Rent Hikes? Shouldn’t it be “Rent Drops”?

Sometimes I’m told I can overanalyze things, just ask my poor, sweet husband. I’ll analyze something until I just straight confuse myself. So, maybe you can help set me straight on this one…

Last week, I read Jon Lansner’s post “North County sees biggest rent hikes” talking about rent levels in Orange County. According to Real Facts (measuring “asking rent”), Stanton and Fullerton recently had the biggest annualized rent hikes. Following these cities were all other OC cities with some sort of rent hike, except for only three cities that had rent declines (Rancho Santa Margarita, Placentia, and Newport Beach). So, the majority of OC cities saw rent increases.

When I first read this, I was really surprised. We’ve got more and more people unable to sell their homes. Many have taken them off the market and just turned them into rental properties. A job relocation, growing family, divorce, you name it, could force people out of their homes. But, in this market, who wants to sell? In 2006, we moved up here and have been leasing out our San Diego condo ever since… even then we didn’t want to take a hit and sell. So, with more and more people following in our footsteps, wouldn’t we be seeing a drop in rent prices. Wouldn’t there be an influx of rental units saturating the rental market, increasing supply, and lowering rents? Now, this my right brain speaking, because I’m basing my theory mainly on personal experience, observation, and feeling.

Okay, let’s hear from my left brain, the logical side that bases things on real data… the side that is on vacation a lot since I’ve been pregnant (again, my poor, sweet husband). We have record numbers of foreclosures and lowest home prices in years. In addition, we have an outbreak of banks going belly up because of their crazy, unregulated lending practices. The Mortgage Lender Implode-O-Meter currently reads that 269 major U.S. lending operations have “imploded” since late 2006. So, now, my left brain says to me, with so many people losing their homes to foreclosure (unable to pay their adjusted mortgage payments, needed to move and couldn’t sell, or just plain gave up on the market), there’s less homes available for occupancy (stuck in foreclosure/REO-sale limbo) and yet more people are on the streets looking to rent. This would actually cause an increase in rents (increased demand, decreased supply).

However, the decreased supply may not be true. A few years back, developers hopped on the condo conversion band wagon. This was the hot ticket for a hot real estate market. Get in, flip ‘em, and get out… with a huge chunk of change. Well, some were a little late to the party and now find themselves with vacant “unsellable” units or in the middle of building units that are slated to go nowhere. Developers are looking to make these units into rentals instead. One development in Boca Raton, Florida may even be forcing current owners out to turn the 75% vacant buildings into rentals. Depending on how many of these units have been put up for rent, supply may be up enough to mitigate any increase to demand.

Ok, one more thing…. inflation. Inflation tables do show that inflation is on the rise. And, it has increased, in the past year, about how much the middle cities increased in their rents. So, maybe that’s all it is… plain old inflation. Sounds too easy. And, with food and gas being more expensive, wouldn’t that make people willing to spend less on housing?

I feel like I’m going in circles over this issue. Enough to make me dizzy. Chime in and help me sort this one out… what do you think?

The Irvine Market Report: Detached Home Stats, July 2008

Note: Last week we took our monthly look at housing numbers for the Costa Mesa market. This week we’ll look at the Irvine housing market numbers. The Costa Mesa numbers, which describe a market in which prices continue to decline, tell a different story than what the Irvine numbers tell us about the condition of the housing market in Orange County. To complicate matters further, Irvine detached-only stats and Irvine’s detached+condo stats are also telling us different stories.

This month’s detached-home-only stats for Irvine are telling a different story than the Irvine condo+detached home stats are telling us. The condo+detached stats described a market that is in a holding pattern. However, the detached-only stats describe a market that, although still very much a buyers’ market, is moving in a direction that is more encouraging for sellers. The only number that didn’t move in a direction that is more favorable to the seller was the number of days that Irvine homes stayed on the market.

So, this month’s numbers brings up the question: Is the long waited housing turnaround about to make its arrival in Irvine? Maybe. Or maybe homes over $500,000 are selling in more volume than in the recent past, and this is increasing the median sales price. I think that the jury is still out on this one.

In any case, it is clear that, although the Irvine housing market has suffered and continues to suffer the pain of the housing downturn, the pain is less so than for many other Orange County cities. Watching what happens in the Irvine housing market in the coming months is going to be interesting. And, of course, I’ll be checking in again next month with the updated numbers.

