Laguna Beach Real Estate

Will Short Sale and REO Laguna Beach Homes for Sale keep pace with National Numbers?

In their first U.S. Foreclosure Sales Report, RealtyTrac reported that 31% of all residential home sales in the first quarter of 2010 were in some phase of the foreclosure process. These include homes for sale in default, where an NOD had been filed by the lender, or those that were already taken back by the bank and labeled “REO” or Real Estate Owned.

In comparison, the percentage of homes sold in the first quarter of 2009 that were in the foreclosure process sat at 37%. More than 1.2 million U.S. properties that sold in 2009 were in some stage of the foreclosure process.

On average, buyers who purchased a home for sale in a foreclosed status paid 27% below the average sale price of properties that were not in a distressed status.

The report noted that “Discounts on REOs are larger than discounts on pre-foreclosures, although discounts on pre-foreclosures appear to be trending higher as short sales become more common.”

There are a couple of points to keep in mind as you look at these numbers:

• The statistics reflect a large area: the entire country or an entire state. They are not broken down by County or City.
• In California, for example, the number of distressed properties in the Inland Empire where there was a large amount of investment owned properties, was higher than in some of the coastal areas such as Laguna Beach.
• In areas where there was a high percentage of vacant, REO homes and those in foreclosure, the banks may have been more motivated to close the sale on the property so that their exposure in the area was lessened.
• It may have been more financially beneficial to use the government TARP money to make deals in these higher-risk areas.
• The number of REOs may decrease in future reports. Lenders have indicated that they are more inclined to work with a short-sale home for sale  situation than to take on all the added costs involved in an REO, such as attorney fees.
• Sellers of non-distressed properties are becoming more educated about their need to price their homes according to where the market is today, not what it was a couple of years ago. Many realize that they are competing with distressed properties for buyer’s money. So, keep your eyes on both “regular” and distressed properties. After all, a good price is a good price, no matter what the situation of the seller!

 Read the full report:

In another, related report, the top 50 cities were listed that had the greatest price reductions…Orange County Homes and Laguna Beach Real Estate were not on that list! On average the top 50 areas included saw average reductions from 7%-26%. The city with the most drastic reductions, which is really no surprise, was Detroit. No ocean view there!

One note to keep in mind as you look at price reductions. There are always 2 reasons for the price reductions. 1) Economically, the market has determined that the home is worth less than what seller has priced it at and 2) The seller decided to initially price the home at a higher rate than what the current market deemed appropriate – this is more a case of seller denial of current market conditions rather than an indication of overall market conditions.

It’s a very slight difference in perception, so just be sure that you don’t simply get caught up in the statistics and numbers. They can be used as a guide, but in the end, what you determine to be the perfect home and the perfect price is up to you.

As always, I invite you to allow me help you with any questions that you have. Those that have worked with me know that I’m a no B.S. straight shooter. If a home that you are interested in is overpriced – I will tell you. Similarly, if a great deal is out there I will enthusiastically share it with you!

Just Contact Me!

Until next time…

I wanted to share with you two things about the Laguna Beach Real Estate Market:

1) Information on 8 Home for Sale in Laguna Beach that have had significant price reductions since they were first listed. Many of these are priced under $1 Million which can be considered a fabulous deal for this coastal beach community in Orange County.

2) From our archives of information, we pulled up an article from 2008 discussing what real estate REO and Short Sale investors were looking for at that time…what they considered to be a bargain when buying a home for sale.

Price Reductions: If you would like to see details on any of these Laguna Beach Homes for Sale, click through to the website.

Discover What Some Real Estate Investors Consider to be a Bargain:

I have often mentioned that we are seeing prices in Laguna Beach that haven’t been seen since 2002 – this is good news for buyers. Add to that, historically low interest rates and you should keep your eyes open for your next home.

I ran across an interesting article that appeared in Investor’s Business Daily in July, 2008. The article was titled “Investors Hunt for Bank-Owned Property Bargains in Packs”. The article explained how investors were pooling their money to buy defaulted loans in bulk directly from the banks rather than trying to negotiate properties just one a time, a process which they felt was too pricey, and too slow.

The interesting thing was what these investors were looking for in regards to price rollbacks. It stated, “Some want only homes with prices cut to 2001 sales values…People who have cash positions now are going to do very well….”

So where are these investors looking? “Some investors say a key to this type of purchase is focusing on spots with strong rental markets. Some buy strictly in the Sun Belt – Texas, Florida, California – citing the region’s long-term desirability”

Location is always important in real estate. You may be able to get a lot of house in a place such as the Inland Empire; however, the better value may be near the coast.

In the past, the entry level cost of a home in this area has pushed people further inland for a home purchase. What was true in the past may not be true today if you are paying attention to the prices.

Keep your eyes open for your opportunity and if our team can be of assistance to you, give us a call.

Are you sorry that you missed the $8000 Tax Credit? Well, it’s still possible for you to save much more money with  Laguna Beach Homes for Sale.  As reported by Informa Research Services, interest rates have fallen since the contract deadline of April 30^th set for the government’s tax credit.  Money saved by lower mortgage payments over the life of the loan could be substantial.

