Archive for July, 2008
July 18, 2008
Coincidentally, my previous blog had a lot to do with numbers and rankings and as we take a look at Huntington Beach(Seal Beach was tied for #1 too), we see that it is number one in Orang County for pricing strength and sales according to the OC Register. The data is cited from Real Estate Economics of Irvine, they also gave the same ranking to both cities last quarter. Although H.B. is one of the highest priced communities in the country, it actually had an increase in resale volume from this same time last year. This great news may help to entice potential buyers who are looking to purchase an abode in H.B. Many of these open house listings prove the aforementioned data. With the ever-changing market, it will be interesting to see if Huntington Beach is able to retain its title for a third straight quarter. Happy Hunting my friends.
7821 Essex Dr: $375,000, 2 Beds, 2 Baths, 950 SQ. FT. Builit in 1985, this single level condo has underground parking.
606 Lake St: $539,000, 2 Beds, 3 Baths, 1,132 SQ. FT. Built in 1998, this condo is walking distance from the HB pier.
16512 Loire Cr: $589,900, 3 Beds, 2 Baths, 1,552 SQ. FT. Built in 1960, this single family home sits on a cul-de-sac, sellers are looking to get out quick because they are moving to Arizona.
3221 Francois Dr: $675,000, 2 Beds, 3 Baths, 1,700 SQ. FT. Built in 1978, this single family residence is located close to Peters Landing Marina.
7626 Park Bay Dr: $710, 000, 3 Beds, 3 Baths, 2,023 SQ. FT. Built in 1998, single family home has a gated pool and spa.
10072 Sprit Cr: $724,900, 3 Beds, 3 Baths, 1,815 SQ. FT. Built in 1967 and walking distance from the beach, this singel family home has a three car garage.
July 18, 2008
When my family relocated here to So Cal from rural Central Illinois, I was amazed by the proximity of grocery stores, Starbucks, and parks near most homes we looked at. In fact, I love the fact I can walk with my kids to the grocery store to grab a few groceries, grab lunch at the park, etc. And with gas prices on the rise you better believe I’m hightailing it with the stroller more and more.
With the unletting increase in gas prices you can only imagine that choosing a home with great location and walkability will probably become a more significant factor.
Enter, WalkScore.com . The rate and rank neighborhoods based on walkability to various necessities on a scale of 1-100 (100 has the highest walk factor). You can search by address or even by city (which is less accurate). Depending on the area both Laguna Hills and Mission Viejo have some highly walkable and some highly car dependent areas.
Walk Score does address some of their “How It Doesn’t Work” factors:
Public transit: Good public transit is important for walkable neighborhoods.
Street width and block length: Narrow streets slow down traffic. Short blocks provide more routes to the same destination and make it easier to take a direct route.
Street design: Sidewalks and safe crossings are essential to walkability. Appropriate automobile speeds, trees, and other features also help.
Safety from crime and crashes: How much crime is in the neighborhood? How many traffic accidents are there? Are streets well-lit?
Pedestrian-friendly community design: Are buildings close to the sidewalk with parking in back? Are destinations clustered together?
Topography: Hills can make walking difficult, especially if you’re carrying groceries.
Freeways and bodies of water: Freeways can divide neighborhoods. Swimming is harder than walking.
Weather: In some places it’s just too hot or cold to walk regularly.
For me, they missed another big one – geography! My neighborhood has great walkability in one direction. While there are stores, parks, etc. in another direction it is a steep walk. And by steep I mean nearly impossible to get up or down. I have to throw the car into 3rd gear on the way down the road when driving to save my brakes every day.
So as you’re looking into homes and doing your research you can add yet another thing to your checklist to look into – walkability.
July 17, 2008
In perusing the sold stats in Santa Ana, I came across a curious one that closed in late June. Three bedrooms, one bath, and only 957 square feet, 1415 South Shelton Street makes for a small house. However, the house does sit on a lot of a little more than 6,700 square feet. So, what makes this little house sell when there are so many other houses for sale in Santa Ana?
(Blue house flag marks 1415 S Shelton – to the right of the blue roof.)
