Sylvia Walker
Recent posts
August 3, 2008
Today’s post is a continuation of our tour of the recently passed housing bill. Up next, taxes and the Housing and Economic Recovery Act of 2008.
Here is a summary of how the Housing and Economic Recovery Act of 2008 will change the federal tax laws:
- Provides $15 billion in housing tax breaks.
- Gives first-time homebuyers a tax credit of $7,500. This only applies to those who brought or will buy the home between last April through the end of next June (April 1, 2008 to July 1, 2009). Also, note that the details of this bill are still being sorted out, but one of the requirements might be that the homebuyer must stay in the home for 15 years (source: Dave Hardin, founder of Covenant Mortgage, on Mortgage Matters).
- Allows those who don’t itemize to claim a housing deduction on their 2008 federal income taxes: $500 for individuals and $1000 for joint filers. Approximately 40% of homeowners do not currently itemize. Those that fall in this category are mostly those with less expensive home and those who have paid-off or nearly paid-off their home loans; retirees often fit in this category. This is a one year only deal. (source: Martin Vaughan, The Wall Street Journal)
- Includes low-income housing tax breaks.
- Increases by $11 billion the municipal bond authority of states. This can be used for:
- low-interest loans to first-time homebuyers
- construction of low-income housing
- refinancing of subprime loans
Additional sources: The Associated Press and The Orange County Register
For more on this tour of the housing bill, see previous posts “Fannie, Freddie and the Housing Bill” and “The FHA and the Housing Bill.“
Next week: A final review of components in the Housing and Economic Recovery Act of 2008
August 2, 2008
In yesterday’s post, I reviewed how the 2008 housing bill will affect the operation of Fannie Mae and Freddie Mac. Today we’ll take a look at what this bill will mean in the operation of the FHA .
Here is a summary of how the Housing and Economic Recovery Act of 2008 will change the way the FHA (Federal Housing Administration) will operate:
- Gives the FHA the authority to lend an extra $300 billion to homeowners who are in economic difficulty. This is expected to help approximately 400 homeowners by providing them with affordable fixed-rate loans. (However, approximately 2.8M homeowners are expected to go into foreclosure by the end of 2009.) Any losses will be covered by the affordable housing account which was also created by this bill. The affordable housing account will be funded by profits from Fannie Mae and Freddie Mac.
- To participate in these FHA loans, lenders will have to agree to lower the amount that homeowners owe on their home loans.
- Homeowners will qualify if their mortgage-debt to income ratio is greater than 31%.
- This refinanced loan cannot be larger than 90% of the home’s value.
- Borrows will be required to prove that they can repay the loan.
- This program starts October 1, but anyone interested is encouraged to start the process now.
- Allows the FHA to back riskier loans. Another way of saying this is that this bill increases the amount of affordable housing that the FHA can help to provide to the workforce and/or poor. Both of these statements say the same thing, but they also created a different picture of who this bill will help. Take your pick on which one you think is the most accurate.
- Allows the FHA to insure (and Fannie and Freddie to buy) loans up to $625,000 in high-priced areas such as Orange County. Also, allows the FHA to insure loans up to 15% higher than the median home price in some cities. This is a permanent change.
- Bans the FHA from charging premiums to riskier borrowers; this starts on October 1 and lasts for one year.
Also, bans the FHA from insuring loans in which the seller pays the buyer’s down payment; this ban starts on October 1.
Tomorrow’s post: More housing bill details, including tax breaks offered in the Housing and Economic Recovery Act of 2008
August 1, 2008
The Housing and Economic Recovery Act of 2008 was passed by Congress and signed by President Bush. In other words, it is now the law of the land. Some are happy about this; some are not so happy about this. Many have mixed feelings (see Brian’s post for some of these opinions.) But whatever you feel about this bill, it is going to be referred to often in the coming months. And here at Redfin we will be writing about what effect, good or bad, this bill has on the housing market and the economy-at-large. That said, having a working knowledge of what is in the bill is useful.
Here is a summary of how the Housing and Economic Recovery Act of 2008 will change the way Fannie Mae and Freddie Mac operate:
- Permanently increases the mortgage loan amount that Fannie Mae and Freddie Mac can provide for homes (and FHA can insure) in high-priced areas, such as Orange County, to $625,000; also, allows for buying and insuring loans 15% higher than the median home price in some cities
- Provides new controls and a new regulator for Fannie and Freddie. For example, the regulator will be able to approve the pay packages for Fannie and Freddie execs, which is currently over $1M for some of the top execs at these companies.