For example, the average interest rate in the Month of April, prior to the deadline, was 5.34%. A borrower with a 30 year fixed rate on a $280,000 mortgage would pay $1561.82 per month. If that same borrower were to purchase in May with an average interest rate of 4.625%, that payment would be $1439.59 per month. This is an annual savings of $1467 which over 30 years result in savings of over $44,000. That’s quite a bundle!

“In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” said Lawrence Yun, chief economist for the National Association of Realtors.

Borrowers who wanted to take advantage of the credit have now purchased. Some describe these as “borrowed buyers” who would have normally purchased over the course of the summer months, concentrating buying activity into a set amount of time. This concentration resulted in an increase of 30% in home sales for the month of March.

For now, with the interest rates as low as they are, there is still a good incentive to purchase which will soften the landing for the tax credit expiration. And there are Laguna Beach Homes for Sale which could become great values with favorable prices and low interest rates.

However, there is still the question of that “shadow inventory”, the millions of foreclosures that need to be sold but haven’t yet been listed. That number could be as high as 4.5 million homes owned by banks and individuals that are waiting for the right time to enter the market.

When they do, the normal supply and demand factors will come into play to determine price. As prices rise, inventory will increase which could drive the prices down as supply outpaces demand. As the inventory decreases, prices will creep up again until demand is met. This cycle could result in a sawtooth recovery of home prices – moving up and down until inventory is stabilized.

For buyers looking for a bottom in the market, it may be wise to watch for several dips and be ready to take advantage of the right home at the right price. As always, get your financial ducks in a row before you find the home of your dreams. If you are going to use bank financing, get preapproved now. It is always best to be ready so when that home you want enters the market, you will be able to act.

And for Laguna Beach Homes for Sale, you just may be able to find a home priced less than $1 million that could qualify for favorable financing. Imagine, investing and living a Laguna Beach Lifestyle!

Until next time…

The Federal Reserve is scheduled to end their debt purchase program on April 1 – April Fool’s Day, partly as the result of a fear of negative perception worldwide that the U.S. government is simply printing money in order to solve the mortgage crisis. Analysts believe that the Feds want to avoid the possibility of a sell-off of U.S. government bonds that could result if that perception became widely believed.  

Boston Fed President, Eric Rosengren said that he believes mortgage rates will rise about three-quarters of a percent to about 6 percent as a result. Things may be a little “wobbly” at first; however, there is an acknowledgment by Fed Vice Chairman Donald Kohn that “We are still in unchartered waters…We will need to be flexible and adjust as we gain experience.”

It is anticipated that the Fed is unlikely to step in again unless a renewed crisis occurs, such as a sudden and destabilizing rise in mortgage rates. There seems to be an indication that the Feds would like to move away from their reliance on unconventional policy measures.

In a policy statement issued after the Fed’s December meeting, the central bank reiterated plans to finalize the program by the end of March and was planning to continue to close down other emergency measures as scheduled.

Said Torsten Slok, senior economist at Deutsche Bank,” That was a fairly strong signal that they will not continue the purchases later on”.

Read the full story…

So, let’s take a look at what options are still currently available for folks interested in purchasing a home in the Orange County Real Estate Market in the next few months:

• Home prices that have been adjusted lower from their market peaks
• Low interest rates
• Tax Credits for both first time home buyers and existing homeowners
• Buyer protection programs offered by some banks and some Real Estate Groups, such as California Association of Realtors
• A large inventory of homes from which to choose – with many custom homes in the Laguna Beach Real Estate Market

Everyone seems to be in agreement that we need to get the inventory of distressed homes off the market before we see overall market recovery in prices. The question is, are you ready to be one of those new homebuyers that will benefit from the current market and the government incentives?

Take the time to review your personal financial situation, talk to your lender, and be certain that you are not missing a rare opportunity. Don’t be concerned if you are not quite ready to make that purchase, find out what you need to correct, improve, or save, in order to get yourself ready to purchase that home you’ve had your eye on.

Until next time…

A quick note about celebrities and real estate.

It was recently reported that actress Halle Berry listed her Beverly Hills home for $5 million. There is no story of woe in this selling…just possibly an example of a smart business decision.

Note that Berry purchased the home in 2001 for $2,275,000 and is now selling it – just 8 years later for $5,000,000…more than doubling her money….in this economy!

True, we don’t know what this home will finally sell for. However, take note that she is following a time tested wealth building plan. Purchase low, sell high. Following the “rule of 72” – this transaction puts her rate of return in the 9% range, doubling her investment in roughly 8 years.

Not bad.

So, what could you buy in Laguna Beach today for less than $ 2.5Million?

The answer is – lots! To see all Laguna Beach Home listings – Click Here.

Currently, there are approximately 128 properties listed in Laguna Beach priced between $1million and $2.5 million.

Could one of these homes be your opportunity to double your financial investment while you enjoy a lifestyle investment in Laguna Beach?

