THE NUMBERS ARE IN FOR 2014--PRICES WERE UP, VOLUME DOWN--BUT DON'T EXPRECT THAT TREND TO CONTINUE IN 2015

The New Year, that is 2015, has started with a much bigger bang than 2014 did.  In fact, it started to pick up at the end of 2014.  The total number of sales for November, 2014 (condos, single-family resale and new homes) totaled 15,643 for all of So Cal. (This includes Ventura, LA, OC, San Bernardino, Riverside, and San Diego.)  That number jumped an astonishing amount to 19,205 for December 2014, a 22.8% jump.  So you can imagine how anemic  the numbers were all year as the total for Orange County for 2014 was 33,844, down 8.2% from 2013's total.  That number was for all homes as stated above.  The median price, meanwhile, hit $585,000 and that was up 9.3% from 2013.  This completed two back to back years of fairly rapid appreciation gains, and experts rightly predicted a heavy slowdown, which actually started last winter, with appreciation steadily dropping all last year.  There was a total of 20,496 single-family resale, 9,166 condos sold and 4,182 new homes.  This year already is showing strong signs of volume recovery as interest rates promise to stay down...for now.  But many buyers are getting the message loud and clear from the Fed, that rates will probably rise sometime this summer.  This is a strong motivating factor for "fence sitters", who are waiting for that perfect time to buy.  The perfect time to buy is when you are financially and emotionally motivated, don't worry about the market,  but in particular, inventory is expected to strengthen this spring as more and more sellers are able and willing to sell, having enjoyed two strong years of equity growth.  You can expect to see our strongest "move up" market in over 7 years as people who want to do something, as well as those who have to do something, all enter the market.

FOREIGN BUYING POWER FOR HOMES HITS INTERESTING HICCUP

Most of us have read about or if you were selling a higher end home, may have experienced, the foreign nationals who have been snapping up properties in the US, particularly in So Cal, especially the OC.  Now listing inventory of the higher priced homes are starting to pile up as these buyers grapple with the stronger dollar.  It is a conundrum.  On the one hand, their money doesn't go nearly as far.  On the other hand, compared to many foreign currencies, the dollar is the safest haven and hedge against inflation.  Even said, listing agents might be compelled to obtain price reductions to move their high end properties.  Be patient and be realistic are the watch words for this market.  Even with this being the case, these off shore buyers will still bring competition to the high end.

AFFORDABILITY--A GLOBAL CHALLENGE

So read the headline of a recent OC Register article.  But there was a great chart from Demographia that listed the top 10 cities with the least affordable homes, in terms of the ration of an area's median home price to local median household incomes, from a study of 86 cities.  The good news is that greater OC isn't on the list, the bad news LA is, but the good news is that at least it's #10.  The cities you ask?: 1) Hong Kong  2) Vancouver, BC  3) Sydney  4) San Francisco  4) tied- San Jose  6) Melbourne  7) London  8) San Diego  9) Auckland, New Zealand  10) Los Angeles

WHAT WERE THE ACTUAL NUMBERS FOR OC?

The last complete month is December2014 and the numbers are: Total sales - 2,880, which is down 6.8% for the same month of 2013; The median price for all homes was - $591,000 which rose a mere 3.7% (much more sustainable and will lead to a healthier market for 2015); The total number of resale homes was 1,726, both price hikes and volume nearly flat at less than 1% for both; Condos sold a total of 744 and the price was $390,000 volume down 4.2% and prices up 4.8%.

HOMEOWNERS'RISING EQUITY SHOULD CAUSE MARKET TO STABILIZE

Rising equity will always have a stabilizing effect, because it allows all segments and price ranges in the market to make independent decisions regarding their home, which ultimately cause more interaction between price ranges and people move up or down in size and price according to their need of growing family, empty nesters, and retirement.  Equity is a very liberating quality in homeowner economics.  And although credit standards tightened immensely after the recession, there are now emerging more loan programs, the resurgence of some old programs and some revamps even in government lending such as the lowering of the FHA mortgage insurance by almost half a point.  On a median priced home, that can be over $200 a month or even more.  That increases a buyers, "buying power", tremendously.  All who are looking to buy should speak with a lender to find out exactly how much you qualify for...buyers may be surprised by their purchasing powers.  Sellers are also in a great position.  At last it would seem we may be trending to a totally equitable market.  It has been sometime.  Surely the results will be an encouraging factor in our economy for the year ahead.  

