Coto de Caza, CA Real Estate News

By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Hello again,  Below is the latest Orange County Market Report, as compiled by my friend Steven Thomas, of Altera Real Estate.  I have a comment at the end. "Orange County Housing Report:  Demand Takes Off                                       February 5, 2009  Steven Thomas, President,  Altera Real EstateQuantitative Economics and Decision Sciences, B.A. Even though the United States is waiting on the stimulus package, demand for Orange County real estate is beginning to take off.  In the past two weeks, demand, the number of new pending sales within the prior month, increased by 24% to 2,671 pending sales, an increase of 674 homes.  Last year at this time there were 1,103 fewer pending sales, totaling 1,568.  Two years ago there were 2,463 pending sales, 208 fewer than today.  After sl...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Employment figures released this morning show that the economy has now shed 3.6 million jobs since December 2007, included close to half that in the last 3 months alone.  The Unemployment Rate is now 7.6%. But jobs aren't fading in every housing market equally. As reported by Ajilon Professional Staffing, there are still areas around the country in which unemployment rates are low and job outlooks are strong. Led by Madison, WI, Ajilon calls them "10 Cities For Job Growth in 2009" and they are: Madison, WI Washington, D.C. Boston, MA Richmond, VA Milwaukee, WI Pittsburgh, PA Baltimore, MD Seattle, WA Houston, TX Dallas, TX There's no common denominator uniting the list -- cities are buffered by industries as varied as healthcare, energy, and technology.  However, it's worth noting that ...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Comparing July's conforming mortgage rates to today's average rates, there's a 1.5 percent difference in favor of homeowners.  Rate drops like that make big differences in a household budget.  Look at these before-and-after payments, based on rates from the chart: $150,000 mortgage ($144 savings/month) July 2008: $958 monthly February 2009: $814 monthly $250,000 mortgage ($240 savings/month) July 2008: $1,597 monthly February 2009: $1,357 monthly $350,000 mortgage ($335 savings/month) July 2008: $2,235 monthly February 2009: $1,900 monthly Of course, the other side of the story is that while mortgage rates fell through late-2008, the mandatory lender fees that accompanied them rose.  That lessened some of the benefits of getting lower rates, but certainly not all of them. According to r...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
A real estate trade group reported Tuesday that Pending Home Sales ticked higher in December 2008.  A "pending home sale" is a home under contract to sell, but not yet closed. The group positions Pending Home Sales report as a predictor of future activity, suggesting that home sales will spike 60 days hence.  This is good news for the economy. However, despite the Pending Home Sales report's correlation to the actual number of homes sold in the future, that connection may not be the report's best use. This is because of what Pending Homes Sales doesn't measure. Specifically not included in Pending Homes Sales are: Sales of new construction homes Sales of For Sale By Owner properties 80 percent of non-surveyed MLS transactions And, lastly, it should be noted that Pending Home Sales trac...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
If the unfreezing of credit is paramount to an economic rebound, the first signs of a thaw may be here. Monday, the Federal Reserve released its quarterly survey of 84 member banks.  In it, the Fed says that fewer than half of its responding banks tightened "prime" mortgage guidelines over the last 3 months. This is good news for active home buyers and other Americans in want of a new mortgage. "Prime" is a vague term with respect to home loans, but it usually refers to mortgage applicants who can document: Equity or downpayment in a home  Credit scores over 740 Excessive income versus debt In looking at the Fed's survey, we can infer that because less than 50% of banks made credit less available, more than 50% did not.  Borrowing may not be easier for prime borrowers, in other words, b...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Super Bowl Weekend traditionally marks the start of the Spring Buying Season in real estate.  Anecdotally, real estate agents will tell you that buyer activity tends to tick higher at this time of the year. Meanwhile, with mortgage rates still trolling near all-time lows and Congress debating a first-time homebuyer tax credit, 2009 may bring out even more buyers than we've seen in the past. Just having your home on the market may not be enough to attract an offer, though -- the home has to have appeal.  That brings us to home staging -- the process by which a homeowner re-organizes and re-presents his home to appeal to as many potential buyers as possible. Home staging is part-science, part-art, and part-psychology.  Homebuyers tend to judge homes within the first 8 seconds of seeing th...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today.  It remains within a target range of 0.000-0.250 percent. In its press release, the FOMC reiterated most of the key points from its December 2008 statement, including: The U.S. employment outlook continues to deteriorate Consumers and businesses continue to cut spending The housing sector is still showing weakness In addition, the FOMC addressed the "extremely tight" credit conditions for U.S. households and business, even as it said some financial markets are showing signs of improvement.  