Irvine Real Estate News

 

Dec. 5, 2019

OC Housing Report: Baby It's Cold Outside

The holidays are officially here, and so is the slowest time of the year for real estate.

 

The Holiday Slowdown: From Thanksgiving to the end of the year, it is the slowest time of the year for housing when both the inventory and demand drop to annual lows.

 

Starbucks does everyone a big favor. Right after Halloween, they reveal their latest holiday cups. This is a glaring reminder for buyers, sellers, and everybody involved in real estate that the Holiday Market is upon us. Costco, CVS, Albertsons, and just about every other retailer quickly follows suit, taking advantage of the busiest retail season of the year. Everyone shakes their head in disbelief, feeling as if Thanksgiving has been skipped. It foreshadows that there isn’t much runway left to cash in on 2019 housing. In the blink of an eye, the housing market has quickly changed and revealed a much different real estate environment. There are fewer and fewer homes for sale as the number of homeowners opting to enter the fray drops to its lowest level of the year. Many sellers who have not found success, mainly due to price, opt to throw in the towel and pull their homes off the market. At the same time, with all the holiday distractions, buyer demand drops to its lowest point of the year as well. In just the past two weeks alone, the active inventory dropped by 11%, shedding 599 homes, the largest drop of the year by a landslide. From Thanksgiving to New Year’s Day, the average drop since 2013 has been 20%, 1,234 homes. Many homeowners avoid placing their homes on the market from December through February, opting to sidestep the holidays and the cold winter weather. Ultimately, many homeowners are waiting to sell. They want to take advantage of the absolute “best time of the year” to sell a home, the Spring Market. They may be right, that the spring is the most active time of the year to sell, when demand (new escrows) climbs to a peak for the year; YET, the increase in escrow activity is met with a flood of new FOR SALE signs, competition. In reality, Orange County housing is still hot today for all homes priced below $1 million. It is even a slight Seller’s Market from $1 million to $1.25 million. 

 

Posted in News
Dec. 3, 2019

Home Sales Report Good Numbers

Way to begin ending 2019 with a bang. According to The U.S. Census Bureau and Department of Housing and Urban Development reports home sales surged to surpass sales a year earlier by 31.6 percent, more than doubling the annual increase the prior month.

 

While sales of newly constructed homes were actually slightly lower than in September, sales during the month at a seasonally adjusted annual rate of 733,000, down 0.7 percent from September. That previous number, however, was revised from an originally reported 701,000 to 738,000 units. Sales in October 2018 were at the rate of 557,000 units.

 

According to Mortgage News Daily’s Jann Swanson, “On a non-adjusted basis, there were 57,000 newly constructed homes sold during the month, unchanged from September but up from 43,000 a year earlier. On a year-to-date basis, sales have totaled 586,000 units, 9.6 percent more than during the same period in 2018.”

 

While Irvine November Property sales were 203, up 6.8% from 190 in November of 2018 and -8.6% lower than the 222 sales last month. November 2019 sales were at a mid level compared to November of 2018 and 2017. November YTD sales of 2,373 are running -4.4% behind last year's year-to-date sales of 2,482.  

 

With the Median Sales Price in November was $885,000, down -1.4% from $898,000 in November of 2018 and up 1.5% from $871,500 last month. The Average Sales Price in November was $1,018,680, down -3.9% from $1,059,641 in November of 2018 and down -6.9% from $1,093,775 last month. November 2019 ASP was at the lowest level compared to November of 2018 and 2017.

 

At this point, 2020 might just turn out to be a good one for home sales.

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +10bps.  This caused rates to move sideways. We saw very low rate volatility all week.

 

Posted in News
Nov. 26, 2019

Single-family rentals continue to get more expensive

 

Apartment living has its advantages, but it seems today's renters are opting for single-family homes instead of schlepping their bags of groceries up elevators. More room for their pets to roam? Possibly. After all, it's reported that 75% of renters own a furry friend. All we know is that apartment rental occupancy rates hit an all-time low. Meanwhile, single-family rental prices have also surged.

CoreLogic reports that U.S. single-family rent prices rose 3% in September over August. If we compare this to last September, however, the national rent increase has remained flat. Looking around for comparisons, Phoenix saw the highest year over year rent price increase, 6.7%, while Miami saw the lowest, 1%.

Low rental home inventories seem to spur the growth of single-family rental prices. September is also the 65th month in a row where low-end rentals spurred national rent growth, according to HousingWire's Julia Falcon. "Rent prices among this segment, defined as properties with rent prices less than 75% of the regional median, increased 3.8% year over year in September 2019, the same as in September 2018," she says.

