NATIONAL ASSOCIATION OF REALTORS WEIGHS IN WITH NEW STATISTICS

The following figures are from data gathered 12/19/2013 with prior year comparisons and are national.  Sales were down 1.2% from a year ago and prices were up 9.4%, indicating a rebounding and stabilizing market.  Perhaps the most important stat is that inventory has risen 5% and experts expect more in 2014.  Distressed sales are currently 14% of sales as compared with 22% previously.  The million dollar home market rose drastically nationwide, with the smallest rise here in the west at 25.4%.  A paltry increase when compared with the northeast market which rose 45.3%.

SOME THOUGHTS FOR AN OPTIMISTIC OUTLOOK

Real Estate experts at the Keeping Current Matters Real Estate Blog, strongly believe home sales will skyrocket 105 to 15% in volume in 2014.  They have good reason to be confident.  They are usually right.  Check out their blog at www.kcmblog.com.  A second reason for optimism, touched on in a previous paragraph is the Jumbo loan.  They are up 34% which means there are secondary lending sources making them.  This creates more avenues for people to get where they need to go in housing.  Jumbo loans means the seller of that middle level move up home, can get financing to go to his/her next home, probably close to the $800,000 to $1,000,000 plus.  Being able to move them up, means the lower end can move up.  And so goes the real estate hokey pokey.  

AS MORE INVENTORY HITS THE MARKET, JULY SALES JUMP

Southern California home sales surged in July, rising to an eight-year high for that particular month, as there were more properties for sale.  Prices did not increase significantly from the previous month, but for July, year over year, there was a 26% increase in pricing.  This is the seventh month in a row, according to DataQuick, that prices have risen 20% in year over year comparisons.  That being said, housing is just at the 2004 levels, far below the high of 2007, just prior to the pricing crash and housing slump.  What is interesting is that people have already forgotten these encouraging numbers and were noticing the significant slowing of new sales for August.  Let this column be the first to encourage the consumer not to be discouraged.  August has always been notoriously slow compared to the spring season.  June is slow because of the advent of summer; graduations, weddings, early vacationers.  August is slow with heavy vacationing, the coming school year, and families getting ready for one or the other, or both.  Exacerbated this year, by many school districts staggering their start dates, August appeared to be one long back to school month.  Having said that, look for September to be stronger than usual, because so many schools did start earlier, allowing people to return to routine and start to think about the fall selling period.  There are many advantages to selling in the fall.  Less competition for buyers, so they have more selection, and because of the tight inventory this year, sellers should also find themselves in decent position.   There is frequently more flexibility on close of escrow time frames and an easier time getting to see those properties.  Buyers and move up sellers should not wait too long, read on for what may be in store for interest rates...

A COMMON QUESTION CURRENTLY ASKED IS, "WHAT IS HAPPENING WITH INTEREST RATES?...

This question is asked and followed immediately with the comment, "maybe I should wait for them to come back down."  The fact that interest rates have been at historic lows for so long, may cause some to forget that they have been held there artificially.  One mustn't be lulled into the common myth that after a quick hike, they will settle back down.  Although rates will remain fantastic, all agree for at least another year, 3 1/2% is likely not coming back unless you get a 10 year fixed rate loan, or buy it down through escrow.  In fact the following entities all agree rates will rise: 1)The Mortgage Bankers Association  2)Fannie Mae  3)Freddie Mac  4)National Association of Realtors.  How much?  Read on...

FANNIE MAE PUTS TOGETHER SOME PROJECTIONS FOR SALES,PRICE, AND INTEREST RATES (NATIONAL OUTLOOK)...

The following projections are for 4th quarter 2013 versus 2nd quarter 2014.

Housing Sales -- 2013 - (in thousands) 5,592 -- 2014 - (in thousands) 5,794

Prices -- 2013 - $189,000 -- 2014 - $213,000

30 Year Mortgage -- 2013 - 4.6% -- 2014 - 4.8%

WHAT WERE THE ACTUAL NUMBERS?

