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Why It’s a Good Time to Buy

Many of the recent market reports are reporting that the housing market is improving. Here are a few reasons to get into the market now!


1. The Government wants to help!  First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and loans are increasingly becoming more available. Plus the new California Mortgage protection plan offers 6 months assistance if you should lose your job. Call Mary for details!

 

2. Leverage your investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000. Market trends show real estate cycles are about 7 years. This is a long down cycle but when it comes back it may rise fast.


3. You have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that we will always have a need for additional housing! Even if the economy doesn’t recover as quickly as we would like there will be a lot of new families looking for homes.  Compare Rent versus Buy programs to see if it makes sense for you.  When interest rates get this low you can sometimes buy for about the same price per month!

 

4. Prices will go back up eventually! You could have instant equity!  In many parts of the country where foreclosures and short sales have driven down prices we are close to the bottom. If the market continues to improve the price of the home you buy right now could rise quickly.


5. Mortgage payment stays the same: As long as you get a fixed rate mortgage! This is the most advised today since adjustable loans have been detrimental to many homeowners. You want to make sure your monthly payment stays the same while everything else go up. Don’t forget the tax credit. Not only the first time buyers tax credit but the deduction you will take on your income tax every year for mortgage interest and taxes.


6. Home Sweet Home: Homeownership provides the kind of freedom, stability, and security that is attainable in few other ways. Wealth accumulation through homeownership is the key to financial independence and self-sufficiency. A home is worth more than money- there’s also the heart.
Most people would still rather own their own home!

New! California Mortgage Protection

This program just rolled out! Only for first time buyers who purchase between April 2, 2009 and December 31,2009. Please use the link below for more details!  

http://www.car.org/media/pdf/Beyondtheheadlines_040209.pdf

Sales Up in the West

Is the West leading the way back?  Latest report of the Pending Home Sales Index, a forward-looking indicator based on contracts signed in January, fell 7.7 percent to 80.4 from a downwardly revised reading of 87.1 in December, according to National Association of Realtors latest report. Every area is down except the WEST which is rising! As a realtor working in Orange County I can definitely see the surge which started right after Super Bowl Sunday!

 

Breakdown By Region

Here’s how the PHSI fared across the country:

·     Northeast: dropped 12.7 percent to 57.8 in January and is 19.7 percent below a year ago.

·     Midwest: declined 9.2 percent to 72.6 and is 13.8 percent below January 2008.

·     South: fell 11.9 percent to 82.2 in January and is 9.1 percent below a year ago.

·     West: rose 2.4 percent to 103.6 and is 13.5 percent higher than January 2008.

In conclusion if the West is leading the way we can certainly hope to see a turn around by spring or summer and it has obviously started here. History has shown that sales can go up even in times of high unemployment if affordability increases. Couple the increased sales with decreasing inventory and it time could be running out for the fence sitters. No one has a crystal ball but anyone who has studied OC real estate knows this area does not conform to the rest of the state or the rest of the country. If you have thinking about purchasing a home in Orange County it might be time to start getting serious. Call Mary at 949-275-6544 if you need any help or would like to discuss the current market conditions.

Increased demand? Multiple offers?

One of the Key Indicators of the rules of investing is supply and demand. Refer back to my previous blog in December!

DEMAND? Demand is surging!Some local Orange County areas have doubled their sales numbers compared to last year. Multiple offers are becoming common place and the surprising new development is how many offers are cash! If history repeats itself, and it usually does, when stock markets go down people look for someplace else to put their money. Combine this with the instability of banks right now and where can you put your money? Real estate has been a proven asset for the long term investor. It will not disappear and it can provide income! What more could you ask for!

SUPPLY? Supply of available homes for sale is decreasing. Several factors are contributing to this such as the moratoriums on foreclosure, sellers unwilling to sell in adverse market conditions, and banks are more willing to help troubled borrowers stay in their homes. Supply is at an average of 4 months in the low to mid price ranges.

Last week’s newly revealed stimulus plans haven’t even factored into the market yet. Impact is hard to predict but this is the basics as I understand them so far. More details will be revealed when the programs officially launch but here is how the President’s Economic Stimulus Plan for 2009 is shaping up so far!

Tax Credit - $8,000 tax credit for anybody that purchases a home and  is a “first time home buyer” technically anyone who has not owned a home in the prior three years.  This credit is good on any primary residencere from January 1st through the end of November, 2009.  Income limitations do apply and the tax creditt begins to phase out for two income families above $150,000 and individuals above $75,000.  Another requirement is to live in the home for two years.

Conventional Loan Limit - the conventional loan limit for high cost areas will increase for high cost areas to last year’s $729,750 level.  The limit had dropped to $625,500 on December 31, 2009.  This should restore buying activity in the $700,000 and $800,000 price range.

California New Home Tax Credit. In our newly signed California budget -finally!-there is a provision for a tax credit up to $10,000 good on the purchase on any new home-defined as never before lived in! No details as yet, and I am sure there will be some restrictions-there always are- but watch for news on this tax credit. Builders are already sitting out this maarket which is why we have the news reporting a decrease in builder starts. Frankly it seems like a good idea considering the amount of inventory that needs to be sold. Still this will definitely help home builders to clear out standing builder inventory which is stagnating and on their books! 

Have we hit bottom?

