AS MORE INVENTORY HITS THE MARKET, JULY SALES JUMP

Southern California home sales surged in July, rising to an eight-year high for that particular month, as there were more properties for sale.  Prices did not increase significantly from the previous month, but for July, year over year, there was a 26% increase in pricing.  This is the seventh month in a row, according to DataQuick, that prices have risen 20% in year over year comparisons.  That being said, housing is just at the 2004 levels, far below the high of 2007, just prior to the pricing crash and housing slump.  What is interesting is that people have already forgotten these encouraging numbers and were noticing the significant slowing of new sales for August.  Let this column be the first to encourage the consumer not to be discouraged.  August has always been notoriously slow compared to the spring season.  June is slow because of the advent of summer; graduations, weddings, early vacationers.  August is slow with heavy vacationing, the coming school year, and families getting ready for one or the other, or both.  Exacerbated this year, by many school districts staggering their start dates, August appeared to be one long back to school month.  Having said that, look for September to be stronger than usual, because so many schools did start earlier, allowing people to return to routine and start to think about the fall selling period.  There are many advantages to selling in the fall.  Less competition for buyers, so they have more selection, and because of the tight inventory this year, sellers should also find themselves in decent position.   There is frequently more flexibility on close of escrow time frames and an easier time getting to see those properties.  Buyers and move up sellers should not wait too long, read on for what may be in store for interest rates...

A COMMON QUESTION CURRENTLY ASKED IS, "WHAT IS HAPPENING WITH INTEREST RATES?...This question is asked and followed immediately with the comment, "maybe I should wait for them to come back down."  The fact that interest rates have been at historic lows for so long, may cause some to forget that they have been held there artificially.  One mustn't be lulled into the common myth that after a quick hike, they will settle back down.  Although rates will remain fantastic, all agree for at least another year, 3 1/2% is likely not coming back unless you get a 10 year fixed rate loan, or buy it down through escrow.  In fact the following entities all agree rates will rise: 1)The Mortgage Bankers Association  2)Fannie Mae  3)Freddie Mac  4)National Association of Realtors.  How much?  Read on...

FANNIE MAE PUTS TOGETHER SOME PROJECTIONS FOR SALES,PRICE, AND INTEREST RATES (NATIONAL OUTLOOK)...

The following projections are for 4th quarter 2013 versus 2nd quarter 2014.

Housing Sales -- 2013 - (in thousands) 5,592     --    2014 - (in thousands) 5,794

Prices -- 2013 - $189,000     --    2014 - $213,000

30 Year Mortgage -- 2013 - 4.6%     --     2014 - 4.8%

WHAT WERE THE ACTUAL NUMBERS?

Orange County saw a total number of sales of 4,402; this includes resale single-family, condos, and new homes.  That was a change of 42.6% upward from the previous July (the most recent complete month available).  There were 2,851 single-family resale homes, 1,283 condos, and 268 new homes.  The median price for all of Orange County, for all housing types combined was $539,500 and that is an increase of 19.9% from July 2012.  Resale single-family median price was $611,000, with condos coming in at $380,000 and new home median price was $706,000. All of So Cal (Ventura, Los Angeles, OC, San Bernardino, Riverside, and San Diego counties) had sales totaling 25,419 which was up in volume 23.50% and the median price for So Cal was $385,000, up 25.80%, both comparing July 2013 with July 2012.

5 ESSENTIALS A REALTOR MUST HAVE FOR THEIR CLIENT

1) Tell the client the truth about price.  Whether buying or selling, it is wise to know what the market will bear, and what price reveals about motive on both sides of the transaction.  2) Understand the family's timeline.  When and how are very important in serving the client.  3) Remove Challenges - There are many during the course of a transaction, and all must be explained and overcome.  4) Help with Relocation.  Whether across town or across the country, every available resource will be made available to assist the client.  5) Get the home sold.  This is what a real estate agent does.  Never lose sight with all the hype of search engines, the Internet, social media, etc.  Get the home sold.  For the best price possible with the least amount of hassle.  Done.  See you next month.

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.