August 7, 2008

Reverse Suburban Migration?

It used to be that people would trade in their short commutes for a bigger house with a nice yard for their kids to play in. They’d prefer to spend an hour in the car everyday if it meant that their kids would have a safe neighborhood to ride their bikes around in and the family could have the house of their dreams (at the price they could afford).

Well, speaking of affordability, that long commute is getting less and less affordable. That dream house out in the suburbs is becoming less of a reality and more of a dream. It’s not just gas prices and inflation that are too blame. In Orange County, we have a distinct lack of reliable public transportation. Living up in Yorba Linda and commuting down to Irvine wouldn’t be such a problem if there was a rail line that whipped you right down.

Mary Ann Milbourn’s post on Lansner’s blog (”Long commute? Good-bye O.C.“) discusses these issues in the context of a recent release from RREEF Research. The release claims “A short automotive commute, a commute by public transport, and even a walking or bicycling commute has become more appealing. Thus, demand will increase for residential locations with good access to employment centers and will decrease for peripheral suburban bedroom communities that are poorly served by transit.” Milbourn ponders the question if this reverse suburban migration will pose a challenge for the OC in attracting residents in the future.

Milbourn describes a possible transportation-seeking phenomenon that may have already occurred: “Experts already have suggested that a tight rental market in North County may not just be due to cheaper apartments, but may also be evidence of people migrating closer to public transit and jobs in Los Angeles.”

A recent article in the L.A. Times by Paloma Esquive (”Busy bus route reveals a cross section of O.C.“) depicts the long commute on the packed (and getting more packed) 57 line. Esquive talks about potential solutions to ease the congestion: “At one time there were plans to replace the bus with light rail, but years of studies, turf wars and battles for funding made those efforts futile. In the end, the OCTA proposed a rapid bus system with fewer stops. The new buses should be ready in 2010, officials say.” More buses is better than nothing, but it still seems like a long way off for implementation for such a mediocre solution.

The San Diego Union Tribune ran an article (”Fuel for thought: Gas prices changing commuters’ attitudes“) in July about the changing behaviors of consumers with gas prices and a lack of a convenient and reliable public transportation service. “As a result, drivers here will have to learn more creative coping skills, from changing how they commute to possibly rethinking where they live.” The article noted that change in behavior has already been happening with changes in what cars are being purchased, according to car dealers interviewed. Also, “San Diego-area transit officials are reporting heavier bus and trolley ridership, as well as a near-record number of van pools.”

Will we see a mass exodus from our OC suburban areas? I would hope we would rather see some nice light rail lines put in.

August 5, 2008

Disputing Doti’s “case for a housing price bottom”

I actually hold a pretty high regard for Chapman University President James Doti. Not only does he run a prestigious private university, but he also has an extensive background in the study of business and economics… a man after my own heart really. This is why I was surprised when I read his guest column in the OC Register on Sunday in the Opinion section. The title was “A case for a housing price bottom: Demographic trends point to a shortage of homes during the next year” and gave a somewhat in-depth analysis and critique on the current state of the housing market, along with some market predictions.

I have to say that the title caught my eye and I was immediately doing one of those “What you talking about Willis?” faces. For being in so much trouble, how can we see a turnaround happening in a mere 12 months? So, I thought I better read the article and find out what exactly Mr. Doti is talking about.

Doti’s portrayal of dreary housing market and inflation costars the Feds as merely being a bystander and powerless against the recession. Instead, Doti puts all the cards in the hands of the housing market. He goes on to cite that housing affordability is back below 2003 levels, before the big bubble was getting going. He also hints at that prices will continue to go down even farther before turning around:

“As rational as home prices may seem now in light of median family income and overall affordability, there is a tendency in a downward cycle for housing prices to overshoot the mark. The likelihood of that occurring in this cycle will depend, in large part, on housing inventories and demographic trends.”

Doti also discounts the whole flood of inventory on the market… “Much ado is made of the 11-month supply of unsold homes currently on the area market. But this statistic is highly unreliable an often gives false signals about the future direction of home prices.” He claims there are a bunch of folks on the sidelines waiting for the beginning stages of recovery to jump in and buy, which would diminish this large supply.

