WAIT UNTIL YOU HEAR THIS STATISTIC...IT'S A DOOZY

It goes without saying that there is always an advantage to selling or buying in almost any market, depending on personal need and motivation.  But right now??  A staggering 96% of Americans currently looking in today's market, say home ownership is "very important."  It is particularly high for women and Gen X and Gen Y.  Another 74% of those polled said, "interest rates are at historic lows and now is a great time to buy."  But let's look beyond the hype of those who are enthusiastic, to see if there are other signs that So Cal is in an upward trend and that the recovery is more than momentary.  We don't have to look far.  The end of April and beginning of May have given us lots of ammunition.  First off, nationally, solid job gains have eased apprehension about the recovery.  The U.S. economy added a solid 165,000 jobs in April.  Unemployment scooted down to a four-year low of 7.5%.  Does anyone else remember when it was double digits?  Not only that, but the job gains were higher in February and March than originally thought, and the gains came despite a global slowdown.  The Orange County Register noted that if you track the three major moving companies, collectively the van lines fell 9% in moves out of California, comparing 2011 with 2012, the first drop since 2009.  Plus in 2012, the state added 296,000 jobs, the nation's biggest job boost, by the way, and unemployment in the state fell to 10.5% from 11.8%.  All in all, this means not only are people feeling better about their financial situation, they are better.  This paints a rosy picture that explains tight inventory and so many buyers out there.  Add three other factors: 1) low interest rates.  2) Pent up demand.  3) back to the survey, 46% of prospective sellers feel the need to find another house first, creating a big blockage of homes and 43% are waiting to make bigger profit.  There is definitely some buyer gridlock happening on the housing front.   Good ways to avoid this are be ready to buy and be prepared to offer your highest and best because you will most likely have stiff competition.  Sellers will be able to peruse through the offers.  Writing a letter to the seller, explaining why you want the house and what it means to you and your family is another great tool.  It isn't always just about the money, believe it or not.  Finally, some people still feel some skepticism over the recovery.  Is it too much, too fast?  Let's remember, prices may have risen sharply compared with the last 6 years, but this is real money this time, real loan qualifications, real down payments, real appraisals.  Prices could level off, if interest rates rise, or if more supply hits the streets.  But the people who already bought, could afford it, and will be sitting with a home whose price may have fallen, but are making a fixed payment at 3% interest.  They are not going to default and they are not going anywhere.

HOW WERE THE NUMBERS FOR THE FIRST QUARTER 2013?

The overall median price for the first quarter was $485,000, a 22% gain.  Resale homes came in higher at $540,000, an upward tick of 18.7%.  Condominiums median was $325,000, a 27.5% rise.  New homes, although much lower in volume were higher in price at $667,500, climbing 20.4%.  The total volume of all homes sold was 7,746.  There were 5,018 single-family resale, 2,203 condos and 525 new homes.  All numbers were higher than 2012.  Specifically for the month of March, there were only 108 homes that made it to a trustee sale auction/foreclosure, and only 574 Notices of Default recorded.  Indeed, CoreLogic reports that Orange County's foreclosure rate fell to less than1% in February.  Those that are 90 days or more delinquent dropped to 3.3%.

WHY DO PEOPLE BUY HOMES?

The real estate blog Keeping Current Matters wondered about that and reported some recent reasons from a Gallup Poll.  Not all the reasons are financial.  In fact, below are the 5 most compelling reasons to buy, financial/non-financial.  First let's look at financial: 1) See owning as an investment  2) Chance to build equity and credit  3) Smarter than renting  4) More cost effective (3% interest and leveraging money)  5) Financial security/stability.  And now, non-financial:  1) Belief in home ownership  2) Don't want to rent  3) Better for family  4) Ability to do what you want with the property  5) Pride of ownership.  Gallup went on to give results that 8 of  10 of all people own or plan on owning property.  Here is their own quote regarding their results; "Our data on home ownership provide strong support for the idea that the American Dream of owning a home continues to be alive and well."  Finally, people were asked, regionally, where they thought prices were headed.  The results for the West?  62% said prices were going up.  25% said they would stay the same.  12% said they would go down.   What do you think?  Historically? Always up.  For more interest on Gallup polls, visit their website, www.gallup.com.  

THE HOUSING MARKET HEATS UP

Let’s start with a quote from a veteran real estate analyst of Southern California, G.U. Krueger, “If home prices and jobs are an indication, prosperity may be re-emerging in California”. In fact, according to analysts with Clear Capital, home prices in February this year grew by double digit rates from a year ago in nearly every metropolitan area deemed important for statistical reasons. Probably some of the best news was that inland areas, hard hit by the foreclosure and short sale wave, also showed serious growth and promise. This is significant because jobs in these regions are more about growth stability, workers and manufacturing as opposed to high tech and Internet or stock market; job divisions sometimes seen as leading vocations along the coast.

