OC Real Estate News

Larry Carton Realtor®, MBA
714-686-3389

HOME SALES SAG DESPITE PRICE CUTS… This has been an interesting month for anyone watching this real estate market, which has definitely transitioned to a new pace. Now that sales have slowed significantly for 6 months in a row, we can officially call the market changed. The Federal Reserve Chairman himself declared we are, “in for a soft landing.” There will be no bubble bursting, but rather an adjustment, as this newsletter has been forecasting for months. There were 3,276 total sales in April. (The most current numbers that are available.) Although this number is off 28% from a year ago April, to be fair, we must remember that ’05 was a banner year. One thing is sure; sellers are facing more competition and must be accurately priced to keep their home from sitting on the market. And that is exactly what’s happening. Don’t let the median price increase of 11% fool you into thinking prices are surging. What’s really happening is that properties that were overpriced, got reduced, and sold for less than the original list price, but because of the high number of sales over $700,000 the median price went up.

THIS MARKET IS RETURNING TO A NORMAL MARKET… Buyers now have more choices and more time with which to make their decision. There is a slight chasm between seller and buyer right now which is slowing the market. Sellers are in disbelief that they can’t get the price they thought they would get. That is a bitter pill to swallow, but one that ultimately must be swallowed. Buyers, on the other hand, think that because a house has been on the market more than 30 days, (does anyone remember that in a normal market, your days on market average 90 to 120 days?), they can go in and “low ball” an offer. Both sides are being unrealistic. This is normal for a market that transitioned quickly. There is a “gap” period when sellers get real and buyers get reasonable. That’s where we are, so yes, sales will pick up.

WHAT WERE THE ACTUAL NUMBERS… The total number of 3,276 was off only 12% from March. There were 1,915 single-family resale, 984 condos, and 377 new homes. The median price for a single-family was $705,000 and for condos $460,000. Year over year appreciation comes in at a modest 9% and you can expect that number to hover there and perhaps go lower as the year goes on. It was stated before in this newsletter, that we needed appreciation to slow down for the overall health of the market. Look to the breakdown of sales by price range to explain the median increase. The under $400,000 range had 429 sales, followed by the $400,000 to $500,000 at 469, and barely higher than that was $500,000 to $600,000 with 505 and nearly constant with that was $600,000 to $700,000 with 597, all to be blasted out with the over $700,000 price range which had 1,255.

PROTECTING YOUR EQUITY FROM LAWSUIT DAMAGES… Many people of wealth have known about umbrella policies for a long time. Umbrella policies are additional policies that work just the way they sound, to wrap around coverage you already have through homeowners and auto, to offer additional coverage against personal lawsuits. Because of enormous increases in home equity thanks to the last 8 years, people now have substantial wealth in their homes and rentals. There was an interesting article in the LA Times talking about umbrella policies and how they aid when normal policy coverage ends. It may be worth talking to an insurance agent about. If you would like a copy of the article, please give me a call.

REALTORS DO NOT DRIVE THE MARKET… The truth is the market drives the market. Realtors do not decide what houses will sell for, anymore than a stockbroker decides what stocks will sell for. Simply put, a house is worth what someone is willing to pay for it at a given point in time. But our homes are emotional whereas stocks are not. Right now, housing starts have fallen 7.4% to its lowest in 17 months. Demand is high for the new high rise condos coming soon to many of our cities. Interest rates remain fairly steady at 6 ½ to 6 ¾ depending on product. The Federal Reserve says inflation is “under control” although we all know oil affects everything from deliveries to tires, to plastic wrap, to air travel. Notices of Default are up 50% from a year ago with 374 last month but foreclosures were still not even a blip with 22. All of these factors affect the real estate market. So whatever you need please let me know. I am here for the long term and it is my job to communicate the market pulse to you. Thank you for the opportunity to serve you, your family and your friends.

Each Office is Independently Owned and Operated.