Doti cites the homeowner vacancy rate as more reliable indicator. Since 2005, this rate has spiked sharply. There are currently about 880,000 vacant homes. So, who exactly is going to buy up all these homes? Doti believes it’ll be new families (or as Doti likes to call them “family formation age cohorts”).

Doti believes a conservative estimate for future housing needs is 1.7 million new dwelling units each year. And since, he claims, new developments have dwindled down, those 880,000 vacant homes will be gobbled up by this demand… allowing for the market recovery to begin.

Doti ends his piece with this poignant message to the Feds:

“This analysis suggests that U.S. housing prices, on average, are nearing a bottom and will soon be poised for a turnaround. No Draconian action by the Fed or any other branch of government will be needed for this to happen. Simple market forces will do the job quite nicely, thank you.

Rather, the Fed should focus its attention on doing the job it’s expected to do – namely, fight inflation and protect the integrity of the U.S. dollar.”

While, I have to admit that I really don’t dispute any of of Doti’s theories or analysis that he presents in his article, as they are presented as individual, stand-alone pieces. However, add them up and with the title “A case for a housing price bottom: Demographic trends point to a shortage of housing next year” and you’ve got me saying “Say what?!”

First of all, we’re already in a recession. We’ve even seen the beginning of layoff mania. The state just finished a bunch of layoffs and many other employees have had their wages reduced to minimum wage. Not only does this affect these employees, it affects the entire state because we all immediately start to worry about our own state of affairs. So, even if we can afford a house now, who says we’re going to run out and buy one even if there are beginning signs of a recovery? Not many will want to make long-lasting financial decisions with incomes that may not be so long-lasting.

Second, where do you think all the vacancies came from? A lot are from foreclosures where families lost their homes. Their credit is now destroyed, and, if they are lucky, they are renting. These people are off the market for awhile, so strike them from your list of potential buyers.

Third, who exactly can qualify for a loan anymore? Forget these foreclosure folks, I’m talking about these regular first or second time buyers with a 20% down payment. Even this crowd is finding it painful to qualify for a loan. If they’ve got the money together, then the appraisal doesn’t come out right… there’s a list a mile long of excuses but the bottom line is getting a loan is not easy.

Now, I don’t doubt that Orange County’s population is going to continue to grow. Hey, I’m helping out with a baby due in December! However, I do doubt the ability of folks to buy these homes. Yes, they’ll be more renters and need, but no, there won’t be more families able to buy. Take us, for example, we still have a condo in San Diego (of course, we’re upside down with it). We’re renting up here until we can get that mortgage paid down to where rent equals our mortgage payments. Forget saving for a down payment… with a baby on the way, rent here, and mortgage payment down there, we’re just making ends meet. We’ll need a full market recovery before we can do anything.

In my mind, the only way these vacancies can be eaten up fast is for smart investors to get in and turn these homes/condos into rentals. Rental demand will certainly go up with Dotti’s population calculations. However, this projected housing shortage is, in my mind, no “case for a housing price bottom.”

July 29, 2008

Orange: Big Price Drops

Orange sellers are taking stock and deciding it’s time to shed some dollars from their price. Check out all these reductions in Orange. However, even after these reductions, I have to say that many of these properties are still a little overpriced, in my mind. If had to pick a couple that I did think were a good value it would be La Veta Park, Olympia Way, and Quail Lane.

611 S La Veta Park Cir #130, Orange 92868; 1 bed/2 bath; 600 sq ft condo; Reduced to $141,900 (original list price was $157,900) [down $16,000 or 10.1%]

2295 N Tustin St #71, Orange 92865; 2 bed/1 bath; 891 sq ft condo; Reduced to $214,900 (original list price was $239,900) [down $25,000 or 10.4%]

621 W Fletcher Ave #6, Orange 92865; 2 bed/3 bath; 1,540 sq ft condo; Reduced to $360,000 (original list price was $410,000) [down $50,000 or 12.2%]

211 N Olympia Way, Orange 92869; 3 bed/2 bath; 1,693 sq ft house; Reduced from original price of $410,000 to $369,000 [down $41,000 or 10.0%]

960 N Handy St, Orange 92867; 3 bed/2 bath; 1,600 sq ft house; Reduced to $424,900 (original list price was $514,999) [down $90,099 or 17.5%]