Here are the 2008 detached home statistics for Irvine as provide by Altos Research:

• Median Sales Price:
  On July 20, 2008: $939,431
  On June 15, 2008: $920,910
  On May 18, 2008: $901,771
  On April 20, 2008: $904,096
  On March 16, 2008: $922,371
  On February 17, 2008: $943,718
  On January 13, 2008: $961,225

• Price Per Square Foot:
  On July 20, 2008: $469
  On June 15, 2008: $408
  On May 18, 2008: $411
  On April 20, 2008: $413
  On March 16, 2008: $416
  On February 17, 2008: $421
  On January 13, 2008: $426

• Market Action Index:
  On July 20, 2008: 17.00
  On June 15, 2008: 16.54
  On May 18, 2008: 16.62
  On April 20, 2008: 16.57
  On March 16, 2008: 16.62
  On February 17, 2008: 15.86
  On January 13, 2008: 16.11

Note: The Market Action Index shows the balance between potential buyers and sellers, in other words, the balance between supply and demand. Above 30 is a sellers’ market; below 30 is a buyers’ market.

• Average Days on Market:
  On July 20, 2009: 109
  On June 15, 2008: 77
  On May 18, 2008: 82
  On April 20, 2008: 96
  On March 16, 2008:106
  On February 17, 2008: 103
  On January 13, 2008: 94

• Number of Homes on the Market (Inventory):
  On July 20, 2008: 401
  On June 15, 2008: 448
  On May 18, 2008: 441
  On April 20, 2008: 427
  On March 16, 2008: 413
  On February 17, 2008: 416
  On January 13, 2008: 442

For more information on May housing activity in Irvine, see yesterday’s post “Reality Check: Irvine Condo and Detached Home Stats, July 2008.”

Reality Check: Irvine Condo and Detached Home Stats, July 2008

Note: The Altos graphs and numbers, which are for detached homes, provide a good overview of market trends in each city. However, condos also play a big role in the Orange County housing market; therefore, taking a look at the condo numbers in combination with the detached home numbers is also helpful. That is what we will do with the following housing numbers.

I also like these numbers for another reason: Comparing the average listing price to the average sales price reveals if sellers are being realistic with their asking price. In other words, it provides a reality check for homesellers and homebuyers.

For comparison, I included the numbers from five years ago (2003). Predictions vary, but some think that Orange County housing prices will eventually return to these levels.



According to these numbers, Irvine real estate is still in a holding pattern. The average sales price went down, and the median sales price also went down slightly; however, the price per square foot went up slightly. This is what these numbers have told us for some months now: the Irvine condo-plus-detached home market is in a holding pattern. Tomorrow we’ll take a look at Irvine’s detached home stats to see if they verify what these condo-plus-detach home stats are telling us. Preview: a somewhat different story.

Now for our reality check: Note that the number of sales is down from where it was at this time last year. In addition, the number of sales is at only about half of where it was five years ago. However, more Irvine homes sold in this period that the previous period, which is not a surprise for this time of year. Maybe this and the fact that prices in Irvine have not declined significantly for some months is what encouraged homeowners to once again increase their asking prices: This month the increase in asking price was about $40,000 more than was asked in the previous period, last month it was about $10,000 more, the month before that it was approximately $55,000 more. Also note that the current average listing price is nearly double the average sales price.

Here are the Irvine condo+detached housing numbers for 2008.

• Average Listing Price for:
  • Week Ending July 20: $1,209,973
  • Week Ending June 11: $1,066,271
  • Week Ending May 14: $1,055,460
  • Week Ending April 16: $999,976
  • Week Ending March 12: $1,023,403
  • Week Ending February 6: $971,094

• Average Sales Price for:
  • Apr-Jun 2008: $676,963
  • Mar-May 2008: $692,562
  • Feb-April 2008: $704,150
  • Jan-March 2008: $699,798
  • Dec 2007-Feb 2008: $743,982
  • Nov 2007-Jan 2008: $797,749
  • One year ago (Apr-Jun 2007): $795,443
  • Five years ago (Apr-Jun 2003): $491,703