To the Fed, the latter is a precursor for the former.  For Americans needing new mortgages or other forms of credit, it may mean that getting approved gets easier sometime late this year. Most importantly, the Fed's...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The Federal Open Market Committee adjourns from its 2-day meeting today.  The monetary policy-setting group is expected leave the Fed Funds Rate within its current target range of 0.00-0.250 percent. This is the lowest range for the Fed Funds Rate in history and, frankly, there isn't much room left to go lower.  Therefore, markets aren't really concerned about what happens to the benchmark lending rate today. Instead, markets will focus on the Fed's ideas to revive the U.S. economy. In its post-FOMC press release last month, the Federal Reserve pledged to "employ all available tools" to get the economy moving in the right direction.  At the time, some of those tools were already in play, including making direct loans to large companies and buying bad debts from commercial bank balance s...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Don't let the plunging median sales price fool you -- December's Existing Home Sales data has home sellers smiling.  Just one month after falling below the 5-million unit trend line, sales volume roared back by 300,000 homes in December, surprising housing analysts and making a case that this spring's Buying Season could be a competitive one. Falling home prices helped fuel home sales.  Nationally, the median sales price -- the point at which half of all homes sold for more and half sold for less -- was $175,400, down $32,000 from last year. However, the most important part of December's Existing Home Sales report isn't making headlines.  At December's sales pace, it would now take 9.3 months to exhaust the existing home supply.  Last month it was 11.2 months.  This means that buyers ar...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
When a homeowner sells his home and decides to buy a new one, there are 3 basic options for the residence -- sell it, keep it, or rent it. Unfortunately, no matter which path they choose, move-up homebuyers in need of a new conforming mortgage will find qualifying for a home loan to be more difficult this season than in the past.  Mortgage guidelines are dramatically tighter for people "carrying two mortgages". Among the changes this spring's buyers face: Selling the primary residenceIf you plan to close on your new home prior to the closing of your existing home -- even if it's only by a day -- both payments must be listed as monthly debts on your mortgage application. This will disqualify the majority of homebuyers. Converting your residence to a second homeIf your current home has le...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
After improving through 11 straight weeks, mortgage rates finally ticked higher last week.  This, according to Freddie Mac's weekly mortgage rate survey.  The Freddie Mac survey showed that mandatory mortgage fees rose last week, too. Unfortunately, the bad news for rate shoppers doesn't stop there. Because Freddie Mac's rate survey is conducted on Tuesday but its reports aren't released until Thursday, the published data doesn't even account for the previous 48 hours of activity in which rates and fees have risen further. Versus last week, 30-year fixed, conforming mortgage rates are up 0.16% on average nationwide.  On a $200,000 home loan, this equates to a roughly $20 extra per month, or $7,055 over the life of a 30-year loan. The Era of Low Rates may not be over, but it may be time ...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The S&P/Case-Shiller Home Price Index is a popular measure of domestic home prices, released monthly.  The index reports on the largest 20 U.S. markets, painting a broad picture of real estate values nationwide. Despite the Case-Shiller Index's two obvious flaws -- (1) it only counts repeat sales on single-family residences, and (2) it only includes 20 major housing markets -- the model makes it easier to identify broader real estate trends in our nation's largest cities. Data, though, is just data.  It often takes a good picture to bring it all home.  Enter The New York Times. On its website, The Gray Lady has posted an interactive Case-Shiller graphic.  For each of the 20 cities studied, users can compare how home values rose versus the national composite throughout the early part of...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
For spot heating, many homeowners turn to portable electric space heaters; it's often more efficient to plug one in than to raise the household thermostat by a degree or two. But using a space heater isn't as safe as it is simple.  According to the National Fire Protection Association, in 2005, space heaters were responsible for: 32% of home heating-related fires 57% of home heating-related property damage 73% of home heating-related civilian deaths Space heaters cause a disproportionate amount of damage versus central heating systems and fireplaces.  Therefore, it's important to practice safety and care when using space heaters. Some basic space heater safety tips include: Don't place anything that can burn within three feet away of the space heater. Make sure that your space heater ha...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Another week, another headline screams how mortgage rates have falled to an all-time low. Freddie Mac published its weekly mortgage rate survey Thursday and found that the "average" mortgage rate is now 4.96 percent, the lowest since the survey started in 1971. But, if we look beyond the headline, we find that there's another part of the story worth watching.  Mortgage rates are falling but the number of points required to lock those rates is not - with most lenders. Most lenders are now requiring an average payment of 0.7 points to get the 4.96 percent rate from the headlines.  That's up from 0.6 percent last week and 0.4 percent a year ago. A "point" is a fee equal to 1 percent of the loan size.  Therefore, to get access to a 4.96 percent interest rate on a $200,000 home loan, today's...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