426 N Esplanade St, Orange 92869; 3 bed/3 bath; 1,866 sq ft house; Reduced from original price of $455,000 to $425,000 [down $30,000 or 6.6%]

522 N Rancho Santiago Blvd, Orange 92869; 4 bed/2 bath; 1,695 sq ft house; Reduced from original list price of $499,900 to $449,900 [down $50,000 or 10.0%]

2215 E Martha Ave, Orange 92867; 3 bed/2 bath; 1,630 sq ft house; Reduced to $451,000 (original list price was $650,000) [down $199,000 or 30.6%]

2761 N Kennedy St , Orange 92865; 4 bed/3 bath; 2,316 sq ft house; Reduced to $479,000 (original list price was $730,000) [down $251,000 or 34.4%]

3411 E Vine Ave, Orange 92869; 5 bed/2 bath; 1,864 sq ft house; Reduced to $499,999 (original list price was $650,000) [down $150,001 or 23.1%]

121 N Quail Ln, Orange 92869; 4 bed/3 bath; 2,577 sq ft house; Reduced from original price of $639,900 to $599,900 [down $40,000 or 6.3%]

July 28, 2008

Who’s got the lower IQ? Wells Fargo or these owners?

Interested in 100% financing? Well, read on for a how-to guide on “getting 100% financing in this market.”

Take a trip with me into the heart of Santa Ana… Get off Interstate 5 at First Street and head west. Make a left on South Flower Street. Go about five blocks and then make a right on West Camile Street. You have arrived… welcome to the street of housing woes, where bad judgment meets financial misfortune. I’ve posted about this little street numerous times before (Camile St in Santa Ana - A Warning Bell of Things to Come? and Sold Homes on Santa Ana’s Streets of Woes come to mind). Last year, the OC Register claimed that the 900 block of Camile Street had one of the highest rates of subprime mortgages in the nation. The result was an onslaught of foreclosures and nice people losing their homes.

Sounds pretty dismal, huh? Sounds like not many homes would be selling here… unless they are super cheap distressed properties, huh? Well, not so! Would you believe Mario Gomez and his family just bought a three-bedroom for $625,000? Would you believe Wells Fargo gave them a loan for it? If not, then you clearly have not read OC Register columnist John Gittelsohn’s article from Friday (”$625,000 house on a street wrecked by subprime loans?“).

Per the article, according to loan documents, the purchase price was $625,000, with $125,000 down and $500,000 financed by Wells Fargo. Well, according to Gomez, no money was put down, his loan is 100% financed, and the purchase price was only supposed to be $500,000. He says someone else, not him, paid the $125,000.

I have a hard time picturing some masked super hero floating around paying down people’s loans. If he is out there, please send him my way! So, if not a super hero, who was it? Well, while there’s no paper trail, it’s pretty clear, to me, who was the culprit. Let’s hear about what Gittelsohn has to the house and the seller Sergio Praslin, manager of Asset Disposition Venture Capital LLC:

“A year ago, the house at 920 W. Camile St. in Santa Ana was bank-owned, deserted and tagged with gang graffiti, a symbol of how the subprime lending bonanza had blighted a city block.

In October, the house sold at auction for $304,500, little more than half what a buyer using 100-percent subprime financing paid in 2006.

Today, 920 W. Camile has been renovated, repainted and floored with faux marble.”

Add to the flip job, the fact that Praslin said to Gomez, “No money, no problem,” as well as promising an extra $30,000 and a 52-inch LCD TV, you’ve got something suspicious. Gittelsohn talks about how Praslin was able to get his buyer:

“For the seller, the advantage of paying the down payment was getting Wells Fargo to cover the $500,000 mortgage – as much or more than the house would fetch on the open market.”

