IF WE PUT REAL ESTATE AND MUTUAL FUNDS SIDE BY SIDE, HOW DOES IT LOOK?

Looking at real estate as an investment, putting aside the considerations that it also provides shelter, and a tax write off, here is the breakdown of return on in vestment, by age group: 1) 18-29 Real Estate - 25% / Mutual Funds - 21% 2) 30-49 RE - 34% / MF 23% 3) 50-64 RE - 30% / MF 28% 4) Over 65 RE - 31% / MF - 28% Hopefully, you have found some good information with which to evaluate your own situation in regards to the real estate market.

HOME PRICES ARE SLOWING, INVENTORY DOWN, GREAT TIME TO SELL?

There is a perception, perhaps a misconception, that the time to sell, must be when everyone else is... After all, the market is hot, right? Everyone is doing it. The fact is, the great investors and money makers of our time, generally speaking, are taking action that is counter intuitive to what is happening in the financial and societal trends of the current moment. Inventory is in fact, at time of publication, at 1.9 months, traditionally by definition, a seller's market. (six months inventory is considered a neutral market, for your information). And yet, seller's are hardly laughing all the way to the bank. The Case-Shiller Index indicates prices may dip slightly. So what gives? Here is the true story that the newspapers won't or can't give you because of lack of understanding of real estate. Right now there is 1.9 months of inventory, not because houses are flying off the shelves as quickly as owners list them, but because owners are listing their properties for sale. There is a hesitation. Perhaps one reason is that the people who regained massive or respectable equity positions, did in fact sell and those that remain are waiting for the rest of their equity to return. Being still 24% down from our high of 2006, -- coupled with the prediction that appreciation this year will be 6% to 8%, not the 20% we luckily (and scarily) achieved last year, -- they may be waiting for a while. Buyers on the other hand, have watched that 20% rise, and are determined not to over pay for their property. They too have read the headlines that prices are slowing, and are mistakenly thinking there is a bubble that will burst and are waiting for that to happen. They too, will have a long wait. There is no bubble. Prices rose quickly but the money and qualification process was real and people have skin in the game. Foreclosures are at an 8 year low (more on that later). Hence, we are in the midst of a learning curve. A period or lull in the market when everyone adjusts to the latest adjustment. It will happen. But no one will be happy. That is the point of this article, accept the fact that whether you are a seller or a buyer, you probably will not love either position right now, even though there is nothing wrong with either position. Sellers need to accept the fact that they are not going to make a killing this year. They cannot list $50,000 about the last comparable sale, just because it worked last year. It isn't going to work this year, save unique properties. Buyers need to accept the fact that they aren't going to get a steal. Not this year, or next year either. But what they will get, is an opportunity to come into the California real estate market, and achieve a greater return on a10 year average than any other investment they could make. Let's remember however, that home ownership should be more than the investment. It is where you raise your family and create your memories. And by the time you realize the tax breaks, and that you are building equity rather than throwing away rent, it is a pretty sweet deal. There are plenty of sellers and buyers out there, that must act regardless of market conditions. To them it is prudent to say, "Go to it, before you have more competition. Because Spring is coming and with it everyone else..." 

HAVE YOU SERVED OUR COUNTRY? SOME MYTHS ABOUT VA LOANS

Don't believe everything you hear. If you wish to use your VA loan eligibility, here's some information: 1) You can only use it one time. Not true. You have one eligibility, but since properties are bought and sold and rarely kept until the loan is paid in full, you may have many different VA loans on properties. 2) It will expire if not used. Not true. 3) You can only have 1 loan at a time. Not true. Talk to an experienced loan officer but it is possible to have multiple properties with loans. 4) If you have a short sale or foreclosure, you cannot get another VA loan. Also untrue. Adjustments are made to your entitlements. 

HAPPY NEW YEAR...WHAT TO EXPECT IN 2014

Most key analysts expect a slightly better market in 2014 than we had in 2013.  There are several reasons for this; improved employment, better and easier financing, a stabilizing economy with growth in the right direction and finally, a larger and improved inventory.  There is a certain unknown quotient in a changing Fed Chairman, but by all accounts, Janet Yellen's direction of the Fed aims to keep monetary policy, "highly accommodative."  In fact, it appears that Yellen gets the fact that real estate drives the economy, and most experts expect her, "to continue on Beranke's path," so stated Karl Case, co-founder of the S&P/Case-Shiller home price index.  Any projections of doom, are very tempered, the only one found at press from economist Essie Adibi from Chapman University, who said the probability for housing doom was "low."  It would have to come, according to him, from high inflation and low productivity, both of which are very long shots.  In fact, inflation has not even been a blip on the economic screen and is not projected to occur in 2014.  John Karevoll of DataQuick foresees, "the welcome decline into deserved obscurity of real estate naysayers and their canned think-tank narratives...the naysayers will become irrelevant as they doubt the housing's continued march to more normal, positive conditions.  Good riddance to them."  Rather strongly worded, but isn't it about time we stop doubting a shred of positive news and rather, embrace our economy for what it is and settle our lives around it, which includes buying homes for our families and our lives.

WHAT WERE THE TRENDS FOR SO CAL AND THE O.C.?

The housing numbers were off in November, the last full month available, but there are several good reasons.  First and foremost, inventory slipped as demand outbid sellers entering the market.  Secondly, investor transactions slowed down, and that is actually is a good thing, for the owner occupied integrity of neighborhoods and for the bidding wars to stop both run ups in pricing and frustration for bona fide purchasers.  Finally, distressed properties really dropped off the radar, dropping what had been a huge segment of the purchase market.  The frosting on the cake was the usual housing slow down at the holidays.  Expect a big engine to start humming early, as many sellers waited for 2014 to put homes on the markets.  Financing may become easier, and even though we've had some slight rises to interest rates, expect them to stay under 5% for at least the first 2 quarters of 2014.  But buyers will come to the market place early to avoid higher rates.  So Cal, comprised of L.A., Ventura, O.C., Riverside, San Bernardino, and San Diego had a total of 17,283 new and resale houses and condos.  That was down 14.2% from October.  The typical seasonal decline between the 2 months is 7.6%.  The median price for all So Cal was up 19.9% from November 2012 and has risen for 20 straight months.  To keep things in perspective, this rise is still 23.8% below the highest high of spring/summer 2007.

WHAT WERE THE ACTUAL NUMBERS?

The total number of homes sold in Orange County for November, (the last full month available), was 2,632.  This was down 8.6% from November of 2012.  The overall median price was $560,000, which is up 24.4% from November 2012.  There were 1,591 single-family resale, and 668 condo sales.  New homes came in at 373, up 78% and clearly illustrates a rebounding new home market.

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%.