• Median Sales Price for:
  • Apr-Jun 2008: $580,000
  • Mar-May 2008: $585,000
  • Feb-April 2008: $578,000
  • Jan-March 2008: $579,000
  • Dec 2007-Feb 2008: $619,000
  • Nov 2007-Jan 2008: $650,000
  • One year ago (Apr-Jun 2007): $667,500
  • Five years ago (Apr-Jun 2003): $453,000

• Average Price/SF for:
  • Apr-Jun 2008: $360
  • Mar-May 2008: $356
  • Feb-April 2008: $356
  • Jan-March 2008: $359
  • Dec 2007-Feb 2008: $365
  • Nov 2007-Jan 2008: $369
  • One year ago (Apr-Jun 2007): $408
  • Five years ago (Apr-Jun 2003): $276

• Number of sales:
  • Apr-Jun 2008: 553
  • Mar-May 2008: 536
  • Feb-April 2008: 485
  • Jan-March 2008: 442
  • Dec 2007-Feb 2008: 398
  • Oct-Dec 2007: 421
  • One year ago (Apr-Jun 2007): 677
  • Five years ago (Apr-Jun 2003): 1,119

Source: Trulia

For more information on the Irvine housing numbers, see tomorrow’s post “The Irvine Market Report: Detached Home Stats, July 2008.”

Neighborhood Spotlight: Aliso Place

Aliso Place is inconspicuously conspicuous.  It’s readily accessible, but a person can drive by it a thousand times and not quite notice it’s there.  Aliso Place is tucked off of Paseo de Valencia right near La Paz in Laguna Hills.  It’s close to schools (walking distance to the elementary and high schools), offers some great views of the Saddleback Mountains and has great access to parks as well.  Most of the models are pretty roomy offering 2,500+ Sq Ft of living space per home.  What’s been happening in the real estate market there?

On the Market
25992 Sarita Dr
3 beds / 3 baths / 2,651 Sq Ft
Listed For:  $619,000
DOM:  40

25511 La Mirada
4 beds / 3 baths / 3,008 Sq FT
Listed For:  $708,000
DOM:  39 Days

24822 Largo Dr
4 beds / 3 baths / 2,870 Sq Ft
Listed For:  $745,000
DOM:  102

Past Sales
24852 Largo Dr              $729,000 (3.01.07)
25581 La Mirada St       $929,000 (3.13.07)
25505 La Mirada St       $905,000 (4.17.07)
25531 El Capitan           $815,000 (8.13.07)
25022 Marin Ct              $710,000 (8.30.07)
25391 Linda Vista Dr     $650,000 (5.30.08)

Sold Three-Bedroom Condos in One of Irvine’s More Affordable Neighborhoods: El Camino

PHOTO OF HERITAGE PARK COURTESY CITY OF IRVINE

El Camino is one of Irvine’s more affordable areas for detached homes. However, today we’ll take a look at what some of the condos in this area have sold for. All of these El Camino condos are three bedrooms and two baths.

To see what is currently available as well as additional information on what has sold recently in the area, see the El Camino map.

1 Montgomery #46: 1977 condo, 1633 SF
Sold for: $375,000 on 06/09/2008
Previously sold for: $337,500 on 02/22/2008 & $565,000 on 05/26/2005

5228 Walnut #10: 1980 condo, 1482 SF
Sold for: $1000 on 03/19/08 (The bank must be involved with this one.)
Previously sold for: $475,000 on 07/30/2004

41 Mirror Lake: 1974 condo, 1164 SF
Sold for: $425,000 on 03/03/2008
Previously sold for: $167,500 on 08/ 31/1994

1 Denver #80: 1977 condo, 1504 SF
Sold for: $455,000 03/03/2008
Previously sold for: $355,000 on 02/18/2003

9 Helena #26: 1977 condo, 1128 SF
Sold for: $450,000 03/12/2008
Previously sold for: $226,500 on 10/10/2000

133 Oval Road #2: 1972 condo, 1091 SF
Sold for: $370,000 on 02/21/2008
Previously sold for: $160,500 on 06/30/1999

It’s All About The Applications – Open House for Newport Beach

I watch quite a bit of news while I am at home during the day composing these blogs for you all to read. The most common reoccurring headline I hear is something negative to say about the real estate market. As difficult as it may be, I like to look at the glass half full, even in the middle of a real estate downfall. With mortgage applications down 6.2% according to Cnnmoney.com, obviously fewer people are looking for housing, but this could mean less competition for you. As cited from the trade group Mortgage Bankers Association’s weekly survey, refinance applications have declined 5.6% and the purchase volume fell 6.7% on an adjusted basis. Refinance applications accounted for 3.9% of all applications, of course this means that more than a 1/3 of the applications were from people that already owned their home. Also, according to the association, the average interest rate for a traditional 30 year fixed loan to 6.59%. So what does all this mean for you? Well it’s simple, more leverage for you when you go in to purchase home. Take a look at some of these great abodes that Newport Beach is offering for open house.