So, who made the bigger blunder here, Gomez or Wells Fargo? Gomez, who now has buyers’ remorse and never did get his 52-inch LCD TV, seems to have not fully understood what was happening. He just says, “We wanted a place with three bedrooms.” Well, for three bedrooms, he could have gotten this one just down the street for only $245,000. Now, I don’t know if it comes with a 52-inch TV, but I would think you’d be saving enough to be able to go out and buy your own. I just can’t believe there are buyers out there so clueless to what’s happening with the housing market… and so trusting. Along with the $30,000 to pay the first three mortgage payments, Gomez also thought Praslin would cover the property taxes and insurance (about $7k per year). As if the wheeling and dealing behavior from the seller wasn’t enough to raise a red flag, what about when Gomez went to sign escrow papers and saw the purchase price of $625,000 and that “someone” had paid a $125,000 down payment. This wasn’t odd to him? He saw that it was wrong, but still signed the papers. Now, he’s stuck with a loan for $500,000 ($2,760 monthly payment fixed for 10 years). God forbid he or his wife lose one of their jobs, they’ll surely be headed for foreclosure.

Now, let’s not forget about Wells Fargo. A big bank who would seem to have their act together. They won’t refinance me and I’m not even trying to buy a house for $625,000 worth $250,000. Just think, in October the very same house was valued at $304,500. Less than a year later, the value doubles while surrounding houses drop. Unless they painted the walls with gold or something, I can’t believe the sellers poured over $300,000 into upgrades into this place. So, why did they give these two a loan? Were they duped into believing that a 20% down payment showed the owners wouldn’t take a hike later? Was their appraiser totally off? Were they just plain blind? I mean, anyone with an internet connection can pull comps on that street and clearly see they have no business financing a house for $625,000 here.

Very, very strange indeed.

July 28, 2008

Rent Hikes? Shouldn’t it be “Rent Drops”?

Sometimes I’m told I can overanalyze things, just ask my poor, sweet husband. I’ll analyze something until I just straight confuse myself. So, maybe you can help set me straight on this one…

Last week, I read Jon Lansner’s post “North County sees biggest rent hikes” talking about rent levels in Orange County. According to Real Facts (measuring “asking rent”), Stanton and Fullerton recently had the biggest annualized rent hikes. Following these cities were all other OC cities with some sort of rent hike, except for only three cities that had rent declines (Rancho Santa Margarita, Placentia, and Newport Beach). So, the majority of OC cities saw rent increases.

When I first read this, I was really surprised. We’ve got more and more people unable to sell their homes. Many have taken them off the market and just turned them into rental properties. A job relocation, growing family, divorce, you name it, could force people out of their homes. But, in this market, who wants to sell? In 2006, we moved up here and have been leasing out our San Diego condo ever since… even then we didn’t want to take a hit and sell. So, with more and more people following in our footsteps, wouldn’t we be seeing a drop in rent prices. Wouldn’t there be an influx of rental units saturating the rental market, increasing supply, and lowering rents? Now, this my right brain speaking, because I’m basing my theory mainly on personal experience, observation, and feeling.

Okay, let’s hear from my left brain, the logical side that bases things on real data… the side that is on vacation a lot since I’ve been pregnant (again, my poor, sweet husband). We have record numbers of foreclosures and lowest home prices in years. In addition, we have an outbreak of banks going belly up because of their crazy, unregulated lending practices. The Mortgage Lender Implode-O-Meter currently reads that 269 major U.S. lending operations have “imploded” since late 2006. So, now, my left brain says to me, with so many people losing their homes to foreclosure (unable to pay their adjusted mortgage payments, needed to move and couldn’t sell, or just plain gave up on the market), there’s less homes available for occupancy (stuck in foreclosure/REO-sale limbo) and yet more people are on the streets looking to rent. This would actually cause an increase in rents (increased demand, decreased supply).

However, the decreased supply may not be true. A few years back, developers hopped on the condo conversion band wagon. This was the hot ticket for a hot real estate market. Get in, flip ‘em, and get out… with a huge chunk of change. Well, some were a little late to the party and now find themselves with vacant “unsellable” units or in the middle of building units that are slated to go nowhere. Developers are looking to make these units into rentals instead. One development in Boca Raton, Florida may even be forcing current owners out to turn the 75% vacant buildings into rentals. Depending on how many of these units have been put up for rent, supply may be up enough to mitigate any increase to demand.

Ok, one more thing…. inflation. Inflation tables do show that inflation is on the rise. And, it has increased, in the past year, about how much the middle cities increased in their rents. So, maybe that’s all it is… plain old inflation. Sounds too easy. And, with food and gas being more expensive, wouldn’t that make people willing to spend less on housing?