Larry's Monthly Column - May 2006

OC Real Estate News

Larry Carton Realtor®, MBA
714-686-3389


PRICES UP, SALES DOWN…WE HAVE RETURNED TO A NORMAL MARKET… Believe it or not, this is the reality. Although many would have you believe that the sky is falling, nothing could be further from the truth. Volume has slowed, this is true, but keep in mind, it needed to fall. Had the market kept spiraling upward, then we would have been in for a rude awakening. As it is, the market has tightened, and there is a more realistic approach to home selling. It is important to point out that the headline of the OC REGISTER on April 19th read, “SELLERS MUST BE REALISTIC ABOUT THE ASKING PRICE FOR THEIR HOME.” It’s important to remember that the market dictates price; not the realtor, or some magic, mysterious formula. Just like stocks, no one is going to buy them higher than they are trading at, just because the seller would like to net more profit. The stabilization that is happening in the market right now is healthy and normal; it’s just that it’s been 9 years since a normal market.
WHAT WERE THE ACTUAL NUMBERS… The median price hit $623,000 which was up a modest $4,000. Sales were off by 22%. Plainly put, the median price rose simply because more homes were sold in the over $700,000 range than any other price range. The total number of homes sold under $500,000 for March was 984 which was off 47% from a year ago. The number of homes sold over $700,000 was 1,497 which was up 6% from a year ago. The total number of sales for March (the most recent numbers available) was 3,910 which was up 46% from February (a very healthy rebound) and off 22% from a year ago March. There were 2,252 single-family resale, 1,048 condominiums and 610 new homes sold. The price range statistics found 431 sold under $400,000, while there were 553 sold from $400,000 to $500,000. Moving up the ladder there were 744 from $500,000 to $600,000 and 660 in the $600,000 to $700,000 range. Finally, as to be expected, the highest number was found over $700,000 with 1,497.
ECONOMIC FACTORS POINT TO A SOLID FUTURE…Well, to be fair, Cal State Fullerton’s forecast is that growth will slow. The main reason for that is slowing growth nationally and consumer spending coupled with accelerating inflation. In fact, we saw the highest inflation jump last year since 1990 at 4.5%. But I have just two words to say about that, houses and gasoline. We saw one of the strongest stock market days in recent months as a reaction to the rumor that the Fed was through rising short term interest rates. However, after the inflation report came out, it looks like one more may be coming. Still, all indications are that other than a couple of segments, inflation is in check. Housing prices are stabilizing and that effect will be felt in coming months. Therefore, housing sales should still be driven by some consistent supply and demand. But we must be careful to avoid a stalemate of sellers refusing to budge on their price, and buyers wanting to lowball offers because they’re reading headlines suggesting there’s more of a downturn then there actually is.
OTHER FACTORS MUST BE WATCHED. PLEASE CALL FOR UPDATES… There are other loose ends happening that should be watched such as interest rates, loan programs and the rental market. For example, interest rates are climbing yet banks are posting lower profits due to competition, and rising short term rates. You can expect loan programs to tighten. The million dollar question posed in the OC Register is, “If the sellers’ hot streak is over, why are prices still so high?” There are many answers. A few answers are incredible weather, a skilled workforce that employers have a hard time duplicating out of state, low unemployment, and more people moving in than out. Southern California will remain in demand. Apartment rents jumped 7% and will continue to climb by about 7% per year in L.A. and Orange counties, according to the Kiplinger Report. Notices of Default are up 28% from last month with 407 and that’s 69% over a year ago, but still only 28 foreclosures. WHAT DOES IT ALL MEAN? That’s the 64 thousand dollar question. You can depend on me to provide you with the most current information available. I will be there for you to help you determine what it means to you personally in light of your real estate goals. Please consider me your Realtor for life and a constant resource. All of these factors control the market to a certain extent. But real estate itself is always a constant. People always need to sell and buy, so skill is what I bring to your equation. I look forward to hearing from you. Have a great month!

Each Office Independently Owned and Operated.




Larry's Monthly Column - March/April 2006


OC Real Estate News

Larry Carton Realtor®, MBA
714-686-3389


THE FRENZY…IS BEHIND US… That was the OC Register’s headline for March 15th, but does anyone really believe it? Orange County sales were sluggish compared to last month (which would be January, remember these are February numbers) and compared to last year (2005), but what numbers wouldn’t be sluggish? Alright, it’s a rhetorical question, but we all need to be reasonable. Just because we don’t continue at a pace of 25% appreciation per year and number of sales over 4,000 per month doesn’t mean we have slid into a housing recession or that a bubble has burst. We have simply settled into a “normal” market. It’s just that a lot of Californians don’t remember a normal market. This is exactly what needed to happen to avoid a bubble. We now have a healthy 14 week inventory. Buyers actually have time to look and choose their home. What will stall the market are sellers thinking that they can continue to overprice their homes based on last year’s appreciation stats and buyers thinking they can ridiculously low ball the seller.

WHAT WERE THE ACTUAL NUMBERS… The total number of sales for February was 2,672. That number breaks down to 1,452 single-family resale, 759 condominiums and 491 new homes. Sales were actually up 3% from January and off 7.5% from February of ’05. Single-family sales were off 3.8% from last month and 19.6% from February of ’05. Condominiums definitely picked up the slack with a 10.8% jump from last month, but were still off from ’05 by 17.4%. The numbers by price range were fairly well distributed until you got to the over $700,000 range. Homes under $400,000 landed at 337. Homes priced between $400,000 and $500,000 came in at 375. If you sold between $500,000 and $600,000 you were one of 484 sales. There was almost no difference at the next level with $600,000 to $700,000 totaling 491 sales. Finally, homes priced over $700,000 rallied to a total of 966 homes sold. (Source: DataQuick)

MORTGAGE RATES SURGE TO 3 YEAR HIGHS BEFORE EASING BACK…This newsletter warned of rising interest rates months ago. Hopefully everyone listened. Be reminded that rising rates will edge a payment up much faster, than slightly declining prices will lower a monthly payment. Buyers need to remember that. Rates have risen a point or so and will probably stay around that watermark. Rates are still great, but I doubt we’ll see the 5’s again for a while. Rates are basically rising amid inflation concerns and bond investors’ fears that Japan and Europe are embarking on a campaign of rate increases. Higher rates overseas draw money from U.S. bond markets, pushing up yields on bonds. That causes certain mortgage rates to rise. (LA Times)

CALIFORNIA ASSOCIATION OF REALTORS AND KIPLINGER EDITORS AGREE ON SLOWING SALES… According to the Kiplinger Report the housing downturn is no aberration. Sales volume may be off by up to 10%, but that’s ok, they say, because 2005 was so good. Prices may adjust a meager 3%, so don’t expect much there. CAR reports that buyers are optimistic and pleased that they have more choices. They feel, “like they are back in the game.” According to David Lereah, chief economist at the National Association of Realtors, “Annual price appreciation is still running at double digit rates, but as the market readjusts, price appreciation should return to more normal rates of growth this year.”

ALL SIGNS ARE POSITIVE FOR SUSTAINED GROWTH… The trouble spots are minimal with just 316 Notices of Defaults issued and only 14 properties in the entire county actually going to sale. These numbers are blips on the screen. If you would like additional information on anything in this newsletter, just give me a call and I’ll be happy to assist you. Prices are fluctuating and you will want a current market analysis of your home before you make any decision. Please feel free to call me anytime and we’ll sit down for a confidential appointment. I appreciate any opportunity to serve you or any referral you may have for me.

Each Office is Independently Owned and Operated.