Upscale rentals (more than 125% of a particular region's median rent), increased 2.9% in September, slightly up from last September's 2.5%. But Phoenix is still the rising star, having seen the highest year-over-year increase for the 10th year in a row, at 6.7%. Phoenix also had an annual employment growth of 2.4%, which is higher than the national employment growth average of 1.4%.

"Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth," says Falcon.

Source: CNBC, CoreLogic, TBWS

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +1bps.  This caused rates to move mostly sideways for the week on low volatility.

 

Posted in News
Nov. 19, 2019

OC Housing Report: Don't Miss Out

It is time to get off the fence before values rise and while mortgage rates are so low.

Cost to Waiting: Housing is poised to get hotter next year, setting the stage for appreciation.

 

Disneyland is known as “The Happiest Place on Earth.” Yet, sometimes the amusement park can be so crowded.

The lines for Space Mountain are often the longest. So many people take a look at the length of the line and turn around claiming that they will try to wait for the perfect time. They rationalize that the evening will be much better after a ton of families with little kids leave for the day. To their dismay, after returning to check the line in the evening, the line has not changed. In fact, it is a little bit longer. Was it because of the warm evening? Did all these people in line try to time the line too?

Many buyers are trying to time the housing market. They too are trying to wait for the “perfect time.” They hear that the real estate market is doomed, that housing is on the verge of a bubble, or how the next downturn will be worse than the Great Recession. These buyers are sitting on the fence and are waiting for it to be there turn. It is inevitable, right?

Unfortunately, all the noise, is just that… noise. The facts and data simply paint a completely different picture. It has been frustrating being a buyer. From 2012 through the first half of 2018, everybody was acutely aware that there was a supply problem.

That changed last year when the active inventory ballooned from August through Thanksgiving. There was finally a lot more supply, but it was only due to a demand problem. Demand dropped as mortgage rates climbed all the way to 5% in November. Everybody thought it was the beginning to the end of housing’s 6-year run-up. But that was then, and this is now. Mortgage rates today are at 3.75%.

This year has been all about recovering from the sting of high interest rates and low demand. Rates continuously dropped and bottomed at 3.5% in September. They had plunged by 1.5% in such a short period of time. It was unprecedented. As a result of the current low interest rate environment, housing has transitioned from a slight Buyer’s Market at the beginning of the year, to a Balanced Market in February, to a slight Seller’s Market ever since.

Of course some Irvine areas are exceptions.

In fact, the market has been picking up steam and the Expected Market Time (time from originally listing to opening escrow) just dropped to its lowest level of the year. Regardless of the time of year, housing is heating up with the active inventory dropping like a rock and demand remaining relatively flat. Since the end of July, the active listing inventory has shed 2,067 homes, a 27% drop. That’s the largest decline since 2012. At the same time, demand (last 30-days of pending sales) has only dropped by 7%. It has not looked that good since 2011. Consequently, the Expected Market Time dropped from 91 days at the end of July to 71 days today, a slight Seller’s Market (from 60 to 90 days), which is when there is not a lot of appreciation and sellers get to call more of the shots during negotiations.

Housing is knocking on the door of a HOT Seller’s Market (less than 60 days) where there are multiple offers and home values appreciate. While it may be frustrating for buyers to hear that the supply problem is back and the market is getting hotter, these frustrations can be overcome by focusing on the payment and diving into the market now before it heats up further. A $700,000 mortgage has a monthly payment of $3,242 today. For perspective, that same payment last year was $3,758 with a 5% rate, an eye-opening $516 extra every single month. But, let’s take it a step further. With a supply problem in 2020 coupled with low mortgage rates, home values are forecasted to appreciate between 2 to 4%.

Even if rates remain the same, at 4% appreciation, that $700,000 mortgage would become $728,000 and the monthly payment would be $3,371, that’s an additional $129 per month or $1,548 annually. What if rates grew to 4.25%? A mortgage rate of 4.25% would still be a great rate and would not rock the housing boat much at all. With 4% appreciation and a rate that is a half percent higher, the monthly mortgage payment would be $3,581 per month. That is an additional $339 per month or $4,068 annually. 

 

Posted in News
Nov. 18, 2019

The same reasons millennials want city-centered living now applies to boomers

 

They’re built in the heart of the city, these high rise buildings close to restaurants, shopping, and entertainment. The demographic developers had in mind was millennials, who would prefer to walk their babies past five different Starbucks than live in suburbia.