According to the California Association of Realtors, the First-time Buyers Housing Affordability Index for California stood at 67 percent in the second quarter of 2009 compared with 49 percent (revised) in the second quarter of 2008. For California condos, that number is 70 percent. For the County of Orange, it is 53 percent.

So what does this mean? The higher the percentage; the more affordable for a first time home buyer to purchase a house. What these numbers are telling us is that 67 percent of households in California can now afford to purchase a home. And for Orange County, 53 percent of households are able to purchase an entry-level home.

The second quarter of 2009 brought in the following stats:

• The median price of an entry-level home in California was $224,180;
• The estimated monthly payment, including tax and insurance, was $1330. This assumes a 10 percent down payment and an interest rate of 4.92 percent; if your terms are different, the payment will vary;
• The minimum household income needed to purchase an entry-level home in this price range was $39,930.

What is interesting to note is that the minimum qualifying income was lower than last year when it was reported that a person needed a household income of $60,460 to qualify for a loan on an entry-level home. Interest rates are still low, as they were last year; however, with the decrease in home prices in Orange County overall, first time homebuyers are still able to buy a home now at good terms and great prices. The median income for the State of California is $61,030.

You may be wondering how this relates to Aliso Viejo Homes, Laguna Niguel Homes and Dana Point Homes. These are the areas that we have seen a lot of activity in first time home sales with people buying a home, getting great deals. For the beginning of November, 2009 there are 23 homes actively listed for sale in these cities with a maximum price of $225,000. Most of these are condos; however, there are a couple of single family residences as well.

This is incredible!

Add to this the just announced extension of the tax credit and you should start to wonder why you are waiting to buy a house in Orange County! First time homebuyers and investors alike should be able to see some interesting opportunities.

Hey there!

It’s the end of another great week here in beautiful Laguna Beach! 

It seems that I continue to get the same question from my clients and friends, and that is: Should I Buy a House Now or Wait?

 While I don’t claim to hold a crystal ball, and cannot see the future of the economy,

I can give you the Top 5 reasons to buy a California home right now.  Consider

this as you enjoy your weekend and as always, feel free to call me with any of your

real estate questions!

The National Association of Realtors is running advertising right now asking the question, “Why are you sitting on the fence?” For the cynical out there, you may be thinking that this is a shameless way for the Real Estate industry to drum up business. After a few lean years real estate agents are hungry for a sale, you may think.

Well, while it may be true that some agents have dropped a few pounds and have had to tighten their belts just like everyone else, the good agents are keenly aware of the great deals that are out there. They are on the phone, sending emails, and educating their clients about what is happening in the industry and in the real estate market.

There are fantastic deals available, and the smart money is investing in these deals as a way to expand their wealth base and take advantage of the opportunities right now, while others are still sitting on the fence.

Is this the bottom of the real estate market? Well, nobody knows for certain, and pundits on both sides of the issue make a strong case for whether or not we have seen the bottom. While it’s interesting to hear what “they” have to say, at the end of the day it is your family’s financial well being and quality of life that should determine if you are ready to buy a home. Most often, the bottoms are not recognized until we are well on our way back up and many opportunities are missed.

Affordability: Across the nation for various reasons, prices have declined.  The counties that experienced the greatest increases in prices are now experiencing drops in prices which are starting to look like great buying opportunities.

Low Interest Rates: True, lending standards have tightened up; however, there are still loans to be made. Buyers are taking advantage of conforming and FHA loans where rates can still be found in the 5% interest range. With FHA financing available in the Orange County area, the increased loan limit of $729,750 is looking especially attractive. Even borrowers with a credit score as low as 580 can consider a home purchase in today’s market. It is best to talk to your lender or mortgage broker to get the most recent information on the loans available to you.

Government Incentives:  Don’t miss out on this one. Many homeowners have claimed that it is the $8000 tax credit offered for 2009 that prompted them to take the step into home ownership. This tax credit expires December 1, 2009 so don’t wait if you want to qualify for this benefit.

Mortgage Protection Programs: For those that may be concerned with the viability of their employment, there could be a program to assist with your mortgage payment if you become unemployed. The California Association of Realtors (C.A.R.) offers the Housing Affordability Fund Mortgage Protection Program for first time home buyers who lose their jobs due to layoffs. There has also been mention of some lenders that are offering similar programs so be sure to ask your loan specialist about this option. Also, another insurance program that has always been available is through disability insurance which applies if you become disabled. Be sure to check out all your insurance and “safety net” options so that you can weather out the storm of any unforeseen event.

Choosing to live the life you want in an area you choose: Do you love your neighborhood, your school district, your commute, your view, your community, the size and “feel” of your house? If you cannot answer with a strong “Yes!” to any of these questions, then now may be the perfect time to step up and live the life you’ve always dreamed of. For the coastal communities of Orange County and Laguna Beach, that means waking up to the smell of the ocean and cool ocean breezes; a year-long temperate climate; great restaurants, entertainment and schools; a short drive or walk to the beach to surf or sun. It’s a lifestyle choice…is it yours?

As always, feel free to request a Market Snapshot of the areas that interest you most!