I feel like I’m going in circles over this issue. Enough to make me dizzy. Chime in and help me sort this one out… what do you think?

July 25, 2008

Home Staging Revisted — Does it really help?

After continued interest in my post about home staging back in November 2007 (”Everyone’s Doing It: Home Staging“), I’ve decided to revisit the idea of home staging. No one can deny that a home that looks nice and where buyers get that “I want to live here!” feeling makes the house more desirable to buyers than a home that is dirty with clutter taking over the house. Just think of the last model home you went to (I’m always a sucker for these).

I admit that at first I was skeptical, but now I’ve literally become a cheerleader for the idea and the industry. And now, I see that HGTV is even hopping on the bandwagon with their new reality TV show “The Stagers.” According to the network, “The Stagers goes inside the hectic world of professional home stagers as they rush to transform a problem house into a showroom — often in just a few days. Amid the tantrums and turmoil are tips and touch-up ideas you can put to work in your own home.” The show looks like it’ll feature some arrogant, in-your-face designers, but, you know what? They get the job done and its looks great.

The show hasn’t even started yet and it’s got me hooked. The first episode airs this Sunday (July 27th) and is called “Clutter Buster.” Attention all sellers, you should watch this. My biggest pet peeve is the amount of clutter sellers leave around when trying to showcase their home.

Before & After (per HGTV’s “The Stagers“)

Anyway, I digress (don’t get me talking about my design shows!). Let’s talk facts and figures. According to the Accredited Stagging Professionals (ASP), 94% of ASP staged homes sell on average in one month or less. From 2007, on average, homes that were not staged sold in 165 days while homes that were staged sold in 33 days. What’s more is the return that is said to be realized on the staging investment. ASP posted the results of HomeGain’s 2007 national survey, based on the ten areas of home improvement identified by real estate agents in HomeGain’s original survey in 2003. They are listed from the highest to lowest returns on investment, showing that the home staging investments have the best return for each dollar spent.

(Courtesy homestaging.com)

Now, of course all of these statistics are from home staging organizations. They’ve collected and massaged the data to help them advertise. However, the logic behind their numbers seem credible with the investments. As for time to sell, I’m more skeptical. There’s so many factors that go into selling a home beside how it looks… like, eh-hem, price!

That being said, I think there’s tremendous value in having your home staged to sell. Just peruse the posts on Home Staging Blog. There are tips o’plenty to help you stage yourself or at least get glimpse to the inside world of staging. One post worth taking a look at is “Staging a Home for Sale vs. Staging a Home for Life Part V-How Much Furniture Do You Really Need?” It explores how much furniture you should have when selling your house… hint, it’s not how much you have now!

July 23, 2008

Santa Ana: Opening a bank now? Something’s not right.

The Orange Juice Blog had a post yesterday that I just love the title of “Was this a good time to open the Santa Ana Business Bank?” The author Art Pedroza wonders why when banks are going down, there’s a group opening a new bank in Santa Ana. And that’s Santa Ana! The OC city with probably the most despair from the housing market crash. According to the Santa Ana Business Bank, they’re legit and ready to serve Santa Ana businesses:

“Santa Ana Business Bank was organized by a group of local leaders. Our founders include entrepreneurs and professionals from many fields including real estate, legal, health, and accounting. Our Board of Directors is composed of prominent civic and business leaders and our management team is highly experienced and committed to operational efficiency. . .

We take great pride in calling Santa Ana home and opening our doors for business. We are ready to help your business grow.”

However, in a time when Santa Ana’s economy is anything but booming, you have to question how this makes sense. And, after reading Pedroza’s commentary, I’m a little suspicious of the whole operation. Is it really just a place to put the public’s money and make a quick buck? I’m outraged at the thought of other’s capitalizing on the public’s money this way. Pedroza writes:

“I wonder if they were planning on putting public bond money in their bank? Amezcua was the co-chair for Measure G, the latest property tax increase from the crooked folks at the Santa Ana Unified School District. He is running his daughter Valerie for the SAUSD school board in November. And I am told that the SAUSD will be putting yet another bond on the ballot in November too.

