Irvine Real Estate News


Oct. 8, 2019

Payment Not Price

When it comes to housing, everybody puts way too much emphasis on the price of a home when they should really be taking a closer look at the monthly payment.

Focus on the Payment: Just a year ago mortgage rates were at 4.75% and rising, substantially higher than today’s 3.5% rate.

Everyone has done it. When it is time to look for a brand-new car, narrowing down the car of choice is the first step. After isolating the perfect car, the next step is to sit down and negotiate. Once the initial paperwork and credit application are complete, the salesperson leaves the negotiating table and visits privately with the manager. Upon their return, they then go over the payment for the car. After going back and forth to lower the monthly obligation by $20, it is not uncommon to get up and start calling around other dealers to see if a better payment is out there. After all, it will be the same monthly amount that will come out of the checking account for five-years! In purchasing a home, buyers tend to focus a bit too much on the price of a home and do not consider enough the monthly payment. After settling on a home and closing, the price no longer matters, it is the payment that is withdrawn from the checking account every single month for 30-years. It happens 360 times for a home loan versus 60 for a car. As a society, why is so much time devoted to the monthly payment for a car and not a home? Everybody is focusing on how high values are today. For detached homes they are up 60% in Orange County since bottoming in 2011. Homes appreciated significantly from 2012 through 2017. In June of 2017, values eclipsed the record peak reached prior to the Great Recession in June 2007. Since breaking the record, values have only increased slightly. Homes are not appreciating much at all in 2019. Many believe that home values are unaffordable and have reached a peak. That is what a lot of buyers are hoping for. That is simply not correct, home values have not yet peaked. Many buyers are sitting on the sidelines and waiting… and waiting. They are trying to time the market. Yet, economists and prognosticators will attest that timing markets is next to impossible. As a result, many capable buyers have been permanently sitting on the sidelines rather than cashing in on an excellent opportunity. Housing is in a very good spot right now and it has everything to do with interest rates. In November of last year, the 30- year mortgage climbed all the way to 5%. Consequently, housing slowed to a crawl. But, since then rates have plummeted to 3.5%, that is down 30%. For a $700,000 loan, that is a $614 per month savings, or $7,373 per year. That is a HUGE savings!

Posted in News
Oct. 8, 2019

Borrowers jump on board the refinance bandwagon as rates drop

When mortgage rates plummet to historically low levels, you have to expect a reaction from the borrowing public. And, as usual, they did not disappoint. Borrowers got themselves to their loan reps and began taking advantage of the market. According to the Mortgage Bankers Association (MBA), the volume of mortgage applications rebounded sharply last week as homeowners rushed to refinance.


Mortgage News Daily says, "The Refinance Index increased 14 percent from the previous week and was 133 percent higher than the same week one year ago. The refinance share of mortgage activity increased to 58.0 percent of total applications from 54.9 percent the previous week."


The article reports that although refinance activity slowed in September compared to August, the months together were the strongest since October 2016, and this is expected to continue. MBA' Joel Kan said, "Purchase applications also increased and remained more than 9 percent higher than a year ago. Low rates and healthy housing market fundamentals continue to support solid levels of purchase activity."


The FHA share of total applications decreased a percent, to 10.4 percent from 11.4 percent the week the previous week and VA loans followed, dropping to 12.4 percent from 13.1 percent. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with origination balances at or below the conforming limit of $484,350 decreased as well, while the contract interest rate for jumbo 30-year FRM, loans with balances greater than the conforming limit, dipped 2 basis points. The article reports that both the contract and the effective rate for 5/1 adjustable rate mortgages (ARMs) moved higher.


MBA's Weekly Mortgage Applications Survey has been around since 1990 and covers over 75 percent of all US retail residential applications. Its respondents include mortgage bankers, commercial banks and thrifts.


Source: MorgageNewsDaily, TBWS


Rates Currently Trending: Neutral

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +40 bps on moderate to high volatility.  This was enough to improve mortgage rates or fees. 