Orange County saw a total number of sales of 4,402; this includes resale single-family, condos, and new homes.  That was a change of 42.6% upward from the previous July (the most recent complete month available).  There were 2,851 single-family resale homes, 1,283 condos, and 268 new homes.  The median price for all of Orange County, for all housing types combined was $539,500 and that is an increase of 19.9% from July 2012.  Resale single-family median price was $611,000, with condos coming in at $380,000 and new home median price was $706,000. All of So Cal (Ventura, Los Angeles, OC, San Bernardino, Riverside, and San Diego counties) had sales totaling 25,419 which was up in volume 23.50% and the median price for So Cal was $385,000, up 25.80%, both comparing July 2013 with July 2012.

5 ESSENTIALS A REALTOR MUST HAVE FOR THEIR CLIENT

1) Tell the client the truth about price.  Whether buying or selling, it is wise to know what the market will bear, and what price reveals about motive on both sides of the transaction.  2) Understand the family's timeline.  When and how are very important in serving the client.  3) Remove Challenges - There are many during the course of a transaction, and all must be explained and overcome.  4) Help with Relocation.  Whether across town or across the country, every available resource will be made available to assist the client.  5) Get the home sold.  This is what a real estate agent does.  Never lose sight with all the hype of search engines, the Internet, social media, etc.  Get the home sold.  For the best price possible with the least amount of hassle.  Done.

MONEY MAGAZINE'S REAL ESTATE EDITION...HEADLINE -HOUSING IS BACK!

If you are a natural pessimist, or from Missouri, and you want to see it for yourself, you may want to pick up this month's Money magazine.  Inside, they prove their four points: 10 In the last year, home prices increased in 92 of the country's 100 largest metro areas.  2) Homes are more affordable than any time in the last 40 years.  3) The number of houses for sale is the lowest in a decade and possibly a generation.  4) Price increases are projected for most of the country in 2013.

Bank of America and Merrill Lynch's analysts had the following statement, "We believe that the gain in home prices can persist despite subpar economic growth this year...The combination of low interest, high affordability, and improving expectations for home prices, provide powerful momentum for the housing sector."  Finally, the National Association for Business Economics reported in HousingWire, "While Gross Domestic Product (GDM) is expected to be negatively impacted by all the uncertainty surrounding the nation's impending debt ceiling debate and risks of sequestration, the housing market is expected to continue its upward trajectory."

These reports and analysis of the current housing market may explain why so much cash is flooding the real estate market.  Many economist deem it the safest bet for growth in the coming 3-5 years.  This newsletter always touts the benefits of home ownership and real estate investment.  The leveraging of your cash is the best feature.  But return on investment is always a reason to look to the market.  Many who study the real estate market are beginning to see signs of the start of the next upward cycle.  Don't expect it to be a 2002 through 2006 phenomenon.  Hopefully, we will never see that kind of bubble again, fueled by improperly documented and ridiculous loan programs.  But real estate has always been cyclical and this time around is no different.  Many people try to figure out the exact moment it hits its low and the exact moment to sell high.  Applause to you if you get it right, but for the rest of us, the question is, "Do current market conditions benefit a buyer?  Low interest rates, a bottomed out prices, would evoke a positive yes from this author.  Sellers too, can begin to see their equity returning and be motivated to sell now as well, to take advantage of lower prices on their next purchase.  Overall, you'd have to give a thumbs up to at least considering a real estate investment, either a owner occupied home, a second home, or an investment.

WHAT WERE THE ACTUAL NUMBERS?

The numbers were pretty good, if you like to see the median price rise in Orange County.  The prices jumped again as the February median price rose to $477,000, a whopping 22.3% change from February 2012.  The change from the previous month, January, was 6.7%  The total number of homes sold was 2,252.  The break down was 1,424 single-family resale, 679 condominiums and 149 new homes.  The new homes is where Orange County and all of So Cal is lacking.  Building permits are just starting to find a more robust number, to indicate that housing starts are making their comeback.  Unfortunately, the new homes don't go up over night, so it may be another year, before the market gets help there.  And it is helpful, because many sellers who wish to move up, currently have no place to move up, new homes typically provide that niche.  It is predicted here that the housing recovery will get even hotter as new homes hit the market in bigger numbers.  Fourth quarter foreclosure filings, Notices of Default plummeted to its lowest level in 6 years.  According to DataQuick, the quarter produced 38,212 NoD's, which is a 22% decline in those filings.  OC was down 70% in February of their filings of the same period a year ago.  Not only are economic times better, but lenders have shown their preference for short sales over foreclosures; along with more stringent loan qualifying guidelines and fewer lenders in the market, there has been a natural progression towards a healthier market.