For our clients and friends who urged us to design an ad that did not look like a standard "Realtor Ad", we thank you for your encouragement and hope you like the new concept. Our slogal is "It takes more than a sign in the yard to sell real estate", and as always, we welcome your input. It is scheduled to launch in the community based @In Home Magazine Anaheim Hills / Yorba Linda next month.
Todd and Nancy Moeller
Seven Gables Real Estate
Direct: 714 276-7006
California - No wonder we're bankrupt ...
In Orange County this morning, there are 410 bank owned properties on the market, 998 in escrow and 675 closed in the last 30 days.
Our buyer clients are making offers at or above list price and competing against an overwhelming wave of demand for foreclosure properties.
In other words, demand is off the charts and we are running out of inventory. So what does California do?
California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday. The law is another attempt to force lenders to try and modify loans and keep people in their homes. When will government learn that more time creates greater inefficiencies? Now lenders have another 90 days to allow files to gather dust on someone's overworked, underpaid desk.
Seriously, how long should it really take to review someone's income, assets and liabilities to determine if they can afford a modified payment? Minutes, not months.
And if that doesn't work out, how long should it really take to determine an approved short sale price after appraising the property? Minutes, not months.
If we really want to stop foreclosures, give lenders less time, have them order real appraisals (not broker price opinions) and require faster decisions. If a loan modification is not feasible, provide an approved short sale price, and reduce it every 14 days until it sells.
And if we really want to keep people in their homes, lenders should be required to allow investor short sale - lease backs. In this simple strategy, an investor buys the property at current market value and leases it back to the homeowner. This strategy would stop embarrassing evictions, traumatic relocations and family uprooting.
The net result is the same - homeowner loses their home and must rent instead. The process is far more efficient, keeps people in their homes, creates a more attractive scenario for investors likely willing to pay a premium for the property with no vacancy or tenant placement expenses.
For too long we have been approaching the problem with band aids, instead of looking at the big pictures and implementing a clear, efficient process that looks at the end of the problem, instead of the middle.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct: 714 276-7006
For homes under $500,000 in Orange County, we have experienced a market shift. Demand is up 45% over last year and at levels not seen since 2005, supply is shrinking and buyers are competing for the same properties. In addition, interest rates are low, tax credits are still in place and prices seem to be stabilizing as multiple offers are creating a 98 - 100% ratios of sold price to list price. In short, it appears we are hovering at the market bottom in this price range.
But is the bottom real? Some industry professionals believe we're experiencing a false bottom. They expect a new wave of foreclosures that will once again force prices to spiral further downward. We don't agree.
Yes, we can expect a wave of new foreclosures - probably several waves throughout 2009 and 2010. However, we say - bring it on! Unlike 2008, we have the demand to quickly absorb this inventory. As an industry, we define demand as either properties sold or properties entering escrow. However, this is merely a snapshot of historical demand, and further, only represents the small portion of buyers who were successful with their offers.
Real, current demand is nearly impossible to quantify, but is what we call "pent up demand". These are the buyers that have been sitting on the fence and are now in bidding wars, trying to buy a property in Orange County. To date, they are been unsuccessful. With less than a three week supply of foreclosure inventory, there is not enough supply to absorb the pent up demand. They will either continue trying or sit back on the fence waiting for more inventory and less competition.
When the new wave of foreclosures hit the market, we should expect to see a demand increase even higher as "pent up demand" translates to trackable demand and more sales. Can we provide quantitative support of our "pent up" demand theory? Only from the trenches. As listing agents, our bank owned properties get an average of 16 offers each. As buyers agents, our averages are better, but only because we provide our clients the right information to make strong offers that get to the top of the stack.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct (714) 276-7006
www.TheOCExperts.com (About Our Team)
www.OCMarketUpdate.com (Real Estate Blog)
www.ZeroShort.com (No Cost Short Sales)
www.OCBankDeals.com (Search Foreclosures)
They have been going back and forth on this issue, and now we have some good news for first time homebuyers:
On May 29, 2009, HUD announced that the $8000 tax credit for 1st time homebuyers CAN be used to offset down payment and/or closing costs on FHA insured mortgages. "FHA will permit entities covered by Section 528 of the National Housing Act to offer tax credit advances with second liens" was the exact language.
In other words, it will work like a "payday" loan. A second mortgage for the $8000 will be used to "advance" the expected $8000 credit to the borrower so they can use it now.
So far, we don't know how this will work and we'll have to trust our lending professionals to quickly respond to this terrific news.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
(714) 276-7006
FAX (714) 917-2293
Every market shift creates new opportunities for different people. In today's market and in this article, the group is "move up" home buyers. These are people with growing families or growing dreams who would like to sell their home valued under $500,000 and buy a property priced over $500,000.
In Orange County, properties under $500,000 are in a deep seller's market. Demand is at its 2009 high, reaching levels not seen since 2005 and pending sales are 45% higher than the same month last year. High demand, coupled with shrinking inventory have resulted in properties selling within weeks, with multiple offers at or above listing price. Surprised? Despite what the news is reporting, the real estate market is in high gear in these price ranges. In Riverside county, the story is the same, but the price range point is $300,000, instead of $500,000.
On the other side of the market are homes priced over $500,000 and especially over $700,000. Properties over $1 Million account for only 5% of Orange County demand, but nearly 25% of supply. The higher the price, the deeper the buyer's market. Demand is low, supply is high and sellers are motivated. It's a great time to get a killer deal in this price range.
In short, it's the perfect scenario for move-up buyers. You get to sell in a seller's market and buy in a buyer's market. And if good planning and good luck have enabled you to rent your current home, instead of selling - you're even better off. The market contradiction of low prices, low interest rates, high demand and shrinking supply cannot last, and historically signals a clear market bottom.
If you're ready to start exploring your options, give us a call. As market analysts and real estate professionals, we use real market data, crunch your specific numbers, consider your unique goals and help you make well-informed real estate decisions.
Nancy Moeller, CPA, Real Estate Broker
Seven Gables Real Estate
Direct (714) 276-7006
www.TheOCExperts.com (About Our Team)
www.OCMarketUpdate.com (Real Estate Blog)
www.ZeroShort.com (No Cost Short Sales)
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As a CPA, REALTOR® and financial expert, I focus on protecting our clients financial interests in the sale.
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