Posted in News
Oct. 1, 2019

First-time homebuyers often feel unprepared for ownership

For some it seems like a no-brainer. Renting a home feels like throwing money away, offering no sense of ownership whatsoever. Buying a home is investing in the future. Even if it takes up to 30 years to pay off the loan, you have been LIVING in your investment.


According to a new study by Framework, however, there is more than meets the eye with first time home buyers, who see it as laced with blind spots and pre-loaded with anxiety — mostly because they went into it fairly blind, without enough education and information. The surveys were completed by two groups: recent first-time homebuyers and prospective first-time homebuyers.


The report says only 41% feel very well prepared for the home buying process, 57% worry they can't afford homeownership, 47% think the home buying process is "rigged" against the buyer, 44% fear making costly mistakes, and 55% said they could use an independent advocate to coach them through the process of home buying and homeownership. On top of that, more than half of first time home buyers in both groups said buying a home was more difficult than it should be.


So what does this tell the average real estate professional or mortgage loan officer? That they may have fallen short of making their buyers literate enough to have confidence in the process? While, once they had been through the process of buying a home, 64% of responders said they emerged from it knowing a lot more about the financial aspects of it, most wished they had taken some kind of class to prepare them for it.


When you think about it, those in the industry often don't do a great job in explaining aspects of homeownership not in their purview — things like paying taxes, how and when a payment can adjust, or promoting the idea of having a home ownership "slush fund" in the case of an emergency, such as flooding, a failing roof, or plumbing leaking underground. Of course, these aren't included in the warm, fuzzy feelings industry professionals care to project as they lead buyers through the process, but that doesn't mean first-time homebuyers shouldn't be encouraged to find classes or sources that address their concerns. says that while the largest cost of owning a home will be your monthly mortgage payment, there are several other costs that you should be aware of when trying to find out how much homeownership will cost you — things like an HOA fee (and what it covers), property taxes, homeowner's insurance, and utilities. And then there is maintenance and repairs.


There are always risks inherent in any large purchase. But it's up to the potential homeowner to decide if it's the best financial step for them. Lenders and Realtors often offer courses for first-time homebuyers, but they can also be found online as well.


Source: PRNewswire,, TBWS


Rates Currently Trending: Neutral 


Mortgage rates are trending sideways so far today.  Last week the MBS market worsened by -1bps.  This caused rates to trend sideways for the week.  Rate markets started to settle down through the week.  We could see a good deal of rate volatility toward the end of the week.


Posted in News
Sept. 23, 2019

Timely payments and a surge in refinances mean lower foreclosures

Mortgage “performance.” Sounds like a fun financial song and dance, right? If you recall the days of heavy foreclosures, however, it’s no joke, especially to the mortgage servicing industry. And according to experts who monitor such things, mortgage performance has markedly improved.


According to data from First Look at the latest mortgage performance data from actionable analytics company Black Knight, that foreclosure starts hit an 18-year low in August, at 36.2K for the month, down more than 23% from this time last year — the smallest it has been since 2005.


But that’s not all. Mortgage holders are also looking to pay off their homes faster, with prepayments increasing by 5% from July to reach a three-year high, and August’s prepayment rate was up 62% from the same time last year.


According to ATTOM Data Solutions, one in every 2,554 U.S. properties received a foreclosure filing during the month of August. Falling interest rates and a subsequent increase in rate/term refinances has helped to cause this surge in on-time payments and proactive borrowing.


A report in DS News says, “Falling rates and an abundance of refinance candidates were primary drivers behind servicers retaining 24% of all refinancing borrowers – the highest such retention rate since late 2017 – and 30% of rate/term borrowers specifically.” It goes on to say that with interest rates at three-year lows, anecdotal evidence suggests that in recent weeks, mortgage lenders had been inundated with inbound refinance business.


