THE FED'S THINKING ON RATES AND THEIR SUBSEQUENT HIKES, SHOULDN'T INFLUENCE YOUR THINKING

What exactly is meant by that?  Simply put, what the Fed does, is all about short term rates and the target that the Fed sets for overnight bank lending rates and how  it buys and sells securities to keep market rates at that level.    This has some impact on long term rates, but has more to do with the global economy, the fluidity of world- wide cash, what is happening with inflation, oil, gas, futures.  In other words, their agenda has nothing to do with your agenda.  Neil Irwin of the New York Times states in a recent article, "You should make your borrowing decisions based on current market rates and whether they make a given home purchases or refinancing decision affordable.  Assume that neither you, your mortgage broker, nor your Uncle Ned, who watches a lot of Wall Street sharpies on CNBC, has any predictive capacity to know whether rates will be higher or lower a month from now.  Mortgages are usually based on long-term interest rates, not short-term interest rates, and the Fed is not on some preordained path; rather, its policy will adjust depending on how the economy evolves."  When it is time for you to buy and you have found the right property, you will want to go forward because it is part of your economic strategy for your circumstances.

PREPARE YOURSELF FOR THE BOOMERANG BUYER...WHY LISTING NOW MAKES SENSE

It is a mystery to those of us who have our career and education in the real estate market, as to why there has always seemed to be a "spring selling season."  Anytime of the year truly represents its own challenges and rewards and it may be that no time is better or worse than any other.  For example, yes the holidays due slow down,  but homes show the best when dressed for Christmas and buyers who are in the market during that time are deadly serious about finding a home and likely to pay top dollar.  So now we find ourselves with sellers getting ready to go on the market; wanting to wait for the "spring season".  That could cost you money, because everyone is doing the same thing.  The result?  The market goes from (national numbers) 1,860,000 homes for sale -- to 2,280,000.  What does it mean?  You have more competition.  You have fewer offers.  Buyers have more choices.  Not necessarily the best scenario for a seller.  If you need to sell... why wait.  List now before your competition does.  And you needn't worry about buyers, at least probably not this year.  According to NAR, 1.5 million "boomerang buyers" are re-entering the market, having now recovered their credit from their previous foreclosures and/or bankruptcy.  Add in the millenials setting up their households and aging baby boomers who decided to work 5 more years, and now 5 years  is up and they are retiring, you have an interesting mix for our upcoming spring/summer markets.  

HAPPY NEW YEAR!! 2016 PROMISES TO BE ANOTHER SOLID YEAR FOR REAL ESTATE

The economy continues to roll with jobs being added at a brisk rate in Orange County and Southern California. The most current stats available are from November 2014 - November 2015 with 39,000 (non farm) jobs being added. Unemployment dropped in November to 4.2% from 4.3% in October, both 2015. Why should this be another solid year? The economy is poised to keep growing, this latest jobs report a 2.5% increase year over year. The Feds did in fact raise the short term rate, the rate charged to banks. However, for most lenders, this increase was factored in a month ago and expect to see very little change in long term rates. This should keep buyers very interested in the current market. Remember that experts have cautioned that the price of money must rise at some point, as soon as inflation is spotted, but economically, that hasn't happened yet. This speculation of when and how much will likely drive true buyers to make a decision to buy sooner rather than later. And sellers need to be aware that they must stay realistic in the pricing of their home, because new inventory will hit and hit hard in January, creating more competition for sellers. Ultimately what could keep a lid on pricing is a rise in interest rates causing borrowers price point to go down as monthly payments rise in response to higher rates. So perhaps, "he who hesitates is lost," is not a bad bit of advice if you plan to buy in 2016.

WHAT EXACTLY HAPPENED IN 2015?