Yes, and NO! Depending on what statistics you are looking at. Annual home sales and most recently December sales numbers-are up! Projections based on these numbers predict that homes sales will jump 25%. However, Median prices may have a ways to go but could stabilize in the later half of 2009. Every market is local. Many areas of California are glutted with foreclosures and this will take some time for the market to obsorb. However, Southern Orange County and particularly Irvine and Newport Coast are not so plagued. We have had down turns before and I hate to admit I remember the days of government foreclosures boarded up tight as a drum to try and stem the damage from looting! So far, it seems we have avoided such things here in Orange County. California led the way to this housing bubble crash and it will lead the way out! If you watch state wide California or USA statistics you will not know what is happening here. We do not have a 2 year supply of homes. I would estimate more like 4 – 6 months and falling daily.

Remember that some of the great deals we are seeing today may not be here in 6 months. If you are looking for a HOME to spend 7-10 years in this is a great time to take advantage of the market and the prices we are seeing RIGHT NOW! Yes, there will still be homes for sale in 6 mos but we will then be in PEAK BUYING SEASON!  This can make a big difference for competition as it is the most popular time to move children into new school districts.

Ultimately, timing the market is not advisable and may not even be possible! If you find a home that meets your needs you might want to buy it! It most likely will not be available 6 mos from now!

Is the Scene Set?

Could we be in for a home buying surge? I am no economist and I find all the hugely varying perspectives very interesting. Remember to follow the simple of rules of investing to try to stay ahead of the crowd. If history in the OC has taught us anything it is to expect the unexpected. 

Track the Market: Every month, follow the five key indicators. Start logging them. Use a spreadsheet to chart them. One or two months doesn’t make a trend. Trends develop over the long term.. At this point you might want to look backwards!

So what are those five key indicators? One indicator alone does not make a trend or a decision to buy or sell. The key indicators to watch are:

·  Interest Rates. Rising interest rates have a depressing effect on real estate prices. Falling rates help generate demand. That helps prices go up.

·  Building Permits. When demand is strong, builders pull more building permits so they can build and sell homes. Builders reduce the number of permits when demand drops.

·  Home Sales. Simple principles of supply and demand affect home sales. When buyers buy prices rise. When buyers retreat so do prices.

 ·  Loan Defaults. Defaulting home owners are having job or money troubles or both. That signals a weakening economy.

 ·  Foreclosure Sales. Foreclosures signal even deeper consumer money troubles and a worsening economy. It also signals dropping home prices.

 

There are correlations to be found in any of our downturns and subsequent meteoric rises. Remember, when the stock market goes down investors look for some place else to put their money. Housing is fueled by supply and demand as well as interest rates. When interest rates go down-more people can afford to purchase a home and sales usually go up. When inventory goes down this generates increased demand. Currently many communities-such as Irvine-are experiencing decreasing inventory. Sales are up and fewer listings are replacing the sold homes. With the moratoriums on foreclosures there is no new supply of those either. Put this along with the scene being set by the government which is now putting in the original rescue plan!!!!- buying mortgage backed securities- this could lead to more available lending and a come back in our Orange County real estate! If you are thinking of buying get your loan approved and be ready to go! Every market is different and if you follow national trends you will not know what is going on in Orange County. This community has not experienced the blow that some areas in California and across the nation have. When the market does turn around it will not be reported until 4 months after is begins so be watching closely!

 

 

SHOULD I SELL NOW?

There have been many recent stories on television and in the paper talking about how many homes are for sale now, how it is taking longer to sell, and how some sellers are giving concessions to get their homes sold! And now we are officially declared in a recession!

Some sellers are considering waiting to sell their homes in belief that the housing market will improve. Many homes on the market are priced at 15-25% below the previous year and we are in a declining market. Yes, the market is definitely in the buyer’s favor right now. 

However, the  number of houses for sale had increased each year for four or five years, but for the first time inventory is declining…

As a seller it is tougher, but as a buyer you are more in the driver’s seat. Though you may not get quite a much for your current home, your next home will also be priced lower than it would be otherwise. This year was marked by foreclosures and short sales and the market has lost about 20-25% of value. While this means that sellers cannot expect as much for their homes as last year, it also means for sellers that are moving up – their future home will not cost as much as they expected. If you’re planning a move to a higher price range, it should actually be in your favor. Interest rates are  historically low and could go lower with some of the current fed plans! That’s another story yet to come!

If you are planning to move in the next 18 months, then you may want to consider moving now to take advantage of the low interest rates and current price reductions. Remember that taxes are also calculated on the price of the homes so lower prices could work considerably in your favor!

Currently in Irvine and Newport Coast inventory is declining and in some neighborhoods and price ranges there are actually very few homes for sale! If your home is in one of these neighborhoods it could be a good time to sell-Less competition!

If you would like a free list of homes for sale in the Irvine or Orange County area, would like more information about Irvine or any of the surrounding communities, or would like to be the first to know about hot new listings before other buyers do, then E-mail Mary Burke at MaryB@IrvineVillages.com  or give me a call at: 949-275-6544. I lookforward to hearing from you!

Welcome to my Irvine Blog

This is my first post in my new blog. My goal will be to keep you informed of real estate new relevant to the Irvine area!I hope you will find the writings here useful and informative and hopefully sometimes interesting! I will try and keep you informed of real estate new relevant to the Irvine area! Please visit often and leave a comment if you have one!

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