DON'T BELIEVE EVERYTHING YOU READ

Newspaper accounts would have you believe that housing prices have gone up even as fewer homebuyers are willing to pay more.  That's because, as covered before in this column, year over year prices are still slightly rising because of the influence of the 2013 numbers in the median configuration of pricing.  In fact, prices are stable and low interest rates are having a "yawn" effect on would be buyers.  But if you can get in now, you should.  Every poll taken recently, regarding the Millennial Generation, indicates strong belief in home ownership.  They poll even higher than did the Boomer Generation and they've driven real estate prices for 30 years.  But the M generation will not go into extreme debt for home ownership.  Just like the Great Depression shaped that generation, so has the Great Recession shaped the M generation.  They are savers; practical in nearly every way.  Look for them to save and save and then...buy.  So why get in now?  Because sometime in the next 2-3 years, supply and demand will take over and prices will rise again.  The next 24 months may be some of the most reasonable months of housing appreciation that So Cal will see for the next decade.  Other reasons for modest growth?  Just as the stock market cannot forever climb just because of cheap money, and without earnings by those companies, real estate cannot sustain long term appreciation without affordability and that comes from payroll earnings.  Salaries and incomes must catch up and then saddle up side by side for the most successful and sustainable market.  Are we on our way towards this?  Yes, unmistakably we are, and it cannot hurt for all who can find their ideal home or investment, to do so before increased competition limits your choices. Prices will not come down significantly, in fact, probably only based on condition, location, and competition.  A good recovering market is in the works.

WHAT WERE THE ACTUAL NUMBERS?

The total number of sales for the month of July, (the last complete month available), was 3,255.  That breaks down to 2,008 single-family resale, 894 resale condos, and 353 new homes.  The only increase in sales was for new homes which rose 53%. Since there has been so little product for so long during the recession, it isn't a big surprise to see that jump as new home inventory makes a come back.  Resale single-family and condos were both off about 15%.  All numbers compare this July with the same month 2013.  The median price rose for both single-family and condos, but has cooled to a much healthier 5.6% and 5.1% respectfully.  These numbers represent a 3 year low for volume, dating back to 2011.  Supply certainly isn't back where it should be and buyers will continue to struggle with pricing.

WHAT ARE THE WORLD RANKINGS FOR "LIVABILITY"

Melbourne ranked number 1, Vancouver a not surprising number 3...clean air, safe streets, natural beauty etc.  but actually, rankings were done by The Economist, and the editors were looking for other factors, such as worker safety, economic sustainability; in other words, the way a multinational corporation might look at a region.  The U.S. doesn't pop up until # 26 - Honolulu.  Pittsburgh was #30, Miami #36.  There are other cities such as Boston and Seattle also ranked, and Los Angeles (one might stretch this to thinking So Cal, as this is a macro approach) # 42, incredibly ahead of San Francisco at # 52, undoubtedly because of housing affordability.

EXPECT CHEAP MONEY TO STAY AROUND

Fed chief Janet Yellen is staying committed to keeping interest rates low until job growth is completely recovered. Lenders are talking about a mini refinance boom this coming year.  If you plan to purchase be sure to get prequalified, and if you are selling, demand that all prospective buyers already be screened and qualified to make an offer on your home.  

A "SUSTAINABLE RECOVERY", LOW FORECLOSURES, RENTS AT THEIR HIGHEST, INVENTORY STRUGGLES...A MIXED BAG FOR THE SUMMER HOUSING MARKET

Last month was "the" discussion on slumping prices.  Really, what's happened is the large gains from 2013, which are always used in the month over month comparisons, are finally weakening the pricing "stew", as more months of 2014 are thrown into the mix.  Simply put, 2013 saw double digit gains, and 2014 has been flat to maybe 4%.  Hey, that's not necessarily a bad thing, as 2013's gains were not sustainable and in fact, another year like it would have seriously hurt the long term real estate market.  The main reason for the hot market last year, lots of investor flips, willing buyers, and cheap money, have not entirely disappeared.   However, buyers are being more discerning, inventory constrictions are being keenly felt, and cheap money is no longer a motivating factor.  But what we all want is a sustainable recovery and we are on our way.  Foreclosures are at their lowest level since 2006.  There are two main reasons for this; a growing economy, more job stability, and rising home prices which are allowing distressed owners who have been under water to exit those properties either breaking even or a small portion of equity.  On the other side of the "prices are too high" argument, are the quickly rising rents.  In fact, the Orange County Register reported that O.C.'s biggest complexes hit $1,729 for its average asking rental price.  That's barely $100 less than San Francisco.  Potential buyers that have never done a "Rent vs. Own" comparison, or who think spending nearly $2,000 a month on rent, (figure $2,400 to 3,500 for a house), receiving neither a tax break or equity build is financially prudent, really should reconsider.  The direction rents are traveling, purchasing may make the most sense.  At least until interest rates rise considerably.  Inventory has definitely grown consistently the last 2 months.  Nationally, according to the National Association of Realtors, it has hit 5.5 months, the first time in 2 years.  Locally, we are at about half that, but much better than the first quarter of 2014.  In no way is this market a snap to figure out.  The question you ask yourself should be a personal one:  "What are my financial goals and my personal desire for my housing needs?"  Answer that one and take action, before the market becomes even more unpredictable.

WHAT WERE THE ACTUAL NUMBERS?

Orange County saw its median price for ALL homes rise to $600,000, up 10% from the same month of 2013.  (All figures are from June of 2014, the last complete month available.)  The resale median was $650,000, up 6.6% and condo price was $400,000, up just 4.2%.  The total number of sales was 3,309, just barely off the 2013 pace (1.2%), showing a strong second quarter gain in volume.  The break down was as follows:  1) Resale - 1,963  2) Condos - 893 3) New Homes - 453.  Note that the increase in the median price for a condo was substantially less than single-family.  

MORE HOMES SELLING FOR 1 MILLION-PLUS

The shift was noticeable--- million dollar sales have been booming relative to the rest of the market.  This partially explains the rise in the median price of homes.  Remember, median is not the average, but rather half--half the homes sold above this mark and half sold below it.  A higher number of homes over a million, will raise that mark.  It's important to understand this distinguishment because it dispels the myth that we are in another bubble.  We are not in another bubble.  Already established by many economists is the belief that this slow down in the number of sales, coupled with growing inventory is a more "normal" market.  But conversely, million dollar sales have sped up.  In fact, sales of homes for $1 million and up rose 11.5% year over year in O.C.  This at a time when overall sales have declined over 8%.  This offers an explanation into numbers that seem contrary to what market analysts proclaim.