From the stats, I’m thinking this house was bought after foreclosing in December 2005. The buyers only paid $24,118 for it. This fact combined with all the work done on the place leads me to believe that this house was a flip. New carpeting, new window, new fixtures, and new floors were put in. The kitchen was remodeled with granite countertops, dishwashwer, tiled floor, and new cabinets. The bathroom also got a facelift with granite countertops, new sink, new cabinet, and new floors. And, of course, the entire inside was freshly painted. That’s a lot of work… sounds like it took them a year and half, too.
I bet when these “investors” bought the place, they thought they could knock out the work and get it sold for twenty times their purchase price. In early 2006, the market was just beginning it’s big slow down. Well, fast forward to 2007 and 2008 and you’ve got one mess of a market. However, these flippers still have a success story. With their purchase price, renovation costs, and mortgage costs, I’m guessing they still made out on this deal with a pretty penny.
So, back to the question about how did this small house sell in this market? Well, price was huge. Before selling, it was down to $339,000. Nearby homes (of similar size) are well over that ($575,000, $475,000, $429,621, and $350,000). The house did sell for $320,000 (6% below asking) in late June. The price combined with renovations made this house more desirable over its competitors. While the end tells a success story, it is clear there was a rocky road to get there.
The home was listed before I started blogging… over year ago. I know that at one point it was at $479,000 last summer. Like most homes that are on the market for awhile, there are a lot of growing pains in coming to terms with the market and/or finding the right real estate agent. Many times, I see people pull their house off the market and list it with a new agent thinking it was the agent that was slacking on the job. Well, more often than not, it’s the sellers inability to understand their house is priced too high, not the agent’s sales force. The bottom line is that price and condition of the home sell homes, not an agent finding the right buyer. Aside from going from one agent to another, it also looks like these sellers had a couple offers that fell through. First in March and then again in May, they were in escrow. Was it the banks that made the deal fall through? Bad inspection? We’ll never know. However, for these flippers that stuck with it and finally lowered their price to a real attractive number to buyers (a requirement in this market!), the third time proved to be the charm.
Listing History:
Date N/A: Listed or reduced to $479,000
Aug 16, 2007: Reduced to $469,000
Feb 6, 2008: Listed again for $399,900
Mar 9, 2008: Reduced to $369,900
Mar 19, 2008: Listed again for $349,900
Mar 22, 2008: Increased to $359,900
Mar 27, 2008: Offer accepted, in escrow
Apr 20, 2008: Back on market, reduced to $349,000
Date N/A: Reduced to $339,000
May 10, 2008: Another offer accepted, in escrow
May 24, 2008: Back on market
June 2, 2008: Yet another offer accepted, in escrow
June 26, 2008: Closed escrow… SOLD!
July 17, 2008
Cnnmoney.com recently published a list of the 100 best places to live in America and guess what…Newport Beach isn’t on there. Are you surprised? Hmmm most likely not. Should it be on there? Well maybe, the question is quite subjective actually. There were only four cities in the state of California that made the list and only two were in Orange County – Fountain Valley and Irvine. When we take a look at the criteria for making the list, we quickly see why Newport Beach did not make the cut. The article took into consideration school systems, good jobs, low crime rate, an active outdoor culture and very affordable housing. Wait! Was that very affordable housing I heard? Well now we see the culprit and why Newport Beach was omitted. It certainly has all of the aforementioned qualities, but the price of the houses knocked it right of contention. If the article had been titled “100 Best Places to Live…For Those That Can Afford It”, I suspect that Newport Beach would have been in the top ten.
With a median home price of $2,066,438 (whew, it hurts just to type that) it is no shock that the coastline city did not make the cut. Still considered a buyer’s market, homes in Newport Beach have been on the market for approximately 110 days. The median price per square foot is $729. By the way, the winning city was Plymouth, MN, yes I know, it’s a far cry from Newport Beach.
Home Sales and Demand Trends
Homes for Sale
Housing Market Conditions
Price per Square Foot
Real Estate Price Trends
July 17, 2008
The June DataQuick home-sales numbers for Southern California came out yesterday. Orange County prices and sales are still showing a downward trend: Prices were off 23 percent from June of 2007, and the median has slipped to $495,000. Sales were down, too: 27% less than last year.