- Allows the Treasury Department to temporarily (until December 31,2009) lend money to or buy securities from Fannie and Freddie. The reasoning for this was to prevent the collapse of the these two organizations. The reasoning continues that these organizations currently own or back a near majority of U.S. home loans and, therefore, the collapse of these either of these two would lead to even harsher economic conditions than we are currently experiencing.
- Creates an affordable rental housing fund that will be funded from the profits of Fannie and Freddie
Tomorrow: The Housing and Economic Recovery Act of 2008 and changes to the FHA
July 27, 2008
Note: Last week we took our monthly look at housing numbers for the Costa Mesa market. This week we’ll look at the Irvine housing market numbers. The Costa Mesa numbers, which describe a market in which prices continue to decline, tell a different story than what the Irvine numbers tell us about the condition of the housing market in Orange County. To complicate matters further, Irvine detached-only stats and Irvine’s detached+condo stats are also telling us different stories.
This month’s detached-home-only stats for Irvine are telling a different story than the Irvine condo+detached home stats are telling us. The condo+detached stats described a market that is in a holding pattern. However, the detached-only stats describe a market that, although still very much a buyers’ market, is moving in a direction that is more encouraging for sellers. The only number that didn’t move in a direction that is more favorable to the seller was the number of days that Irvine homes stayed on the market.
So, this month’s numbers brings up the question: Is the long waited housing turnaround about to make its arrival in Irvine? Maybe. Or maybe homes over $500,000 are selling in more volume than in the recent past, and this is increasing the median sales price. I think that the jury is still out on this one.
In any case, it is clear that, although the Irvine housing market has suffered and continues to suffer the pain of the housing downturn, the pain is less so than for many other Orange County cities. Watching what happens in the Irvine housing market in the coming months is going to be interesting. And, of course, I’ll be checking in again next month with the updated numbers.
Here are the 2008 detached home statistics for Irvine as provide by Altos Research:
- Median Sales Price:
On July 20, 2008: $939,431
On June 15, 2008: $920,910
On May 18, 2008: $901,771
On April 20, 2008: $904,096
On March 16, 2008: $922,371
On February 17, 2008: $943,718
On January 13, 2008: $961,225
- Price Per Square Foot:
On July 20, 2008: $469
On June 15, 2008: $408
On May 18, 2008: $411
On April 20, 2008: $413
On March 16, 2008: $416
On February 17, 2008: $421
On January 13, 2008: $426
- Market Action Index:
On July 20, 2008: 17.00
On June 15, 2008: 16.54
On May 18, 2008: 16.62
On April 20, 2008: 16.57
On March 16, 2008: 16.62
On February 17, 2008: 15.86
On January 13, 2008: 16.11
Note: The Market Action Index shows the balance between potential buyers and sellers, in other words, the balance between supply and demand. Above 30 is a sellers’ market; below 30 is a buyers’ market.
- Average Days on Market:
On July 20, 2009: 109
On June 15, 2008: 77
On May 18, 2008: 82
On April 20, 2008: 96
On March 16, 2008:106
On February 17, 2008: 103
On January 13, 2008: 94
- Number of Homes on the Market (Inventory):
On July 20, 2008: 401
On June 15, 2008: 448
On May 18, 2008: 441
On April 20, 2008: 427
On March 16, 2008: 413
On February 17, 2008: 416
On January 13, 2008: 442
For more information on May housing activity in Irvine, see yesterday’s post “Reality Check: Irvine Condo and Detached Home Stats, July 2008.”
July 26, 2008
Note: The Altos graphs and numbers, which are for detached homes, provide a good overview of market trends in each city. However, condos also play a big role in the Orange County housing market; therefore, taking a look at the condo numbers in combination with the detached home numbers is also helpful. That is what we will do with the following housing numbers.
I also like these numbers for another reason: Comparing the average listing price to the average sales price reveals if sellers are being realistic with their asking price. In other words, it provides a reality check for homesellers and homebuyers.
For comparison, I included the numbers from five years ago (2003). Predictions vary, but some think that Orange County housing prices will eventually return to these levels.