Amezcua himself will be pimping for two new bond measures being put on the ballot by the Rancho Santiago Community College District, where he serves as a board member. They passed a bond a few years ago but Al and company spent most of the money on the Santiago campus and the Carona Sheriff Training Facility - they ignored Santa Ana College for the most part. Then they didn’t fire the Santa Ana College president after she got caught building a secret shower in her office and after she got caught having fire alarms turned off rather than fixing the fire alarm system.

But I digress. The Santa Ana City Clowncil is also going after millions of dollars in OCTA funding for a streetcar system that will link the lame Santa Ana downtown with the lame Garden Grove downtown. And where will that money be kept? Hmmm…. Sure enough the guy whose engineering company is involved with the streetcar plan, George Pla, is also a board member of the Santa Ana Business Bank.

What gives? Are these people really that confident that they can pull the wool over everyone’s eyes? Or are they prototypical dumb criminals who will eventually get caught red-handed? Who knows? But we do know this - right now is a bad time to be in the banking business.”

Seems like enough corruption ready to be scripted into a made-for-TV movie. What Santa Ana really needs is less of these hooligans and more leaders that actually care about the welfare of the City and its citizens (not their pocketbooks!).

July 21, 2008

Tustin Village Townhomes: First-Time Buyers’ Dream?

Tustin Village is centrally located just west of the 55 freeway and just south of the 5 freeway. The complex has two and three bedroom townhomes with two community pools, club house, and parks. The two bedrooms are popular with 1,080 sq ft and 1.5 baths. Like most townhomes, the bedrooms are upstairs. There are currently eight of these two bedroom models on the market. They vary in price from $149,000 to $195,000 ($149,000, $162,000, $169,900, $169,900, $170,000, $179,500, $180,000, $195,000).

Nearly all of the listings advertise these properties as “Perfect townhouse for first time buyers” or “Great investment property or First time buyer.” And what’s this “code” for? Not the nicest area and not the nicest complex, but, hey, good for you if you don’t plan on being there long or you plan on renting it out. Regardless, these units do offer families alternatives to the single families home and the ability to own their own place.

There have been several recent sales for this two-bedroom model. The overall trend follows the OC real estate market, prices continuing to fall. Makes you wonder what the sellers with their townhome listed at $195,000 is thinking. These places should be selling for $150,000 (or below) in July.

Sold Stats:

15500 Tustin Village Way #40, Tustin 92780; Sold for $140,636 on June 16, 2008

15500 Tustin Village Way #7 , Tustin 92780; Sold for $166,500 on June 13, 2008

15500 Tustin Village Way #65, Tustin 92780; Sold for $175,111 on May 29, 2008

15500 Tustin Village Way #19, Tustin 92780; Sold for $299,000 on May 9, 2008

15500 Tustin Village Way #13, Tustin 92780; Sold for $300,000 on April 29, 2008

15500 Tustin Village Way #17, Tustin 92780; Sold for $274,287 on April 18, 2008

July 17, 2008

Santa Ana: Third Time’s a Charm for Flipping

In perusing the sold stats in Santa Ana, I came across a curious one that closed in late June. Three bedrooms, one bath, and only 957 square feet, 1415 South Shelton Street makes for a small house. However, the house does sit on a lot of a little more than 6,700 square feet. So, what makes this little house sell when there are so many other houses for sale in Santa Ana?

(Blue house flag marks 1415 S Shelton - to the right of the blue roof.)

From the stats, I’m thinking this house was bought after foreclosing in December 2005. The buyers only paid $24,118 for it. This fact combined with all the work done on the place leads me to believe that this house was a flip. New carpeting, new window, new fixtures, and new floors were put in. The kitchen was remodeled with granite countertops, dishwashwer, tiled floor, and new cabinets. The bathroom also got a facelift with granite countertops, new sink, new cabinet, and new floors. And, of course, the entire inside was freshly painted. That’s a lot of work… sounds like it took them a year and half, too.

I bet when these “investors” bought the place, they thought they could knock out the work and get it sold for twenty times their purchase price. In early 2006, the market was just beginning it’s big slow down. Well, fast forward to 2007 and 2008 and you’ve got one mess of a market. However, these flippers still have a success story. With their purchase price, renovation costs, and mortgage costs, I’m guessing they still made out on this deal with a pretty penny.

