Wouldn’t you like to know what Real Estate Agents fear telling you?  Well, now you can!  Our new site is dedicated to doing just that for home buyers and sellers in today’s crazy Orange County Real Estate market.  Selected articles also appear in the Orange County Register Real Estate section every Sunday.

Advice for Home Buyers

Here are a few examples of recent topics we’ve covered:

What Buyers Say vs What Agents Hear

Attention Home Buyers and Sellers – Be Mature

You Want the Carpets Cleaned Before You Move In? Put it in the Contract

Heads Up Home Buyers – 80/20 is the Rule!

Home Inspection Tips Number One and Number Two

Have fun reading and watching the videos, and please feel free to leave comments or make suggestions for topics of interest.

Straight Talk for Home Buyers is a post from: Orange County Real Estate-Orange County Homes For Sale

Finally, summer is here and so are home sellers’ wild expectations.

THE Best Time of Year to Sell

Here’s a hint: it is NOT Summer.

Every year the real estate industry deals with the same cyclical phenomena, homeowners who feel that summer is the best time of year to sell.  Unfortunately, buyers do not agree.  Buyer activity actually peaks during the spring.  Summer is the second best time of the year to sell.  Can somebody please communicate that to all of the Sellers who have been fooled and are placing their homes on the market in droves?  This year has been no different, and with the end of the Federal $8,000 Tax Credit on April 30th of this year, buyer demand has definitely already peaked.  Homeowners are fooled into thinking that the Orange County real estate market is the hottest during the summer because the county is a summertime vacation destination.  Since the process in finding a home and closing takes at least a few months, more buyers start looking during the spring.  In finding a home during the spring, buyers can close and move over the summer months.  So, buyer DEMAND is higher during the spring and CLOSINGS are then higher during the summer.  If buyers find something during the summer, they close during the fall.  NEWSFLASH: if they have kids, school has already started.  For parents, moving while the kids are in school is not typically easy.  Thus, parents prefer to close during the summer.  We are almost through July, the window of opportunity to close before school starts is fading fast.  What is reported by the media does not help either.  Newspapers and the nightly news report on SOLD data.  Rarely do they talk about current demand, homes placed into pending status.  As more and more homeowners hear about the incredible SOLD statistics, they get excited to hear about an increase in the median sales price and an increase in the number of closed sales.  The data is very accurate, BUT is a snapshot of activity 45 to 60 days back when the buyers first wrote the offer to purchase, springtime.  Homeowners are making decisions based upon what is happening in the rearview mirror. Homeowners need to be aware of current demand, a snapshot of the most recent pending activity.  In doing so, they will realize that demand is down 28% since peaking back on April 29th.

Active Listing Inventory

The inventory has grown unabated by 54% so far this year.

The Orange County housing inventory grew by the largest amount so far this year, adding an additional 418 homes in the past two weeks and now totals 11,235.  The market has not breached the 11,000 mark since the beginning of April 2009.  Last year at this time the inventory was at 8,895 homes, 2,340 fewer than today.  The inventory has not stopped growing at all this year as more and more pent up homeowners have opted to place their homes on the market at unrealistic levels.  The same media reports of median home price increases and year over year increases in the number of closed sales have fooled these pent up sellers into believing that the market has recovered and that it is a great time to take advantage of the market.  It is true that agents have tons of buyers in the market that have written many unsuccessful offers thus far and homes that are priced well are receiving multiple offers.  The market disconnect lies in the fact that inventory has been increasing on the backs of unrealistic homeowners who have placed their homes on the market at overpriced levels.  Today’s “spreadsheet buyers” are not willing to pay much of a premium for a home just to end their unsuccessful string of offers.  They will maybe pay an extra few thousand dollars, but not the 5 to 10% premium many sellers are vying for.  As more overpriced homes are placed on the market, it is just a matter of time before buyers start getting discouraged and slow their effort in finding a home.

Housing Demand

Not much of a change in demand

It is important to reiterate that demand has already dropped 28% since peaking in the Spring.  The drop has been more profound this year due to the end of the Federal First Time Home Buyer Tax Credit at the end of April.  Demand, the number of new pending sales over the prior month, increased by 10 in the past two weeks and now totals 2,870.  From here, demand typically rises slightly and peaks at the end of August before slowly deteriorating for the remainder of the year.   Last year at this time demand was at 3,306 pending sales, 436 more than today.

Expected Market Time

After bottoming in April, the expected market time for OC homes has increased by 66%

With an increase in the active listing inventory and almost no change in demand, the expected market time increased from 3.78 months two weeks ago to 3.91 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 2.69 months.  For homes priced above $1 million, the expected market time is 10.68 months.  Contrast that with homes priced below $1 million where the expected market time is 3.37 months.

Foreclosures and Short Sales

Over the past two weeks the active distressed inventory has grown the most this year.

The active distressed inventory grew by 150 homes over the past two weeks and now totals 3,457 total foreclosures and short sales, levels not seen since May of 2009.  The active distressed inventory started the year with 2,555 homes and has since grown by 35%.  The distressed inventory now represents 31% of the current active inventory.  Last year at this time, there were 2,616 distressed homes on the market, 841 fewer than today.  The number of foreclosures within the active listing inventory increased by 35 homes in the past two weeks from 578 to 613.  The expected market time for foreclosures is 1.79 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 115 homes over the past two weeks and now total 2,844.  The expected market time for short sales is 2.71 months, still a HOT seller’s market, but slower than the 1.53 month market back in April.

Orange County Housing Report: Best Time of Year to Sell is a post from: Orange County Real Estate-Orange County Homes For Sale

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

It really is a seller’s market in South Orange County Real Estate today!

This adorable home in Rancho Santa Margarita sold in 7 hours!  Well, it took a little longer than that to get the paperwork all straightened out, but the house hit the MLS at noon and an awesome offer came in at 7.  Can you say “Happy Sellers?”  Can you say ”Extatic Buyers?!”

With multiple offers over the list price being the norm in the Orange County Real Estate market today, this transaction is no exception.  The savvy buyers’ agent knew that to have a chance the offer had to be made quickly, at a VERY GOOD PRICE, and with a Pre-Approval Letter.  And they knew that since this is an equity seller (not a Distressed property, real people, with real equity, with a real motivation to move) other buyers would be coming out of the wood work.   And come out, they did!!

So as the seller’s agent, I worked with my clients to get their home in tip-top shape (thanks to them for listening and working REALLY HARD) and to set the right asking price, and the market did the rest.  It really is a sellers market in many price ranges in Orange County today.  If you are thinking about selling – now’s the time!

Rancho Santa Maragarita House Sells in 7 Hours! is a post from: Orange County Real Estate-Orange County Homes For Sale