also a HOT seller’s market.

Closed Sales

May will prove to be one of the best months in terms of closed sales in 2010.
The number of closed residential resale homes in May totaled 2,789 homes, a 13% increase year over year.  But, keep in mind that the tax credit for first time home buyers is for successful contracts that are consummated on or before April 30, 2010, and must close on or before June 30, 2010.  The tax credit may have ended for all buyers still looking for a home, but still applies to buyers who put together a contract prior to April 30th and still able to close by the end of this month.  Just as there was a surge in demand in March and April, the surge continued in terms of sales in May and will continue this month.  We can expect headlines to reflect this surge when they report May sales later this month.

Orange County Real Estate Activity by City

Orange County Housing Report: Demand Returning to Normal is a post from: Orange County Real Estate-Orange County Homes For Sale

Brand new on the market!  Click “play” to see a short video of this great home for sale in Orange, with wonderful patio, upgraded kitchen and bathrooms, and beautiful living space.

This end unit condo in Chapman Townhomes, with 3 bedrooms and 3 bath, has vaulted ceilings, gorgeous natural light, and a secluded garden back yard.  The private master bedroom has romantic balcony and a walk in closet with mirrored doors.  Skylights and ceiling fans bring the sunny Southern California climate indoors.  Tired of dealing with Short Sales and Bank Owned homes?  This is a standard sale with an equity owner!  Call me for a private tour of this wonderful Orange County home for sale – 949-584-5221.

An Oasis in Orange – Condo for Sale by Equity Owner is a post from: Orange County Real Estate-Orange County Homes For Sale

This super-clean home on the Coyote Hills Golf Course in the gate-guarded Pinehurst Greens neighborhood has been on the market almost 4 weeks, and the bank says, “Sell it now!”

Previously offered at $679,900, the list price has now been reduced to $649,900.

Check out the Virtual Tour – three large bedrooms, three baths, a beautiful well-maintained neighborhood, and peaceful back yard garden situated on the 15th hole of the golf course.

Bring an offer and let’s do a deal!

$30k Price Reduction on Foreclosure Home in Fullerton is a post from: Orange County Real Estate-Orange County Homes For Sale

You put an offer on a great home, and the response from the seller comes – a counter-offer, marked “MULTIPLE COUNTER OFFER”.  What does it mean?  What should you do?  Well, first of all, don’t panic!

What Does “Multiple Counters” Mean?

Often in today’s Orange County Real Estate market, homes in high demand because of price or some other factor will attract more than one buyer.  This is especially true for Single-Family homes price around $500,000 or less.  When a home for sale attracts more than one buyer who makes an offer, the seller has several options.  One of those options is to make a “counter offer” to the prospective buyers.

If counter offers are made to more than one offer, that is a “multiple counter offer” situation.

Know the Market

As I said – don’t panic, or let emotions take over.  It’s very hard to know exactly what the seller is thinking or what there motivations might be, so just stick to the facts.  How does the home compare to others on the market, or that have sold recently?  Are there special features (or flaws) that make the home stand out?  How does the seller’s counter offer relate to that market knowledge?

Know Your Limits

Regardless of the market situation, keep in mind what your own limits are, and don’t go overboard.  If you’ve set a budget that is being pushed, go ahead and review that budget, but don’t abandon it in the face of some competition.

Make an Informed Decision

Now that you’ve thoroughly reviewed both the counter offer, the market, and your own limits, decide on a course of action.  You can respond to the counter offer with a counter offer of your own – which might include either a higher or lower purchase price!  You can accept the counter, and hope that yours is the offer that’s accepted, or you can decline to respond and start looking for the next deal.   Whatever you decide, rest assured that you’ve carefully weighed all the options and made the BEST POSSIBLE OFFER based on your own limits and the market conditions.

Unlike when the seller makes a counter offer to a single offer, the buyer’s acceptance of the offer

What a Multiple Counter Situation Means to an Orange County Home Buyer is a post from: Orange County Real Estate-Orange County Homes For Sale

It’s a seller’s market market in Orange County Real Estate Today – so here are the top 4 things you need to do to be successful as a buyer against pretty staggering odds.

1. You have to have your Money available

You have to have money for an initial deposit – usually about 1% of the price you are offering – more if you can to be more competitive.  You also have to have the money for the down payment – which for an FHA loan is currently 3.5% of the purchase price.  And yes, your deposit does count toward your down payment.  And you must have your closing costs covered  - this amount will vary depending on how you negotiated your purchase contract and if you are paying points on your loan to buy down your interest rate.  Your Realtor will be able to work with your lender to get good idea of what your closing costs will be.  And all of this has to be documented by means of income tax returns, bank statements, and pay stubs.  Today’s Orange County home buyers have to prove their financial ability to perform before an offer can ever be submitted.  Don’t put yourself at risk of missing a great opportunity in today’s Orange County market because you aren’t ready to start making offers.