So, back to the question about how did this small house sell in this market? Well, price was huge. Before selling, it was down to $339,000. Nearby homes (of similar size) are well over that ($575,000, $475,000, $429,621, and $350,000). The house did sell for $320,000 (6% below asking) in late June. The price combined with renovations made this house more desirable over its competitors. While the end tells a success story, it is clear there was a rocky road to get there.

The home was listed before I started blogging… over year ago. I know that at one point it was at $479,000 last summer. Like most homes that are on the market for awhile, there are a lot of growing pains in coming to terms with the market and/or finding the right real estate agent. Many times, I see people pull their house off the market and list it with a new agent thinking it was the agent that was slacking on the job. Well, more often than not, it’s the sellers inability to understand their house is priced too high, not the agent’s sales force. The bottom line is that price and condition of the home sell homes, not an agent finding the right buyer. Aside from going from one agent to another, it also looks like these sellers had a couple offers that fell through. First in March and then again in May, they were in escrow. Was it the banks that made the deal fall through? Bad inspection? We’ll never know. However, for these flippers that stuck with it and finally lowered their price to a real attractive number to buyers (a requirement in this market!), the third time proved to be the charm.

Listing History:

Date N/A: Listed or reduced to $479,000

Aug 16, 2007: Reduced to $469,000

Feb 6, 2008: Listed again for $399,900

Mar 9, 2008: Reduced to $369,900

Mar 19, 2008: Listed again for $349,900

Mar 22, 2008: Increased to $359,900

Mar 27, 2008: Offer accepted, in escrow

Apr 20, 2008: Back on market, reduced to $349,000

Date N/A: Reduced to $339,000

May 10, 2008: Another offer accepted, in escrow

May 24, 2008: Back on market

June 2, 2008: Yet another offer accepted, in escrow

June 26, 2008: Closed escrow… SOLD!

July 16, 2008

Orange: Real Estate Market Report

It’s time for a check-up on the Orange real estate market. Please undress, put on this gown, and wait on the table… the doctor will be right in.

The last “physical” we did on the Orange market was back on April 29th. At that time, Orange did not receive a clean bill of health, but rather results showed a drop in median home prices with homes taking longer to sell. Not quite the “six months to live” scenario, but not good.

How is Orange fairing now? Well, the diagnosis is still not good. The median single family home price continues to fall, to a new low of $569,882. This is down 6% from $606,957 in late April and down 12% from $645,403 in late February. For a real shocker, just look at what the median price was in early January, $672,843. The current median price is now down 15% from the beginning of the year. Where will it be at the end of the year? There’s always hope that things will pick up in summer, but, if they do, it’s likely they’ll go down again in late fall and winter.

The number of homes on the market are now 595 homes (up from 574 in late April, 559 in late February, and 582 in early January). The number of homes on the market is really subjective without any kind of measure for demand. Luckily, Altos Research also measures demand in its market action index. Currently, the market action index is at 15.41. Anything below 30 shows a buyer’s market… needless to say, the Orange market is pretty desperate and buyer’s can have their way with sellers.

(Data and graphs courtesy Altos Research.)

Another test to run to see how the Orange market is fairing is to look at how long homes are sitting on the market. The average property in has been on the market for about 99 days. This number is about the same as it has been since the beginning of the year: 110 days in late April, 99 days in February, and 109 days in January. Compared to the crazy mania days (”pre-bubble burst”), it seems like three months is a long time to sell. However, after looking through the inventory, it actually surprises me. I would expect it to be longer, just look that the properties below that have been listed “forever.”

Properties Just Listed

4415 W Stay Ct, Orange 92868; 3 bed/2 bath house; 1,178 sq ft; $400,000

3431 E Vine Ave, Orange 92869; 3 bed/2 bath house; 1,866 sq ft; $400,000

3010 N Butterfield Rd, Orange 92865; 3 bed/2 bath house; 1,898 sq ft; $580,000

Properties Listed for “Seems like forever”

1245 East Palm Ave, Orange 92866; 3 bed/2 bath house; 1,954 sq ft; $699,900; 839 days on the market

830 East Hoover Ave, Orange 92867; 3 bed/1.75 bath house; 1,640 sq ft; $650,000; 760 days on the market

417 East Jacaranda Ave, Orange 92867; 3 bed/2 bath house; 1,358 sq ft; $499,900; 594 days on the market