FOR SALE BY OWNER…MAYBE NOT, IF YOU LOOK AT THE FACTS

The "FSBO" seller has a lot of issues to resolve to successfully sell their home.  They must contract with or negotiate with many entities, which can all snarl up with problems.  To name a few, there is the contract itself, and its inherent liabilities of disclosure, the buyer's agent, which they are likely to have, an inspection company, termite, obligations of radon, mold, and other environmental issues, an escrow company, a title company, and the buyer's lender.  And the facts are 88% of buyers look online and only 21% in the newspaper, while 43% actually buy from an online find, 9% from a sign in the yard, and 1% from a newspaper of other print ads.   Why is this important?  A FSBO simply cannot get their properties into all the search engines that a real estate agent can provide.  They cannot get the world wide exposure that a real estate agency can get, and they can't gain access to the networking core that Realtors have.  If you have all the time in the world, and money, maybe...but the best reason to use an agent?  According to KCMBlog.com, a seller will net on average 13% more, using an agent.  Food for thought.  

IT IS A HAPPY NEW YEAR--IF YOU PLAN ON BUYING OR SELLING REAL ESTATE IN 2015

Indeed it is!  In case you've missed the headlines, dating all the way back to early December, which proclaimed, "A More Balanced Market," all the way to Saturday, January 23rd's, "Home Sales Projected To Increase As Prices Level," 2015 is poised to be, "everyone's" market.  Just what is meant by that?  A more balanced market is also a more neutral market, favoring neither buyer nor seller.  As much as a buyer or seller may wish for "their" market, it isn't healthy and it excludes many potential customers to the market.  Meaning that a hot buyer or seller market, generally excludes people who WANT to do something, and because it is not a balanced market, you only get the people who HAVE to do something.  This leaves a lot of people not jumping in the pool, so to speak, which isn't much of a party.  The annual price appreciation for Orange County homes in October was 10.2%, compared with 18.7% a year earlier (Source: CoreLogic and DataQuick).  Appreciation is expected to level off even more this year, down to 4% to 6%, according to the National Association of Realtors. Recall the headline just mentioned, "As Prices Level Off..."  In fact, pending home sales are rising in the U.S.  Signed contracts for previously owned homes rose slightly in November, even through the holiday and only 17 working days to the month.  In fact, contracts were up 4.1% from November 2013 (NAR).  After the robust recovery of 2013, many dropped out of the unbalanced market, so essentially, 2014 became a recovery year independent of most economic factors, such as remaining low interest rates and a growing economy.  The real key to success for 2015, is that we are looking at the beginning of a sustained recovery and growth cycle.  Sellers are aware that homes are taking longer to sell, which means more inventory will hit the market.  Buyers are able to look through more homes, which is increased competition for sellers.   Prices are expected to level, allowing more buyers to enter the market, which increases the affordability index. All of which is a wonderful recipe for a substantial year in real estate, truly a WIN/WIN for all.

KEYS TO THE '15 HOUSING MARKET

This column has long stated that the key to a healthy real estate market was contained in one critical area -- jobs and wages.  If you didn't catch the OC Register article, by Jonathan Lasner, "12 Keys To The '15 Housing Market," it may be worth it to you to go online and take a look.  Summarizing, a couple of key points on which these two authors agree, are jobs and wages, "lendability", and the U.S. dollar.  To explain: 1) The housing market has enjoyed the past 3 years primarily on low interest rates, motivating many into buying higher than they would like, based on cheap money.  However, this has been an artificial stimulant to the extent that at some point, jobs simply must be there.  Now they have returned averaging 2% annually, the last 3 years, the fastest rate, according to Lasner, since the turn of the century.  2) Lendability - at some point, rates must rise, and sometime this year, just might be the time.  Although it is doubtful we would leave the high 4's or very low 5 percentile, the ease with which borrowers can borrow, might just take up the slack of the higher rates.  In other words, credit requirements loosening just a bit.  You can expect this as competition between lenders heats up.  3) The U.S. dollar -- A safe haven once again, expect investors and foreign buyers to remain strong this year.  This will keep buyers honest, and yet, these buyers refuse to overpay, which keeps sellers honest.  All in all, 2015 is shaping up to be a robust year for all who want and need to take action in the real estate market.

WHAT WERE THE ACTUAL NUMBERS?

The total number of sales for November (the last complete month available), was 2,441, which was down 7.3% from November of 2013, not a surprise given the hot 2013 market.  The median price for all homes rose, however, to $585,000, an increase of 4.5%, right where we should be. The median price for single-family resale rose 4.9% to $640,000.  Condos saw the same percentile to $391,250.  There were sales of 1,508 for resale single-family, 631 condo sales and 302 new homes.  One of the key areas to watch for 2015 is new construction.  Expect much more inventory and brisk sales in that arena.  Foreclosures are at a nearly 10 year low with only 16,833 Notices of Default filed for the entire state, 3rd quarter of 2014, the lowest since the 2005 mark of 15,337.  In November, foreclosure resale's represented a mere 5% of the total number of sales.  Absentee buyers-- mostly investors -- bought 23.2% of the homes sold in November, and would include foreign buyers as well.  This is not an unhealthy number as owner occupied intent still drives this market.