There was a lot of movement in all sectors of real estate, another sign of a healthy market. By that, please note that there was a giant merger between homebuilders, there was release of an ocean view community, in the works for 40 years; there were many high priced, high profile listings that hit the market, not the least of which was Richard Nixon's Western White House. The median price most currently available at press time is $623,000 with the average for the year at approximately $604,000, up 4% from last year according to Corelogic. This was almost exactly what had been prognosticated by real estate economists, which also gives credence to 2016, as this is nearly the exact growth predicted for 2016. Sales were up regionally and overall, according to real estate analyst Steven Thomas of Reports On Housing, "There was real price appreciation as buyers clamored to take advantage of interest rates before the Fed made their move." But rates have been so low for so long, that it is clear this isn't the strongest or only motivator for buyers. Another factor: housing prices weren't the only thing making news in 2015; rents rose astronomically compared to housing prices. For most millenials entering or re-entering the market, their motivation was simply getting their ducks in a row-- money saved, debt paid down, and in general recovering from the great recession, and many intentionally guided themselves back into the housing market.

WHAT ARE THE ACTUAL NUMBERS?

These numbers through December 7th: 1) The inventory in OC was 4,972 down from 5,388 just two weeks earlier and down from 5,885 a month ago. 2) Million dollar plus listings equals 34.2% of all listings 3) 182 listings are foreclosure or short sale 4) Total number of sales for the 30 days November 7th - December 7th was 2,992 up 1.6% 5) new homes comprised 337 of those sales, down 4%. 6) Adjustable rate mortgages still comprise a small piece of the lending pie with only 15.3%. 7) 10,664 - Orange County building permits for single and multifamily homes hit the highest level in 15 years.

WHAT DID THE AVERAGE 2015 BUYER AND SELLER LOOK LIKE, ACCORDING TO THE NATIONAL ASSOCIATION OF REALTORS?

The typical buyer was 44 years old and had median income of $86,100, and 83% of them bought a detached single-family home. Here are some other interesting stats: A) 87% of buyers bought their home through a real estate agent or broker. B) 32% are first time buyers. C) Buyers expect to stay in their home 14 years (compare this stat with how long the typical seller actually stays.) D) 88% of buyers would use their agent again or recommend their agent to others. TYPICAL SELLER: A) Their age is 54 B) The typical tenure in the home is 9 years. C) The most common reason for selling a home was that it was too small, followed by a job relocation, D) 89% of home sellers worked with a real estate agent to sell their home. E) Only 8% of recent home sales were For Sale By Owner. This is the lowest share recorded since this report started in 1981, further underscoring how complicated a transaction has become, especially in California.

THERE IS A LOT OF NOISE WHEN IT COMES TO REAL ESTATE NEWS--HOW TO DECIPHER?

A lot of people are certainly nervous these days...And yet, still, there is optimism.  Who to believe?  The sky is falling or the sky is the bluest it's ever been!  How about the truth lying between these two extremes.  Certainly our economy continues to do well, our stock market volatile because of world markets, namely China.  Positive: growth is steady as the economy adds 215,000 jobs in July.  Negative: China seems to be slipping.  Positive: instead of seeing this as bad for housing, because of all the cash buyers from China in the last year could evaporate, think positive of all the money in China that will be looking for a safe harbor; exiting their markets and searching for places to park their cash.  Positive:  Housing is the number one need on the horizon, meaning we need to build, a lot.  Negative: trying to find enough workers.  Positive: If you already have a home and you wish to sell it, there is probably a ready and willing buyer or two or three, who would like a chance to buy.  Negative: August just finished the worst month for the stock market in years.  Positive: the Feds may now be unwilling to raise interest rates, which was a certainty two weeks ago.  If you want a sure bet, there is a savings account available with .05% interest available.  The real estate and stock markets may not be for you.  One of those markets just lost 3 trillion in one week on paper, and the other is up 5.3% year over year for the latest month available. (July 2015)  But let's remember some practicalities: 1) You have to live somewhere  2) Interest is deductible  3) there is a homeowner's tax deduction of $7,000 4) every time you make a mortgage payment you build equity  5)no one can make you move but you.  6) decorate any way you wish.  But perhaps the most interesting comment that can be made is that if you own your own home you will undoubtedly retire sooner and in better financial shape.