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June 2017 Orange County Housing Numbers

The latest figures available at time of press, again from Corelogic, are through June 27th.  The total number of resale houses in Orange County was 2,430 (up slightly), 2.5%.  Condos came in at 1,017 (slightly off), 1.2%.  New homes, reflecting lack of product, saw sales of 387 (off a more significant 9.4%).  The median price for all homes was $695,000, pretty  flat, just a 0.2% rise.  

The average house payment continues to go up, coming in at $3,162.99, probably due more to lower down payments overall.  According to the KCM Blog, 60% of first time buyers have a down payment of less than 6%.

by Stacey Sloan
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3 Tips to Consider When Buying a Home in this Market

Tip 1 Be Prepared
Not in just the traditional ways such as being prequalified for a loan. Think beyond that.  Already know the schools, and make sure they are what you want for your family, check out the neighborhood, be aware of trains or busy streets.  Find out how long the home has been on the market, what the tax rate is for property taxes, and Mello Roos.  Make sure you go in with eyes completely open to repairs as much as possible and realistically what you can afford to fix.  

Tip 2 Think Strategically
Make your offer attractive to the seller, be flexible about escrow terms, such as length, or a rent back.  

Tip 3 Seek out the Ugly Ducklings
Don't be afraid to look at a home that has been sitting on the market for awhile.  True, the very finest homes, best locations, and upgrades, will generally sell quickly.  But a home that just needs a little TLC, or new landscaping or paint, can sometimes have very motivated sellers in them, waiting for a reasonable offers.  Don't be afr…

Interesting Interest Rates

Afraid of rates going up before you can buy?  Worry not.  Look at rates historically, during which several real estate booms occurred.  The following are average rates per decade.  

1970's -- 8.86% 
1980's -- 12.7%
1990's -- 8.12%
2000's -- 6.29%
2010-Present-- 3.98%

Despite What You May Hear, Homebuying Remains Important for Financial Health

NAR's most recent survey, entitled, National Housing Pulse Survey, shows that 84% of Americans either own, plan on owning, and believe in home ownership.  This is the highest it has been since 2007.  Millenials, although thrifty and living longer at home, do so to avoid throwing money away on rent, which produces no equity or tax advantage.  As reflected in the survey numbers, many plan to leapfrog into purchased home or condo, bypassing the apartment rental rite of passage.  Perhaps this is optimistic speculation, but this column would point out, many Baby Boomer parents with a ton of equity, who just may plan on helping the kiddos buy a home.  

by Stacey Sloan

2017 is Following the Predictions it was Given a Year Ago for Sales, Price & Inventory

Experts from both the California Association of Realtors, and the National Association of Realtors predicted that inventory would stay tight, sales would stay strong and appreciation would hover around 5%.  All of these predictions, have in fact, come to fruition.  There has been no real surge of sales, no further dip in inventory, and interest rates have remained attractive to would be buyers.  In fact, due to causal factors that appear currently in the real estate market, next year is likely to be about the same as this year.  
What factors would these be?  Namely buyer demand is unlikely to lessen, inventory may actually rise next year, creating a slight bump in year over year sales, interest rates are stable and unlikely to rise substantially, only incrementally, employment and wages should remain steady.  The only real crimp to it all is that builders are lacking.  This may put more stress on the aging boomers, who have been hesitant to put their primary home on the market.  

Median Home Price Hits All Time High For Orange County Amidst Still Heavy Demand And Low Inventory

It is open to debate whether homeowners are really staying put longer...or just putting off their retirement move as boomers contemplate when, where, and how to retire and move on to the next phase of their lives.  At the other end of the spectrum is some pretty convincing data that millenials really don't mind living at home longer, even marrying and living under the same roof, possibly remolding the look of a southern California family and harkening back to a different time when extended families were the norm and the nuclear family was just emerging post WWII as affordable housing hit the nation. 

Millennials--much molded by the Great Recession, are eager to save money first, before they buy, and incur as little debt as possible.  And many parents seem to agree, helping their kids get in a position to buy that So Cal home; but since we know how expensive they are, this is a project that will take a while to percolate.   All of this is a recipe for staying in homes longer.  Pa…

What Is Going on With Construction?

CoreLogic's chief economist, Frank Nothaft, broke down construction into the 4 "L's".  1)Lots --raw land is in significant shortage close to metro areas; so what little there is, causes prices to rise rapidly and creates zero lot lines and denser housing.  And cheaper land lying further out of course allows for more spacious and less expensive living but tries a metro area's infrastructure in many ways, namely traffic and pollution. 2) Labor--Many construction workers were displaced in the recession, and have already developed secondary careers outside of building.  Yes, there is a labor shortage.  3)Lumber--The more expensive it is, both to find, produce and transport, the more expensive the home.  4)Lending--Many small banks that provided different sources and credit lines are also out of business. 

We are much more cookie cutter lending these days.  Since folks don't always stay between the lines, contrasting lenders are sorely missed.
by Stacey Sloa…