According to these numbers, Irvine real estate is still in a holding pattern. The average sales price went down, and the median sales price also went down slightly; however, the price per square foot went up slightly. This is what these numbers have told us for some months now: the Irvine condo-plus-detached home market is in a holding pattern. Tomorrow we’ll take a look at Irvine’s detached home stats to see if they verify what these condo-plus-detach home stats are telling us. Preview: a somewhat different story.
Now for our reality check: Note that the number of sales is down from where it was at this time last year. In addition, the number of sales is at only about half of where it was five years ago. However, more Irvine homes sold in this period that the previous period, which is not a surprise for this time of year. Maybe this and the fact that prices in Irvine have not declined significantly for some months is what encouraged homeowners to once again increase their asking prices: This month the increase in asking price was about $40,000 more than was asked in the previous period, last month it was about $10,000 more, the month before that it was approximately $55,000 more. Also note that the current average listing price is nearly double the average sales price.
Here are the Irvine condo+detached housing numbers for 2008.
- Average Listing Price for:
- Week Ending July 20: $1,209,973
- Week Ending June 11: $1,066,271
- Week Ending May 14: $1,055,460
- Week Ending April 16: $999,976
- Week Ending March 12: $1,023,403
- Week Ending February 6: $971,094
- Average Sales Price for:
- Apr-Jun 2008: $676,963
- Mar-May 2008: $692,562
- Feb-April 2008: $704,150
- Jan-March 2008: $699,798
- Dec 2007-Feb 2008: $743,982
- Nov 2007-Jan 2008: $797,749
- One year ago (Apr-Jun 2007): $795,443
- Five years ago (Apr-Jun 2003): $491,703
- Median Sales Price for:
- Apr-Jun 2008: $580,000
- Mar-May 2008: $585,000
- Feb-April 2008: $578,000
- Jan-March 2008: $579,000
- Dec 2007-Feb 2008: $619,000
- Nov 2007-Jan 2008: $650,000
- One year ago (Apr-Jun 2007): $667,500
- Five years ago (Apr-Jun 2003): $453,000
- Average Price/SF for:
- Apr-Jun 2008: $360
- Mar-May 2008: $356
- Feb-April 2008: $356
- Jan-March 2008: $359
- Dec 2007-Feb 2008: $365
- Nov 2007-Jan 2008: $369
- One year ago (Apr-Jun 2007): $408
- Five years ago (Apr-Jun 2003): $276
- Number of sales:
- Apr-Jun 2008: 553
- Mar-May 2008: 536
- Feb-April 2008: 485
- Jan-March 2008: 442
- Dec 2007-Feb 2008: 398
- Oct-Dec 2007: 421
- One year ago (Apr-Jun 2007): 677
- Five years ago (Apr-Jun 2003): 1,119
Source: Trulia
For more information on the Irvine housing numbers, see tomorrow’s post “The Irvine Market Report: Detached Home Stats, July 2008.”
July 25, 2008
PHOTO OF HERITAGE PARK COURTESY CITY OF IRVINE
El Camino is one of Irvine’s more affordable areas for detached homes. However, today we’ll take a look at what some of the condos in this area have sold for. All of these El Camino condos are three bedrooms and two baths.
To see what is currently available as well as additional information on what has sold recently in the area, see the El Camino map.
1 Montgomery #46: 1977 condo, 1633 SF
Sold for: $375,000 on 06/09/2008
Previously sold for: $337,500 on 02/22/2008 & $565,000 on 05/26/2005
5228 Walnut #10: 1980 condo, 1482 SF
Sold for: $1000 on 03/19/08 (The bank must be involved with this one.)
Previously sold for: $475,000 on 07/30/2004
41 Mirror Lake: 1974 condo, 1164 SF
Sold for: $425,000 on 03/03/2008
Previously sold for: $167,500 on 08/ 31/1994
1 Denver #80: 1977 condo, 1504 SF
Sold for: $455,000 03/03/2008
Previously sold for: $355,000 on 02/18/2003
9 Helena #26: 1977 condo, 1128 SF
Sold for: $450,000 03/12/2008
Previously sold for: $226,500 on 10/10/2000
133 Oval Road #2: 1972 condo, 1091 SF
Sold for: $370,000 on 02/21/2008
Previously sold for: $160,500 on 06/30/1999
July 20, 2008
Note: I hadn’t planned on writing about the Orange County Great Park development for a while, but a comment I received recently made it seem timely.