454 Bolero Way: $479,000, 2 Beds, 2 Baths, 970 SQ. FT. Open this Saturday from 1 – 4

454 Vista Trucha: $845,000, 3 Beds, 3 Baths, 2,155 SQ. FT. Open this Sunday from 1 – 4

2311 Redlands Dr: $849,000, 3 Beds, 2 Baths,  1,571 SQ. FT. Open next Sunday from 1 – 4

511 Park Ave: $1,329,000, 3 Beds 2 Baths, 1,152 SQ. FT. Open this Sunday from 1 -4

1948 Santiago Dr: $2,249,0005, Beds, 4 Baths, 3,900 SQ. FT. Open next Saturday and Sunday from 1 – 4

204 Via San Remo: $2,395,000, 3 Beds, 4 Baths, 2,915 SQ. FT. Open this Sautrday and Sunday from 1 – 4

Home Staging Revisted — Does it really help?

After continued interest in my post about home staging back in November 2007 (“Everyone’s Doing It: Home Staging“), I’ve decided to revisit the idea of home staging. No one can deny that a home that looks nice and where buyers get that “I want to live here!” feeling makes the house more desirable to buyers than a home that is dirty with clutter taking over the house. Just think of the last model home you went to (I’m always a sucker for these).

I admit that at first I was skeptical, but now I’ve literally become a cheerleader for the idea and the industry. And now, I see that HGTV is even hopping on the bandwagon with their new reality TV show “The Stagers.” According to the network, “The Stagers goes inside the hectic world of professional home stagers as they rush to transform a problem house into a showroom — often in just a few days. Amid the tantrums and turmoil are tips and touch-up ideas you can put to work in your own home.” The show looks like it’ll feature some arrogant, in-your-face designers, but, you know what? They get the job done and its looks great.

The show hasn’t even started yet and it’s got me hooked. The first episode airs this Sunday (July 27th) and is called “Clutter Buster.” Attention all sellers, you should watch this. My biggest pet peeve is the amount of clutter sellers leave around when trying to showcase their home.

Before & After (per HGTV’s “The Stagers“)

Anyway, I digress (don’t get me talking about my design shows!). Let’s talk facts and figures. According to the Accredited Stagging Professionals (ASP), 94% of ASP staged homes sell on average in one month or less. From 2007, on average, homes that were not staged sold in 165 days while homes that were staged sold in 33 days. What’s more is the return that is said to be realized on the staging investment. ASP posted the results of HomeGain’s 2007 national survey, based on the ten areas of home improvement identified by real estate agents in HomeGain’s original survey in 2003. They are listed from the highest to lowest returns on investment, showing that the home staging investments have the best return for each dollar spent.

(Courtesy homestaging.com)

Now, of course all of these statistics are from home staging organizations. They’ve collected and massaged the data to help them advertise. However, the logic behind their numbers seem credible with the investments. As for time to sell, I’m more skeptical. There’s so many factors that go into selling a home beside how it looks… like, eh-hem, price!

That being said, I think there’s tremendous value in having your home staged to sell. Just peruse the posts on Home Staging Blog. There are tips o’plenty to help you stage yourself or at least get glimpse to the inside world of staging. One post worth taking a look at is “Staging a Home for Sale vs. Staging a Home for Life Part V-How Much Furniture Do You Really Need?” It explores how much furniture you should have when selling your house… hint, it’s not how much you have now!

Bang For Your Buck Euro Style…Are You Kidding Me?

                              Vs.    