See Irvine's "Airport Area" to see what I mean.

What’s happening, however, is the invasion of 50-65-year-old empty nester renters downsizing from homes in which they raised their offspring, mowed lawns and threw back yard parties. It’s all about scaling down, simplifying, and eliminating the commute. This is evidenced by a recent Curbed article, where Patrick Sisson describes a Chicago high-rise on the lakefront.

Watermarke in Airport Area, Irvine

“While the real estate preferences of millennials and young adults get the bulk of media attention, older renters actually have as much or even more to do with the last decade’s upswing in downtown urban living,” says Sisson. “According to the Urban Land Institute’s latest Emerging Trends Report, urban growth has come from two distinct age groups. Over the last decade, the urban population of 20- to 29-year-olds grew by 4.7 million. But during the same time, the number of 55- to 64-year-olds living downtown grew by 10.3 million.”

 

He goes on to say that while the new glass high-rises sprouting up in emerging downtown neighborhoods may be marketed to millennials, many of the units may end up being occupied by their parents.

 

“Developers have always focused on consumers with money,” says real estate consultant John Burns in the Curbed article. “Even though some of these new developments are in areas people think are cool for millennials, those who can afford them are often in their late 50s and early 60s.”

 

The idea of ex-surburbanites moving downtown once their kids are out of the house isn’t anything new, but their numbers have skyrocketed over the last decade. According to U.S. Census Bureau figures, the 55-and-older demographic represented the largest jump in the renter population in the U.S., growing 38 percent between 2007 and 2017 (the number of renters over age 65 grew by 65 percent). For the 54-and-under age range, the percentage of renters only rose 10 percent.

 

What no one could predict was a trend for older Americans to both live and work longer than previous generations. In the past, when golden parachutes and final retirement checks were reason to celebrate and move to warmer climates, boomers haven’t taken the bait. Renting can make more financial sense than holding on to a large suburban home, and the ease and simplicity of it make life easier. The reasons millennials would be drawn to city-centered living —transit access and proximity to retail and restaurants—are precisely the things drawing in older renters who consider a future of decreased mobility, the desire for less responsibility and a set of elevators delivering them to everything they could possibly need as they age.

 

Older renters are a major focus for developers, according to Sisson, who points out that a number of large national firms have product lines dedicated to older adults and seniors, including luxury options. Greystar has a series of projects under the Overture banner, meant for residents 55 and older. Carlyle Group is investing billions of dollars in the market. And Related announced a $3 billion urban senior living project with Atria.

 

Even the units themselves are morphing to meet the needs of these older buyers, with more two- and three-bedroom units to attract older residents looking for homes somewhere between starter-home and suburban-house size. Planning that focuses on senior living also includes fitness centers, bike repair shops, walkability — all things millennials want but may not be able to afford until their student loans are paid off and their kids are grown.

 

Source: Curbed | AppleNews | TBWS

 

Rates Currently Trending: Lower

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +21bps.  This may've been enough to move rates or fees slightly lower last week. We saw moderate rate volatility through the week.

 

Posted in News
Nov. 11, 2019

What a Twist!

The housing market just dramatically improved as the inventory plunged and demand increased.

Sudden Improvement: The Expected Market Time just dropped by 8%.

Was it the nanny? How about the next-door neighbor? The uncle or family friend? Classic “whodunit” movies are intentionally designed to keep the audience on the edge of their seats attempting to figure out the identity of which character is behind the mystery. The writers keep you guessing as you anxiously shovel handfuls of movie popcorn and wash it down with a Classic Coke. Finally, the plot twist is revealed. You may be surprised because you missed all the signs. In the same way, housing has been slowly evolving, flashing signs of change regardless of all the chatter that housing is about to collapse. The twist? In the past two weeks, the market improved significantly, and the Expected Market Time dropped to levels not seen since April, the height of the Spring Market. This did not come out of left field. 2019 has been characterized by the gradual evolution away from the housing slowdown at the end of 2018 back to a much stronger Southern California housing market. Everyone stopped talking about the lack of homes on the market as demand came to a crawl. It’s basic supply and demand. When the supply of homes increases and demand falls, housing tilts towards the buyer’s favor. That is precisely what occurred from November 2018 through January of this year. When the supply of homes consistently drops as demand remains reliably strong, housing tilts in the seller’s direction. That is storyline since July. Fueled by a return to historically low mortgage rates, demand has not budged much since peaking back in April. From July to today, it has only dropped by 9%, an uncharacteristically small decline given the shift from the Summer to Autumn Market. Last year, it dropped by 22%. The active listing inventory plunged from 7,601 homes at the end of July to 5,921 today, shedding 1,680 homes or 22%. Last year in increased by 7%. As a result, the Expected Market Time (the time from the initial FOR SALE sign to opening escrow) dropped by 14% since July of this year, the largest since 2012. 