The Orange County Great Park development generates a lot of controversy. An example is a comment that I received to one of my recent Great Park posts. Here it is:
Marsha said:
You should see the article at www.newsOC.org that talks about the Great Park coverup–it really tells it like it is.
My reply is:
I don’t know enough about this right now to give an opinion, but this is certainly a question that needs to be addressed. And I imagine that counter claims have been stated, so I would have to hear the other side of the argument (from the Navy, Lennar, and the City of Irvine) before coming to any conclusions. I don’t have this information right now, so I will reserve judgment. The Great Park development seems to generate some very strong opinions, and whether this turns out to be a valid criticism or political maneuvering is a question that I am not ready to answer. I will keep it in mind as I look into the Great Park development.
Answering these questions will help me to understand the issue better and the motivation behind the criticism:
I noticed only one post on the newsOC blog (e-newsletter) that you linked to. Are there currently other posts on this site, or is this the only post? Also, I was looking for a date on the post in the newsOC blog as well as on the the Financial Times News article that was linked to but didn’t see any (other than a 2008 copyright). Do you have the dates that these articles/posts were written?
In addition, would you provide a link to the Financial Times News. This was cited as a source in your link, but I am having trouble locating it on the web. It would be helpful to know more about the publication. I am assuming that the Financial Times News is different than the Financial Times. Who are the publishers, and where are they located?
July 19, 2008
Note: The Altos graphs and numbers, which are for detached homes, provide a good overview of market trends in each city. However, condos also play a big role in the Orange County housing market, so it is helpful to take a look at these numbers in combination with the detached home numbers. That is what we will do with the following housing numbers.
I also like these numbers for another reason: Comparing the average listing price to the average sales price reveals whether sellers are being realistic with their asking price. In other words, it provides a reality check for homesellers and homebuyers.
For comparison, I included the numbers from five years ago (2003). Predictions vary, but some predict Orange County housing prices will eventually return to these levels.
Yesterday’s post, which covered the status of the detached home market in Costa Mesa, revealed that a bottom has not been reached in this market. Today’s post, which covers the condo and detached home market in Costa Mesa, reveals the same. Note that the number of sales is about the same as it was this time last year.
Now for the reality check: Homeowners are asking on average about $170,000 more than the average sales price. Also, homeowners’ average asking price increased by over $9,000 from the previous period, but the average sales price decreased by over $36,000. It seems that Costa Mesa homesellers haven’t come to terms with current market conditions.
Here are the condo+detached Costa Mesa housing numbers for 2008:
- Average Listing Price for:
- Week Ending July 09: $688,495
- Week Ending June 09: $679,047
- Week Ending May 07: $696,330
- Week Ending April 09: $677,338
- Week Ending March 05: $678,172
- Week Ending Jan 30: $701,471
- Average Sales Price for:
- Apr-Jun 2008: $517,483
- Mar-May 2008: $553,586
- Feb 2008-April 2008: $575,432
- Jan 2008-Mar 2008:$591,601
- Dec 2007-Feb 2008: $589,408
- Nov 2007-Jan 2008: $620,022
- One year ago (Apr-Jun 2007): $733,267
- Five years ago (Apr-Jun 2003): $476,137
- Median Sales Price for:
- Apr-Jun 2008: $493,307
- Mar-May 2008: $520,148
- Feb 2008-April 2008: $530,150
- Jan-Mar 2008: $540,000
- Dec 2007-Feb 2008: $540,000
- Nov 2007-Jan 2008: $565,000
- One year ago (Apr-Jun 2007): $705,000
- Five years ago (Apr-Jun 2003): $425,000
- Average Price/SF for:
- Apr-Jun 2008:$354
- Mar-May 2008: $399
- Feb-April 2008: $440
- Jan-Mar 2008: $444
- Oct-Dec 2007: $450
- One year ago (Apr-Jun 2007): $502
- Five years ago (Apr-Jun 2003): $362
- Number of Sales for:
- Apr-Jun 2008: 220
- Mar-May 2008: 194
- Feb 2008-April 2008: 171
- Jan-Mar 2008: 164
- Dec 2007-Feb 2008: 134
- Nov 2007-Jan 2008: 133
- One year ago (Apr-Jun 2007): 223
- Five years ago (Apr-Jun 2003): 342
Source: Trulia
Note: For more information on the Costa Mesa housing numbers, see yesterday’s post “The Costa Mesa Market Report: Detached Home Stats, July 2008.“
July 18, 2008
A look at this month’s stats tells us that the housing market turnaround hasn’t arrived in Costa Mesa. All the indicators except the number of days on the market show a market that is even more in the buyers’ favor than it was last month. And don’t get too excited by the decrease in the number of day on the market. The paltry amount of the change in this number makes it insignificant.