Source: FirstLook, Black Knight, ATTOM Data Solutions, TBWS


Rates Currently Trending: Neutral 

Mortgage rates are trending sideways so far today.  Last week the MBS market improved by +35bps.  This was enough to move rates lower last week. We saw high rate volatility throughout the week.


Posted in News
Sept. 17, 2019

Real estate still rules as safest long-term retirement investment in new survey




Real estate still rules as safest long-term retirement investment in new survey


When 2,000 Americans are asked their opinion about investing and a large chunk of them agree, it’s something worthy of note. According to a study done by the online magazine Sophisticated Investor, a cyber-publication dedicated to providing insight and analysis on a variety of investment topics to investors worldwide, real estate won out as the safest investment.


The group, aged between 35 and 65+, examined a number of investment options they consider to be the safest for long-term retirement investing, including real estate, stocks & bonds, bank savings accounts, fixed annuities, precious metals and U.S.-backed securities. The survey found that  22.4% of all respondents selected real estate as the safest long-term investment for retirement with a higher percentage resulting from the 45-54-year-old group (25.1%). A press release by Newswire about the study says, “Given the current turbulent state of the financial markets and the global economy, the average American investor seems to be leaning towards more secure long-term investment options for retirement and real estate is currently viewed as the top choice in that regard.”


A spokesperson for Sophisticated Investor goes on to say, “Real Estate has come a long way since the last financial crisis where confidence in this asset class hit rock bottom. The real estate markets have been showing consistent positive results all over the country, and that could explain why Americans have such a positive outlook on this asset class.”


Stocks & bonds came in second at 18% and interestingly enough, when demographic filters were applied to the survey results, factoring young investors, between 35 and 44-years-old,  19.5% indicated this investment option was the safest with an even larger share of them being females. Gold and silver bullion garnered only 10.6%, yet when demographics filters were applied, males were the largest group voting for these metals as the safest long-term investment for retirement. Precious metals are usually considered safest during times of economic crises.


Bringing up the rear was U.S. Treasury issued securities at 9% — surprising in that these have long been the bastion of safety and security amid the turbulence of financial markets.


Source: PRNewsire, TBWS


Rates Currently Trending: Neutral 

Mortgage rates are trending sideways this morning.  Last week the MBS market worsened by -132 bps.  This was enough to move rates higher last week. We saw high rate volatility throughout the week, especially Friday.


Posted in News
Sept. 16, 2019

OC Housing Report: Green Shoots

Even though the housing market is not as hot as prior years, trends have emerged that confirm that it is starting to heat up.

Green Shoots: Trends are developing which demonstrate that the housing cool down is beginning to heat up.

Headlines are the same across the country: there are more homes on the market and it is taking a lot longer to sell a

home. Multiple offers and instantaneous success are characteristics of housing a couple of years ago. After many years of rapid appreciation, demand for homes slowed considerably as mortgage rates climbed to 4.5% in March 2018. Demand deteriorated further when rates unexpectedly squeezed past 5% last November. Ever since the housing market slowed last year, demand has remained sluggish, a bit subdued in comparison to the hot years from 2012 through 2017. Those markets were characterized by a very limited inventory and sizzling demand. Yet, behind the scenes, the 2019 housing market has been boosted by falling mortgage rates. After starting the year at 4.5%, rates have dropped ever since, dipping below 4% in June for the first time since the end of 2017. Today, they sit at 3.5%, the lowest level since October 2016, nearly three years ago. As a result of the return to historically low mortgage rates, trends have surfaced that highlight a marketplace that is heating up.

GREEN SHOOT – The current active inventory has dropped by 8% since the end of July. The inventory shed 604 homes in that time, the largest drop since 2008. Today, there are 6,997 homes on the market. It is the first time that there are fewer homes compared to the prior year since April 2018. The current trend is for a rapidly falling active inventory and fewer homes on the market than the prior year. 


