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California - Especially Southern Cal and San Francisco - Dominate Many Housing Headlines

Three articles were big news this past month as California dominates profitability with 13 (count 'em), of the most profitable housing markets in the nation, according to local economist, Jonathan Lasner.  Another headline, "Southland Home Prices jump 11.4%", reflecting January's year over year gains from 2017 to 2018.  Two other articles are worth noting:  The Cost of Living, in terms of rent. Orange County posts an average rent of $1,871.  The median house payment based on an all time high median home cost of $700,000 for a home comes with an average monthly payment of $3,226.  

Figure half the home sales are below that figure, hence the definition of median, and you can easily see at the starter home end of the spectrum, your house payment could be lower than rent, or fairly close, and will for sure surpass when you add in the tax breaks still available for all homes $750,000 and under.  Are there murmurings at this point of a housing bubble?...Well, yes.  Not to b…
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Housing Numbers for Orange County January 2018

The total number of sales for Orange County for January, the last complete month available, was 3,129.  This number was 4.5% lower than January of 2017.  That figure, broken down, constitutes 1,708 single-family resale, 766 condos, and 655 new homes.  Overall prices were up 5.3% year over year for January.  Condo prices, however, spiked 11.1%, a reflection of demand in that specific market segment. The average house payment is 3,226.15.  The inventory is historically low with 3,774 homes listed, although that is an increase from the 3,707 of just 2 weeks ago, announcing the arrival of sellers for the spring selling season.  Homes over $1,000,000 comprise 46% of all listings, so very stiff competition in those upper price ranges.

Rent Spikes Keeping Pace With Home Appreciation

But this is not a good thing if you are a renter.  The increase year over year from December 2016 to 2017 was 5%.  Except, that's not equity in your pocket, as with your counterparts who bought last year; it's money out of your pocket that you will never see again.  Not only that, but rents are going to go up again this year--- while people who bought saw their equity grow, and their housing cost stay exactly fixed with their fixed rate loan, as it will remain for 30 years if they so choose.  Is buying a better way to build wealth than renting?  What do you think?

Interest Rates Will Rise

The only question is how much and how quickly.  Remember, we have a new Fed Chairman, and Mr. Powell, testifying before the House Financial Services Committee for the first time, suggested that the central bank could raise its key interest rate faster than anticipated.  Rates are at a 4 year high right now.  So it is a great time to talk to a lender and find out exactly what programs are out there that you may qualify for today.  There are always tweaks to loan programs and caveats to qualifying, so it is vital to get this step handled before you look for a home.  And talk to a real person, the internet is a maze of mysterious lenders and loan programs that seem to vanish right when you need them.

Something to Think Abou

A couple of ways to get the most from your home sale, according to Collateral Analytics, is to slightly under price the home, not only to start bidding wars over perceived value, but also to expose your home to more people via the Multiple Listing Service, who search in certain price ranges.  Also, don't go "For Sale By Owner" as statistically it is proven that they frequently under price their home and don't know how to negotiate for themselves.

Actual Numbers for Orange County Home Sales (Nov 2017)

At press time, we have numbers only through November 22 , sales were at 3,320 and the median price rose 6.2% to $699,000 with increases in 61 of the 83 zip codes in OC.  

There were 60 distressed listings, either short sales or foreclosures, up from the prior 2 weeks.  

We are still seeing very minor percentages of buyers using an ARM loan product, versus a fixed rate, just 17.2% down from the previous 2 months, but up from a year ago (11.8%), which is reflective of the several rate increases, modest though they were, that we did have.