Here are the 2008 detached home statistics for Costa Mesa, as provided by Altos Research:
July 06, 2008: $682,521
June 08, 2008: $688,307
May 11, 2008: $690,275
April 20, 2008: $702,668
March 09, 2008: $716,286
February 03, 2008: $735,900
January 06, 2008: $748,007
July 06, 2008: $380
June 08, 2008: $384
May 11, 2008: $391
April 20, 2008: $403
March 09 2008: $415
February 03 2008: ~ $424
January 06, 2008: $430
July 06, 2008: 15.87
June 08, 2008: 16.58
May 11, 2008: 15.96
April 20, 2008: 15.60
March 09, 2008: 16.04
February 03 2008: 15.91
January 06, 2008 16.03
Note: The Market Action Index shows the balance between potential buyers and sellers, in other words,
the balance between supply and demand. Above 30 is a sellers’ market; below 30 is a buyers’ market.
July 06, 2008: 94
June 08, 2008: 98
May 11, 2008: 108
April 20, 2008: 106
March 09, 2008: 105
February 03 2008: 93
January 06, 2008: 84
- Number of Homes on the Market (Inventory):
July 06, 2008: 305
June 08, 2008: 300
May 11, 2008: 301
April 20, 2008: 307
March 09, 2008: 304
February 03 2008: 315
January 06, 2008: 328
Note: For more information on the Costa Mesa housing numbers, see tomorrow’s post “Reality Check: Costa Mesa Condo & Detached Home Stats, July 2008.”
July 13, 2008
Note: I have spent a lot of time in the last few weeks on the development that is occurring at the former El Toro Marine Base. This is appropriate considering the impact the Great Park development will have on Orange County and beyond. But this will be my last on the topic for a while. In the future, I’ll write updates on the Great Park development, probably on a monthly basis.
Some have complained about the amount of time that it is taking to build the Orange County Great Park. This shows a certain amount of attention deficit disorder and a lack of understanding of what is being built. This is the development of a great metropolitan park—not the common subdivision-shopping mall-parks development. As I stated in previous posts, the housing-malls-parks development serves a purpose, but they are a dime a dozen in Orange County. The building of a metropolitan park is a more visionary and, therefore, long-term undertaking.
It might be just a matter of preference as to which is a better use of this 1,347 acres in the middle of Orange County, but I am going with the visionary. To say that a metropolitan park is not a good use for this land is similar to saying that San Diego’s Balboa Park is all very nice, but a better use for this land is to convert it into subdivisions and malls with some parks.
In hindsight some things could have been handled differently. Originally, the sports park was planned as one of the first Great Park feature to be available for public use. It would have been wise to keep the sports park, which is likely be a popular feature, on the fast track. As Doug Blonsky of New York’s Central Park Conservancy said: “I don’t think that the Great Park is necessarily behind right now, but you do want to get something in the ground growing as soon as you can.” However, Blonsky also stated that the New York Central Park Conservancy took years to perfect its master plan. Well, the sport park now is being given high priority and the preview park, which is the 27.5 acres located around the balloon site, is offering the public access to the Great Park.
Previously, I looked at the Great Park budget to answer the question: Is this thing “buildable”? My conclusion, after looking at possible revenue, was: yes, it is. Now I’ll ask and answer two other questions: First, is the Great Park development proceeding in a timely, efficient manner? Yes, for a metropolitan park in the mold of Central Park, Balboa Park or Golden Park, it is. Second, is the Great Park likely to be a benefit to Orange County and beyond? Yes. Absolutely!
Now here is my question to you concerning the Great Park development: Do you want common, or do you want visionary?
GRAPHIC COURTESY THE ORANGE COUNTY GREAT PARK CORPORATION