Posted in News
Sept. 11, 2019

Low rates may spur further home price growth as we move into 2020


Low rates may spur further home price growth as we move into 2020


If you’ve been waiting around to buy a home thinking prices would start stabilizing or getting reduced, think again. A new CoreLogic report is saying annual home-price growth will increase by 5.4% by July of 2020, representing a shift in the market.


What might cause this shift? Low interest rates. The S&P CoreLogic Case-Shiller index for home prices, a widely-cited barometer for the national housing market, evidently registered the slowest pace of home price growth since 2012 in June. A year earlier, home prices were rising at an annual rate of 6.3%. To boot, some major housing markets, such as New York, Miami, and Seattle, actually experienced a decline in home prices either on a monthly or annual basis. But home-price growth had become weaker as would-be buyers were priced out of these and other markets.


Now the index is registering a 3.6% uptick year-over-year in July, noting some parts of the country where prices had fallen, namely Connecticut and South Dakota. But that’s pretty much it, according to an article by Realtor’s Jacob Passy.


Recent home sales data now says sales activity has modestly picked up as consumers seek to grab on to low mortgage rates, which have fallen throughout much of 2019. Technically speaking, loan rates generally track the path of the 10-year Treasury note, so whenever you want to check trends, go there. Treasury yields have fallen in recent months amid compounding concerns related to trade tensions and the state of the global economy.


Passy quotes CoreLogic’s chief economist Frank Nothaft, who says, “With the for-sale inventory remaining low in many markets, the pick-up in buying has nudged price growth up. If low interest rates and rising income continue, then we expect home-price growth will strengthen over the coming year.”


As for how much growth in home prices may occur, this is no exact science. Passy says CoreLogic estimated that the real-estate markets in nearly one in four metropolitan areas were undervalued (at least 10% below what it determines to be the sustainable level where supply and demand are balanced).


Meanwhile, another 40% of markets were correctly predicted, meaning that roughly a third of markets nationwide are overvalued — and that could mean that price growth could slow or prices could fall if enough buyers are priced out of the market again.


Source: Realtor, TBWS


Rates Currently Trending: Neutral 

Mortgage rates are trending sideways so far today. Last week the MBS market worsened by -5bps.  This caused rates to move sides once again. Rates continue to trend sideways at historically low levels.


Posted in News
Aug. 28, 2019

Orange County Housing Report: It is what it is

Many buyers and sellers are holding out for a major shift in the market favoring their point of view, but housing is not changing anytime soon.

Status Quo: For the rest of the year, the housing market is not going to change much at all.

There is an old saying, “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck." No

matter how hard you wish it was something else, it is still a duck at the end of the day.

Today’s housing market is a slight Seller’s Market. That is when homes are not appreciating much at all, but sellers get to

call more of the shots during the negotiating process. For buyers and sellers, wishing that the market was different is a

complete waste of time.

Many buyers and sellers are holding out and hoping for a change in the market. Buyers want to see housing slow to a

crawl like it did in the last four months of 2018 where, for a moment, they were in the driver’s seat. They would love to see

prices come down, after all, aren’t values too high?

Sellers expect the housing market to behave like it did from 2012 through 2017. Boy those were HOT years!! They should

once again be able to stretch their housing price and get $15 or $20,000 more than the last sale with multiple offers within

the first couple of weeks, right?

This kind of thinking is stinking thinking. Neither are correct. What you see in the market today is ultimately what you are

going to see for the rest of the year. More simply, it is what it is; what you see is what you get. Values are not going to

grow much. The overall pace of housing is not going to change. Housing is going to move along at the same clip. Buyers

think that the end of the year is the BEST time of the year to buy. Nope! What you see is what you get. Sellers think that

the market is going to suddenly heat up. Nope! What you see is what you get. 