After a weak holiday shopping season, annual retail sales declined in 2008. It marks the first annual Retail Sales decline since the government started tracking the data 40 years ago. It also gives credence to the notion that the U.S. economy is suffering through a deeper recession that previously thought.  A pullback in spending -- especially during the shopping-heavy month of December -- highlights how cautious nature of today's American shoppers. And in a strange sort of way, all of this may end up being good news for Spring home buyers. Because Retail Sales are reflective of consumer spending, a dramatic pullback helps to keep the economy in slow gear, countering the inflationary impact of government stimulus and direct intervention.  Inflation, you'll remember, causes mortgage rate...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
An oft-touted benefit of homeownership is its tax benefits.  However, like most IRS-related items, understanding how the benefits work is not always clear. In general, homeowners are entitled to two home-related tax deductions -- one for annual mortgage interest paid, and one for real estate tax bills paid. Not everyone is eligible, though.  Some of the exclusionary traits include total amount borrowed, and whether or not the home is a primary or secondary residence. The official IRS publication is filled with notes and explanations but, in general, you can calculate your approximate mortgage interest tax deduction using the following math: Sum your annual mortgage interest and real estate taxes paid Find your tax rate on the IRS tax bracket schedule Multiple your tax rate by the sum f...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
Home prices are largely based on Supply and Demand. If demand outweighs supply, home prices rise If supply outweighs demand, home prices fall It's good news for home sellers, therefore, that "used" homes for sale fell 6 percent nationally last month.  Less supply often means higher prices. Of the 29 metropolitan areas tracked in real estate brokerage firm ZipRealty's survey, only Philadelphia showed an increase. But the survey isn't perfect.  For example, it doesn't track the demand side of the equation -- buyer activity.  Anecdotally, November and December are slower for buyer foot traffic than, say, March and April.  December's drop in supply, therefore, may reflect the expectation of reduced buyer interest. In addition, the ZipRealty survey ignores the supply of newly-built homes, an...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
I've just received the latest Orange County real estate market report, as compiled every couple of weeks by Steven Thomas, of Altera Real Estate.  You can see the entire report by clicking on: http://www.OurAgentSpot.com/sthomas/MarketTime-Jan-8-09.pdf  For a brief synopsis, the report details the promise of a better start to a real estate year, than we've had for the past couple of years.  Prices are down substantially, the number of available houses has shrunk to levels of 2 or 3 years ago, and interest rates for mortgages are among the lowest ever seen. The possible bad news?  No one - I repeat - no one, knows whether prices will drop much further, and loans have become more difficult to obtain, especially in higher amounts. The majority of sales presently taking place are distressed...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
The New Year is not yet one week old but that's not stopping market "experts" from predicting what's in store for 2009. The calls on housing and mortgage rates run the gamut: Home prices have farther to fall Home prices have touched bottom Mortgage rates will dip Mortgage rates will rise Put it all together and it's clear that the experts have no better idea about the future than you or I.  Their guesses are educated ones, but they're guesses nonetheless. A terrific example of how poorly experts can predict the future comes from a Wall Street Journal performance analysis of 1,700 mutual funds.  In 2008, only one earned a positive return.  That one fund represents zero-point-zero-six percent of all tracked mutual funds.  Surely, the fund managers of the other 99.94% didn't expect to post...
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By Bob Phillips, CDPE, SFR, South Orange Co., CA
(Realty ONE Group)
As part of the Economic Stimulus Act of 2008, Congress authorized a conforming loan limit increase in "high-cost" areas around the country. Versus the national conforming loan limit of $417,000, for example, a Manhattan home buyer could secure a 2008 mortgage for $725,000 and still be within "conforming" guidelines. Effective January 1, however, those limits rolled back.  Conforming mortgages in the 59 designated high-cost regions are now capped at $625,500.  In non-high-cost areas, the 2009 conforming loan limits remain unchanged from 2008. 1-unit properties : $417,000 2-unit properties : $533,850 3-unit properties : $645,300 4-unit properties : $801,950 Loans in excess of these dollar amounts are often called "jumbo", or "super jumbo" home loans, depending on their size.  Jumbo home ...
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