 

Posted in News
Nov. 5, 2019

Recent rate cut means smiles for mortgages and credit cards, sad news for savers

When the Federal Reserve cuts rates, there is a reason for it. While there is no crystal ball, the Feds look for signs of a slowing economy and often hedge their bets by announcing a rate cut to encourage more consumer spending.

 

The effects of three rate cuts over the past year offer a mixed bag, with some Americans taking advantage of cheaper loans (impacting your mortgage, home equity loan, credit card, student loan tab, and car payment). Lenders, however, may be less included to lend money in anticipation of an economic slowdown. Throw in less interest on that rainy day nest egg, and in some cases, buying power is lost over time.

 

So let’s study all the edges of the rate cut sword as described by CNBC’s Jessica Dickler. First off, the prime rate (the rate banks extend to their most creditworthy customers), is typically 3 percentage points higher than the federal funds rate. That not only determines your savings rate; it also is the rate used for many types of consumer loans, particularly credit cards.

 

“With a rate cut, the prime rate lowers, too,” she says, “And credit cards likely will follow suit. Most credit cards come with a variable rate, which means there’s a direct connection to the Fed’s benchmark rate.” This means cardholders could see a reduction in their annual percentage rate within a billing cycle or two. However, credit card debt will continue to be expensive, with only a small dip in the foreseeable future.

 

Dickler says it’s a good time to shop around for a zero-interest balance transfer offer because if the economy continues to soften (the reason for the three cuts in the past year), these terms could get less generous. You can also call your credit card issuer directly and request a break on interest rates. You have nothing to lose.

 

As for savings, online banks typically offer the highest yields because they come with fewer overhead expenses than traditional bank accounts. Shop around for the best rates. And don’t forget that although you can’t access it for while if you do so, you can lock in a higher rate with a one-, three- or five-year certificate of deposit.

 

While the economy, the Fed, and inflation all have some influence over long-term fixed mortgage rates (which generally are pegged to yields on U.S. Treasury notes), there is no direct connection to mortgage interest rates. Historically speaking; however, mortgage rates are the lowest that have been in many years — always good news for the housing market, whether it be existing homes or new construction. If you’re not buying, however, this also makes it a good time to both refinance or pull equity from your home.

 

Wondering if buying a car might be cheaper with rates this low? The recent rate cut will likely not have any material effect on what you pay, according to Dickler. “For example, a quarter-point difference on a $25,000 loan is $3 a month, according to Bankrate,” she says. “Auto loan rates have remained low, even after years of rate hikes.” But it’s wise to reward of how other factors may affect a car purchase, as prices for them may rise due to trade wars increasing tariffs on materials.

 

Source: CNBC, TBWS

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +33 bps.  This was enough to move rates lower last week. We saw a good deal of rate volatility at the end of the week.

 

Posted in News
Oct. 31, 2019

Don't be spooked by the Irvine real estate market

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Don't be spooked - contact me for a no-obligation buyer consultation.  https://www.HomesForSaleinIrvineOC.com/buying/

 

Posted in News
Oct. 29, 2019

Accessory dwelling units are being used for fun, family and profit

 

Casitas. Granny flats. Tiny homes. Back yard in-laws units. She-sheds. Man caves. Call them what you will, but across the country they are now being used not only for fun, but for profit as well.

 

According to a recent article by CNBC, the latest housing trend in backyards around America is the emergence of the accessory dwelling unit (ADU), cropping up in back and side yards across America, acting as either rental units or additional space for aging parents and still-nested adult children.

 

Writer Diana Olick says, “Growth in the sector has been fueled by changes to local and state zoning rules. Some municipalities are struggling with a lack of affordable housing and see these additional units as one remedy.” She goes on to describe how in 2010 Portland, Oregon waived impact fees for ADUs, making them significantly less expensive. As a result, the number of ADU permits jumped from 86 in 2010 to 660 in 2018. Same thing happened in California when a 2017 state law forced cities to relax ADU regulations, where permits jumped even more dramatically.