UCLA also posted predictions that Orange County would see strong gains and continuing job growth. Their current prediction is that OC should return to pre recession job levels around 2016. Unemployment is expected to drop to 6.8% this year compared with 7.6% a year ago and level off at 4.6%. In 2016.

No doubt everyone has read about or personally experienced the tight inventory, yes a serious lack of homes for sale. Not only is the desire to buy right now so high because of the low prices, signaling the bottom of the market that we hit last year; but also, more importantly, is the historically low interest rates. These rates are allowing the buying public to get up to as much as 30% more house for their money with no fear of a bubble. WHY?...Because these are real loans for people who have been strenuously qualified. If you have gotten a home loan recently, you know that this is true. That is real qualification and the loans being fixed versus ridiculous stated loans and interest only 3 year adjustables, which have gone by the wayside, thankfully. Now is the time to try and find and buy your dream home.

FEWER FORECLOSURES DOT THE HOUSING LANDSCAPE

The number of OC homes facing foreclosure fell 55% over the previous 9 months ending in February, a decrease of nearly 5,000 properties that were previously in some form of foreclosure, according to CoreLogic. Another data provider, DataQuick, had a similar report. Southern California, comprised of Ventura, LA, San Bernardino, Riverside, Orange, and San Diego counties, reported 20,879 Notices of Default for 4th quarter 2012 as compared with 34,013 for the same period 2011. Orange county went from 4,297 to 2,169 and that is how the 55% decline is figured. Part of the decline is in response to new foreclosure laws which require an additional 30 day warning period in writing before the NOD can be placed on a property. Lenders are preferring to have properties go through a short sale. Thankfully, lenders are catching up with the learning curve and most now have procedures in place which actually can expedited the short sale process.

WHAT WERE THE ACTUAL NUMBERS

The total number of sales in Southern California was 15,945. The overall median price was $320,000 which is up 20% from the $264,750 of a year ago for the same month. (February is the latest full month available for statistics). Orange County had total sales of 2,252 which was up in sales volume by 6.7%. However pricing was up overall 22.3% with the median overall hitting $477,000. Part of the reason for the large gain, however, is lost when you just look at statistics. Last year, 2012 saw mainly investors flipping houses and cashes buyers buying distressed properties to flip. The market was largely devoid of the upper end seller or buyer. They are now back in force and so some of the price hike should not be seen as a worrisome bubble, but rather a welcome addition to the real estate market of 2013. Every county posted sales volume gains of around 5% except the Inland Empire, which lost a little ground. Every So Cal county posted double-digit pricing gains.

CALIFORNIA IS FOR SALE...SORT OF

Let’s put it this way, California hasn’t looked this good to buyers in 8 years. All of us who live in the Golden State, and who own or have owned property, have borne the brunt of a grueling recovery. Actually, it was a market in free fall, that caused all kinds of pain, wrecked havoc not just in our fair state, but the shot heard round the world. But a lot has changed in the last 8 years. Part of the pain of a recession is that there seems no way out but to just grind it out. Time, stamina, and determination have been local themes to Californians and in fact citizens of real estate everywhere. Now we find builders are back in a big way, inventories are at historic lows (and by low, try less than half of the top of the 2006 market), money is cheap, and our state especially, is drawing buyers from all over, particularly cash buyers. In fact, according to DataQuick, one in three Orange County buyers in 2012 paid cash. Not surprisingly, the number of deals-- greater than 10,000, was the highest since California’s last down market of 1992, twenty years ago exactly. Why this insistence on history repeating itself? Some would say it is because real estate is cyclical. Others would say it is because people never learn that what goes up must come down. Cycles do happen in real estate, and the cause for each generation’s ups and downs do differ. But germane to the process is a bubble, expanding for that economy’s purpose, driven by that unique component of that expanding market. But purely speaking, it is supply and demand driven. The fuel to the fire this last time around was free loaded lending, irresponsible at best, and many would argue borderline illegal at worst. Recovering from that has been painful and difficult for not only sellers and buyers, but the professionals left behind to deal with the cleanup of the heyday. It is safe to say that we have today, a much healthier housing market, real lending standards, and the current pace of selling is based on legitimate pent up demand, from both move up buyers, first time buyers, and investors who still recognize the bottom of a market, although quickly rising. They are coming in with cash from all over the world, some to stay in the market, holding properties as rentals, some still trying to “flip” properties to the many buyers out there, and some buying luxury second homes. Read on and you’ll learn some interesting information on current numbers, sales, foreclosures, and tips on buying and selling, and why the perfect time to do both is right now!