But the market is showing signs of life in Riverside and San Bernardino counties, where bargain-hunters are swooping in to snatch up distressed properties. Sales in S.B. County were up 1.1% vs. June 2007; and RivCo’s were up a whopping 11 percent. Median prices, however, continued to fall: Riverside County’s stands at $275,000; San Bernardino County’s, at $240,000 — 31% and 34% less than last June, respectively.
The bargain-hunting is reflected in mortgage payment Southern California buyers are agreeing to pay. From DataQuick’s news release:
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,671 last month, down from a $1,713 the previous month, and down from $2,430 a year ago. Adjusted for inflation, the current payment is at its lowest level five years. It’s 34.6 percent below its year-ago level and 22 percent lower than the spring of 1989, the peak of the prior real estate cycle.
Are we near the bottom? Here’s DataQuick analyst Andrew LePage’s take on the market, from the L.A. Times’ story:
The housing market “would really be in trouble if these bargain hunters weren’t so active,” DataQuick analyst Andrew LePage said.Without these buyers, homes would languish even longer on the market, leading to steeper price cuts, LePage said. But he cautioned that the uptick in sales activity probably wouldn’t lead to a bump in values in the near-term.“At some point prices stabilize, but that is six to 12 months later easily,” LePage said. “Then you’re also looking at years of relative stagnation” before prices actually rise.”
Christopher Thornburg of Beacon Economics also thinks the market still has room to fall.
By the time the slump is over, home values throughout the region will be down about the same amount — probably 40% to 50% below peak levels, predicts [Thornberg]. Home values in Los Angeles and Orange counties are down roughly 25% from their peaks last year.
“In the places that were harder hit, it’s pretty clear we’re getting close to the bottom,” Thornberg said, but “places like West L.A. — where people said, ‘It can’t happen here’ — are starting to stumble now. It’s a function of time.”
Foreclosures are figuring heavily into sales statistics, according to The Times’ story:
In Orange County, for instance, foreclosures and short sales constitute the majority of homes for sale in eight cities, among them Aliso Viejo, Santa Ana, Garden Grove and Anaheim, according to an analysis of listing data by Aliso Viejo real estate broker Steven Thomas.Overall, foreclosed homes made up 41.1% of the homes sold in June, the first time the percentage has topped 40% in this real estate cycle. In June 2007, foreclosed homes made up just 7.3% of home sales.
If you’d like to see how a your city fared in June, Jon Lansner’s blog has compiled this table of Orange County sales and prices, broken down by ZIP code.
Recent Redfin posts:
Orange County Affordability vs. Comfortability
Inventory for Huntington Beach
Orange: Real Estate Market Report
July 16, 2008
It’s time for a check-up on the Orange real estate market. Please undress, put on this gown, and wait on the table… the doctor will be right in.
The last “physical” we did on the Orange market was back on April 29th. At that time, Orange did not receive a clean bill of health, but rather results showed a drop in median home prices with homes taking longer to sell. Not quite the “six months to live” scenario, but not good.
How is Orange fairing now? Well, the diagnosis is still not good. The median single family home price continues to fall, to a new low of $569,882. This is down 6% from $606,957 in late April and down 12% from $645,403 in late February. For a real shocker, just look at what the median price was in early January, $672,843. The current median price is now down 15% from the beginning of the year. Where will it be at the end of the year? There’s always hope that things will pick up in summer, but, if they do, it’s likely they’ll go down again in late fall and winter.
The number of homes on the market are now 595 homes (up from 574 in late April, 559 in late February, and 582 in early January). The number of homes on the market is really subjective without any kind of measure for demand. Luckily, Altos Research also measures demand in its market action index. Currently, the market action index is at 15.41. Anything below 30 shows a buyer’s market… needless to say, the Orange market is pretty desperate and buyer’s can have their way with sellers.
(Data and graphs courtesy Altos Research.)