Just when you thought you have seen it all, this comes along and blows you away. According to the Los Angeles Times, a home in Southern California was recently priced as 2,486,398 euros. Now I know the dollar is weak, but come on now folks. The builder and co-owner, Joe Folender will also list the dollar price of $3,895,000. His objective is to attract foreign buyers looking for a bargain during America’s economic hard times. “The dollar is weaker, we are capitalizing on the strength of other currency, whatever works, said Folender.” According to the article the trend has not become huge across the country yet, but has been seen in New York as well. You gotta love California, we set the trend for all things, both good and bad. It is hard to say how far this will go and how many agents throughout the country will utilize this practice, but one thing is for sure, people will always be looking for a bargain – both foreign and domestic.

 Here are some bang for your buck homes in the Huntington Beach area – With no euro signs!!!

8275 Cherrywood Cr: $335,000, 3 Beds, 3.5 Baths, price per suare foot $264. This condo style residence was built in 1974 and has been on the market for 86 days.

18756 Roxbury Ln: $799,000, 4 Beds, 4Baths, price per square foot $307. This single family residence was built in 2005 and has been on the market for for 143 days.

7305 Arcadia Dr: $639,999, 3 Beds, 3 Baths, price per square foot $243.  This single family residence was built in 2005 and has been on the market for 24 days.  

18737 Sinclair Ln: $779,000, 3 Beds, 3 Baths, price per square foot $300. This single family residence was built in 2005 and has been on the market for 161 days.

409 E. Utica Ave: $313,219, 2Beds, 2 Baths, price per square foot $285.  This condo styly home was built in 1989 and has been on the market for 23 days.  

19912 Sheffield Ln: $318,753, 3 Beds, 2 Baths, price per square foot $290. This single family residence was built in 1963 and has been on the market for 45 days.

Is The Real Estate Market Near The Bottom?

Jon Lansner certainly thinks so.  His recent blog gives several indicators:

• OC home prices rose in June
• Increased sales rate
• Supply down
• And more

I’m not so optimistic.  I don’t want to be the naysayer, but the number of low interest rates/arms set to expire from 2009-2011 and the home values certainly not rebounding in time to refinance makes me nervous that this is just the bottom of round I.  I don’t think Round II will be quite as bad, but it certainly won’t help.   That said, I think we still have some time before crying “bottom”. 

CNNMoney.com reports that they think that there are several factors indicating the market has not yet hit rock bottom.

The factors that are weighing on the housing market remain in place – weak consumer confidence, a weak labor market and rising mortgage rates – so there are some strong fundamental headwinds still weighing on the market,” said Robert Dye, senior economist at PNC Financial Services Group.

“We are hoping for a bottom, but we are not expecting any significant rebound from that bottom until the labor market and consumer confidence starts to improve,” he added.

I have to agree there are too many unknowns and weaknesses in the market.  Until we see some more strength from the consumer perspective, as well as a well-laid plan to account for the millions of homes that are doomed for foreclosure when the arms and interest rates rise in the next few years, things aren’t going to get much better.

No Big Bargains in Huntington Beach

Price data from the MLS (see charts below) show that Newport Beach and other areas sell at more of a dicount thatn Huntington Beach neighborhoods.

• West Bay- Santa Ana Heights houses sold at 93.2% of list price from May 20- July 20
• West Newport houses sold at 93.5%
• Seal Beach sold at 93.7%.

More expensive homes in Balboa and Harbor View sold at bigger discounts, but that’s typical with very expensive homes.

Meanwhile, in Huntington Beach

• Fountain Valley/ NE Huntington Beach houses sold at 98.1% of list price
• Northwest Huntington Beach houses sold at 96.1%
• South Huntington Beach sold at 97.2%
• West Huntington Beach sold at 95.2%

So if you’re shopping in Huntington Beach, negotiate hard and fight for a good price, but don’t expect to get a huge discount.

The real estate and financing markets have become very closely linked over the last few years, and so interesting to note is that as Huntington Beach Downtown blog tells us, HB was not immune to the run on Indy Mac Bank.

Last night we had our Red Carpet Event at the Hotel Huntington Beach. About 60 people came for the home-buying class, which in addition to sale-to-list price data has a lot of other local pricing data and tips for buying a home. Slides are here, but warning: it’s a big file. We’ll have another event on September 10th.

Huntington Beach Area Houses May 20- July 20, 2008

Huntington Beach Area Condos May 20- July 20, 2008

Photo credit: reitveld on flickr.