2. Buying a home takes Time

You must be willing to commit the time it takes to get up to speed on what’s going on in the specific neighborhoods and price ranges you are targeting.  Time to review properties as soon as they hit the market.  Time to return calls and emails from your Realtor and your lender.  And time to update your financials if the process takes more than a couple of months.  It also takes time to make offers, and review the responses from sellers.  It takes time to understand the condition and circumstances of the available properties.

3. You have to be Mentally Tough

To be successful in this Orange County Real Estate Market, you have to stay focused on what you are llooking for and capable of purchasing.  You cannot get distracted by the opportunity to purchase a “fixer” if you won’t have any money left to make the repairs – stay locked in to your zone and shut out all the other noise.  You have to be mentally tough when offer after offer gets rejected, or when you get hit with multiple counter offers – resis the temptation to make up drama about why these sellers are purposefully making your life miserable and unbearable.  Just stay focused on the facts and the math and make informed decisions.  You have to be mentally tough to hear that the inspector suspects mold, and the remediator expects it to cost about $25,000.00 to fix.  And the seller won’t budge on the price.  Be mentally tough, make an informed decision, and move on.

4. It Takes Teamwork

Be up front honest with your Realtor and your Lender.  Even if you don’t know the answer to a question.  Many first time buyers are so overwhelmed with the enormity of the task and the price tag that they cannot absorb it all.  Be honest about that, as well.  Your team can help you through all this so much better if you keep them in the loop.   Tell your Realtor what you like and don’t like, how you prefer to receive information (phone, email, text, …)  Be a team player and ask your team for help.  To paraphrase Jerry McGuire – “Help Us Help You!”

So that’s it in a nutshell – now get to work on finding the perfect Orange County home for you!

Top 4 Tips for How to be a Successful Home Buyer in Today’s Orange County Real Estate Market is a post from: Orange County Real Estate-Orange County Homes For Sale

An emerging trend in Orange County home sales is to require the buyer to be Cross Approved in order to submit an offer to buy a home listed for sale.  This means that even though you already have a pre-approval from your lender, hopefully the lender your Realtor referred you to, you still have to get an additional approval from the seller’s lender.

I Have a Lender – Why Do I Have to Talk to That Guy?

Why are sellers asking for this Cross Approval from home buyers?  One reason is really simple – they want a shot at your business.  Especially true for REO homes for sale and for Short Sales.  These lenders have taken a hit on the former loan holder who went belly up, they’d love to replace that borrower with you.  Make sense?

What does this requirement to get a Cross Approval mean to you as a buyer in today’s fiercely competitive (in most price ranges, especially under $750K) market?  I mean you must contact the designated lender and have them review your financial picture and give you a pre-approval, just like the one you got from your lender.

To be a competitive buyer offering on a home that requires a Cross Approval, you have to go through the hoops to get the job done.

What’s the great news?  I can make this whole thing SUPER EASY for you!  The lenders I recommend to my buyers will do the work for you!  Honestly!  I Swear!  They will contact the other lender, with your permission, and share your financial picture, your credit report, and ususally the results of the DeskTop Underwriting process.  And they will do it quicky and professionally.  Which will make you a way more competitive buyer by getting this hurdle out of the way very quickly – speeding up your offer to try to be the first complete offer submitted.

What’s the question I get the most about Cross Approval?  Will it ding my credit – having another lender run my credit.  The answer is emphatically “No!”  Usually the Cross Approval lender will not need to re-reunn your credit – and even if they do the impact is usually only 1 point off your FICO score.  No material impact on your strength at all!

So call or email me if you need more information on Cross Approvals and why they are here to stay for the forseeable future for competitive home buyers in Orange County today.

I’m Leslie, just keeping it Real in Orange County Real Estate!

Real Tips for Home Buyers – What Every Buyer Needs to Know About Cross Approval is a post from: Orange County Real Estate-Orange County Homes For Sale

FHA Loan Alternative – 5% Down Conforming on Orange County Homes is a post from: Orange County Real Estate-Orange County Homes For Sale

This cute little Single Family Detached home in a wonderful neighborhood is being prepared for market.  It has three bedrooms, one and a half baths, and over 1200 square feet of living space.  Bank Owned homes for sale in Mission Viejo don’t last long these days, so if you’re interested drop me a line or give me a call.  I’ll arrange a private showing and keep you informed about when it might be ready for sale.

Originally Posted at Orange County Real Estate

New Pre-Market Bank Owned Home in Mission Viejo is a post from: Orange County Real Estate-Orange County Homes For Sale

Housing Starts Soar To 6-Month High In January… Or Do They? is a post from: Orange County Real Estate-Orange County Homes For Sale