Another test to run to see how the Orange market is fairing is to look at how long homes are sitting on the market. The average property in has been on the market for about 99 days. This number is about the same as it has been since the beginning of the year: 110 days in late April, 99 days in February, and 109 days in January. Compared to the crazy mania days (“pre-bubble burst”), it seems like three months is a long time to sell. However, after looking through the inventory, it actually surprises me. I would expect it to be longer, just look that the properties below that have been listed “forever.”
Properties Just Listed
4415 W Stay Ct, Orange 92868; 3 bed/2 bath house; 1,178 sq ft; $400,000
3431 E Vine Ave, Orange 92869; 3 bed/2 bath house; 1,866 sq ft; $400,000
3010 N Butterfield Rd, Orange 92865; 3 bed/2 bath house; 1,898 sq ft; $580,000
Properties Listed for “Seems like forever”
1245 East Palm Ave, Orange 92866; 3 bed/2 bath house; 1,954 sq ft; $699,900; 839 days on the market
830 East Hoover Ave, Orange 92867; 3 bed/1.75 bath house; 1,640 sq ft; $650,000; 760 days on the market
417 East Jacaranda Ave, Orange 92867; 3 bed/2 bath house; 1,358 sq ft; $499,900; 594 days on the market
July 15, 2008
(Courtesy Slate Magazine)
A Fullerton realtor Adam Brett posted on ActiveRain about how “Orange County Residents can afford a home again“. He brings up a very good point. With all the foreclosures and short sales, prices continue to drop. This would lead us to the idea that more of us can afford to buy. Brett’s observations:
“Despite the seemingly bleak economic situation, Orange County Residents can afford a home again. Consumers are advised to choose a lower loan amount, a smaller home, and carefully consider their financial situation in a realistic fashion. Likewise, lenders must refrain from issuing loans to consumers who would not otherwise qualify.”
While I certainly don’t doubt that affordability measures are looking more favorable, I do, however, doubt that more residents are comfortable with the idea of buying, even though they may be able to afford it. Consumer confidence is just too low. While salaries haven’t dropped as much of the housing market, making affordability indexes on the up, job growth decline sure has been sending a different message. According to an OC Register article in late June citing Chapman economic experts:
“The February benchmark data released by the Employment Development Department confirmed our earlier assessment that Orange County’s job growth declined in 2007 for the first time since the last recession ended in 2002. Revisions also show that Orange County entered recession, defined as two consecutive quarterly job losses, in the second half of 2007.”
So while we’re being told that we may lose our jobs and we’re headed into a recession (if not already there), we should be excited that we can afford a home? I’m not comfortable with that, and I’m thinking there’s a lot more like me out there.
Rather than jump up and go out and buy a home, I think most people are just waiting it out to see what’ll happen. After so many were burned in speculating before the bubble burst, there’s not a whole lot of people willing to speculate about the future Orange County housing market now.
Also, Brett mentions that “lenders must refrain from issuing loans to consumers who would not otherwise qualify.” Ah-hem… excuse me while I choke on the water I was drinking. Just try and find a lender that’ll give a qualified buyer a good loan. I know someone that was prepared to put 20% (with good credit and all the fixings) and just had to retract an offer because of the lenders over-conservative shenanigans. So, even if you can afford it and are comfortable with it, doesn’t mean you can buy.
July 15, 2008
The median price of homes and home sales are at a record low in Southern California. As reported in DQNews.com, buyers looking for a bargain drove home sales up in the month of May, but it was still one of the slowest months in the past 20 years. The median price for homes dropped a staggering 27% from one year ago. To give you a big picture perspective, there were 16,917 homes that closed escrow in Southern California. When we take a look at the numbers for an individual city such as Huntington Beach, we can see how it stacks up when compared to the entire southland region, which had a median home price of 370,000. As you can imagine, in Orange County it was slightly higher with a median price of $485,000 (a 23% change from this time last year). When we jump over to our friendly neighborhood of Huntington Beach, we see a considerable change of $820,281 for the median home price. With the average home being on the market in Huntington Beach for an average of 84 days, H.B. remains a buyer’s market. Below is a detailed breakdown for Huntington Beach.