 

This means huge growth for ADU builders, who are eager to expand the market and drive the number of ADU installations up dramatically. Financing for ADUs is still looking for a home, however. “ADU is still really for the most part an affluent homeowner product, meaning you have to have cash on hand to take this on,” says one ADU builder. “Financing is a concern for the larger homeowner universe.”

 

As for he purposes these tiny dwellings are serving, ADU builders are reporting that interest is evenly split between those looking to address housing for family members and those seeking rental income. Pricing depends on the size of the unit, of course, but the most popular model, with the most common size is running just under 300 sq. ft. and cost around $105,000 to install.

 

Whether it’s housing family or renting out their units on AirBnb, many ADU owners look for their units to provide an even bigger financial return in retirement. One couple in the article lived in their ADU for nearly a year while renovating their main dwelling. Their plan? Someday they want to live in (visit?) their ADU and rake in the cash by renting out their house, traveling and doing whatever they please.

 

Local zoning regulations remain as one of the greatest roadblocks for ADU builders. While it is definitely becoming easier to build ADUs in some local areas, Olick reports that there are still battles big and small, from zoning to neighborhood opposition. “Some don’t want to see their neighborhoods crowded with renters, pushing density and services beyond capacity.”

 

Before considering adding an ADU to your property, experts recommend you not only check with your neighborhood’s rules and regulations. Talk to your neighbors as well, because especially in many upscale neighborhoods NIMBY (not in my backyard) is alive and well.

 

Source: CNBC, TBWS

 

Rates Currently Trending: Neutral 

Mortgage rates are trending sideways this morning.  Last week the MBS market worsened by -2 bps.  This caused rates to remain unchanged for the week. We saw low rate volatility through the week.

 

Posted in News
Oct. 23, 2019

Woodbridge Real Estate Update | October 2019

 

WOODBRIDGE REAL ESTATE UPDATE

OCTOBER 2019

 

Property Sales

September Property sales were 22, up 15.8% from 19 in September of 2018 and -8.3% lower than the 24 sales last month. September 2019 sales were at their highest level compared to September of 2018 and 2017. September YTD sales of 174 are running -21.3% behind last year's year-to-date sales of 221.

 

Prices

The Median Sales Price in September was $732,500, down -11.7% from $830,000 in September of 2018 and up 5.0% from $697,500 last month. The Average Sales Price in September was $704,443, down -18.4% from $862,990 in September of 2018 and down -11.5% from $796,296 last month. September 2019 ASP was at the lowest level compared to September of 2018 and 2017.

 

Inventory & MSI

The Total Inventory of Properties available for sale as of September was 72, up 10.8% from 65 last month and up 67.4% from 43 in September of last year.

September 2019 Inventory was at highest level compared to September of 2018 and 2017.

A comparatively lower MSI is more beneficial for sellers while a higher MSI is better for buyers. The September 2019 MSI of 3.3 months was at its highest level compared with September of 2018 and 2017.

 

Market Time

The average Days On Market(DOM) shows how many days the average Property is on the Market before it sells. An upward trend in DOM tends to indicate a move towards more of a Buyer's market, a downward trend a move towards more of a Seller's market. The DOM for September was 36, down -5.3% from 38 days last month and up 16.1% from 31 days in September of last year. The September 2019 DOM was at its highest level compared with September of 2018 and 2017.

 

Selling Price per Square Foot

The Selling Price per Square Foot is a great indicator for the direction of Property values. Since Median Sales Price and Average Sales price can be impacted by the 'mix' of high or low end Properties in the market, the selling price per square foot is a more normalized indicator on the direction of Property values.

The September 2019 Selling Price per Square Foot of $490 was up 0.2% from $489 last month and up 1.4% from $483 in September of last year.

 

Selling Price vs Listing Price

The Selling Price vs Listing Price reveals the average amount that Sellers are agreeing to come down from their list price. The lower the ratio is below 100% the more of a Buyer's market exists, a ratio at or above 100% indicates more of a Seller's market. The September 2019 Selling Price vs List Price of 96.7% was up from 96.3% last month and down from 98.1% in September of last year.

 

Inventory / New Listings / Sales

'This last view of the market combines monthly inventory of Properties for sale along with New Listings and Sales. The graph shows the basic annual seasonality of the market as well as the relationship between these items. The number of New Listings in September 2019 was 24, down -14.3% from 28 last month and down -14.3% from 28 in September of last year.

 

See the current Active, "In Escrow" and Sold Woodbridge listings.

Posted in News