Home Sales and Demand Trends
Housing Market Conditions
Price Per Square Foot
Homes For Sale
Real Estate Price Trends
July 15, 2008
Since we were young, we have been taught, by our parents and our grandparents and our local real estate agents, that we should own a house. We’ve also been led to believe that real estate is an excellent investment.
It’s clear from the current housing disaster that real estate is not always a great investment; in fact, it has been the path to financial ruin in the hands of naive and/or greedy buyers and unscrupulous, irresponsible lenders. 
Everyone has to spend money on a place to live. If you’re going to live in one place for a long time, the financials for buying have a better chance of working out in your favor. This is one reason real estate was a “good investment” for our parents — they bought (at much lower prices) and stayed put, which meant only one real estate commission and one set of moving expenses and closing costs. They eventually paid off the house and enjoyed a mortgage-free retirement.
But if you’re moving every five years or so — as many Americans do these days — owning may not work so well financially. Paying commissions and closing costs every few years is expensive. Factor in taxes, repairs, maintenance, and upgrades, and you’ll spend far more on a house than you ever did renting, and unless you happen to be lucky enough to sell in a sellers’ market, you could easily lose money.
Until you pay off your home, you don’t really “own” it anyway — all you own is the obligation. It’s like buying a stock on margin: You benefit if the value goes up and suffer if it goes down.
Real estate agents used to say that you should buy a home if you’re planning to stay put seven years or more. Most don’t say that anymore, because they know hardly anyone stays put for that long. It’s to their benefit to tell you it’s always a good time to buy, but it’s not always true. You have to evaluate your personal situation and decide what’s best for you.
Financials aren’t the only consideration when deciding between buying and renting. But it has to be a factor.
A commenter on Jon Lansner’s real estate blog dug up this Redfin listing on a Mission Viejo house. It’s a lovely five-bedroom, two-bath, single-story home, 2,246 square feet, built in 1969. Here’s its sales history:
1988: $185,000
1990: $285,000
2000: $380,000
2004: $600,000
2006: $820,000
2008: $573,750 (bank purchase)
Current listing price: $490,000
If you were the person who bought in 2004 and sold in 2006, you did well. The 2006 buyer, not so much. On the other hand, if this house were still owned by the person who bought it in 1988, that owner would be sitting on a pile of equity.
But the person who owned between 1990 and 2000 saw the house appreciate in value $90,000 in 10 years. Deduct the real estate commission, taxes, and other expenses, and that house appreciated only a few percent a year.
But maybe the owners had a great 10 years in that house and were just happy to get a check at escrow. Which is exactly the point. A house should be a place to live in, enjoy, entertain, raise children, and create memories. If you “make money” on it, that’s great. But that should not be the prime objective.
Recent Redfin posts:
Road Improvements in South Orange County
Gas Prices and the Housing Market – Part 2
Fannie and Freddie: How the Mighty Have Fallen
July 14, 2008
And if there’s something that we Californians love to grumble about – it’s traffic.
Remeber Measure M? Some of us have voted on it twice now and that micro-tax has added up and there’s a nice pool of funds available to fix the local roads. I have to admit that I was pleased to see which roads are up for improvement in Laguna Hills and Mission Viejo because these are ones that have driven me crazy for the last few years.
In particular, the improvements around Marguerite and Crown Valley. That intersection singlehandedly affected our decision to purchase a home on the west side of the interchange so as to avoid the mess. It often takes 10-15 minutes to head 1 mile down Crown Valley in either direction.
According to the OC Register, these are the properties that will be facing updates.
LAGUNA HILLS
Laguna Hills is getting $433,176 to be used for street and road improvements, and traffic signal improvement along Alicia Parkway and La Paz Road.
MISSION VIEJO
Mission Viejo projects approved for funding are:
Oso/Marguerite intersection improvement – $100,000
Crown Valley/Marguerite intersection improvement – $487,280
Alicia Parkway and Trabuco Road signal upgrades – $152,119
Crown Valley and Marguerite Parkway business area – $153,024
La Paz Road and Marguerite Parkway Central business area – $122,969
Marguerite Parkway and Los Alisos Boulevard com/school – $56,355
Oso Parkway and Felipe Signal coordination and closed circuit television – $112,712
So happy driving, it should get a little better in the near future!