Posted in News
Aug. 27, 2019

Existing Home Sales Continue to Impress


Existing Home Sales Continue to Impress


What is normally considered the “selling season” has gotten a retroactive boost in recent days. The National Association of Realtors’ chief economist Lawrence Yun reports that the sales of previously owned U.S. homes picked up in July, suggesting that lower mortgage rates are beginning to drive sales after a weak spring selling season.


It’s always news when sales are better than expected. And existing-home sales rose 2.5% in July from the previous month to a seasonally adjusted annual rate of 5.42 million, according to the NAR. They were expected to rise just 2.3%.


Compared with a year earlier, sales in July rose 0.6%, the first increase after a streak of 16 consecutive months of year-over-year declines. Yun says July’s uptick was a combination of incredibly low mortgage rates and strong job conditions.


June’s sales were revised higher, to a 5.29 million annual rate from an earlier estimate of 5.27 million, capping off a less than optimum spring selling season. March through June is when roughly 40% of the year’s sales take place. So even a slight pickup is good news.


Steadily falling mortgage rates are definitely in the mix, while a shortage of homes for sale has raised its head as a larger issue, keeping home prices high. The median sale price for an existing home in July was up 4.3% from a year earlier. There was a 4.2-supply of homes on the market at the end of July, based on the current sales pace.


According to Yun, low inventory remains a challenge for the market during the second half of the year. “The job market still remains strong but there is increasing economic uncertainty,” he said, adding “people may be hesitant to buy a home if they think we may be facing an economic recession.”


While purchases of previously owned homes account for the bulk of U.S. home buying, the Commerce Department last week reported that home building fell in July for the third straight month. Housing starts, a measure of new-home construction, fell 4% in July from the prior month to a seasonally adjusted annual rate of 1.191 million.


Source: Realtor, TBWS


Rates Currently Trending: Neutral 

Mortgage rates are trending sideways so far today.  Last week the MBS market worsened by -15bps.  This caused rates to mostly move sideways. Rate markets showed a good deal of volatility last week.


Posted in News
Aug. 20, 2019

Homebuilders see more short term profit in building single-family rental communities


Homebuilders see more short term profit in building single-family rental communities


If you can’t buy, rent? That’s the stigma renters used to tolerate, but no longer. According to CNBC’s Diana Olick, demand for single-family rental homes is surging while homebuilders are rethinking how they do business by redesigning and reimagining the sector — and becoming landlords themselves.


“While builders have always sold some of their new homes to investors as rentals, the strong demand has some moving into the space exclusively,” says Olick. An example she used is a new housing project in San Antonio, TX, where a builder is creating a gated community of 250 three and four-bedroom homes are renting for anywhere from $1,800 to $2,300 per month. The community includes luxury amenities such as a pool, a fitness center, a community kitchen and party space, as well as a dog park and dog-washing station.


Olick explains how close-quarters condo rentals are no longer the trend, taking the idea of an apartment and going horizontal instead of vertical. While nearly all apartment rentals consist of studios, one and two bedrooms, there are very few three and four-bedroom homes for rent. “We saw a growing need coming out of the downturn, to provide three- and four-bedroom homes to the renter society,” said one of the homebuilders she quoted.


A major shift in the demographics is finding homebuilders shifting their thinking as well. “Empty-nesters are done taking care of their homes. They want to downsize, they want portability, mobility in the lease. The millennial household formation, they’re not really dialed into taking care of a home, they want to go out and do the same thing that the boomers are doing, which is enjoy life, not work hard for their house,” said the builder.


Last year, approximately 43,000 single-family homes were built for rent, the largest number in nearly 40 years according to National Association of Home Builders analysis of U.S. Census data. The built-for-rent share of housing starts is also rising, nearly double its recent historical average (from 1992-2012). This is beginning to answer the need for not only empty-nesters but for millennials as well, who often are not yet in the position to take on a mortgage or simply are choosing not to. Many are not married, have no kids but definitely have dogs, making them gravitate toward renting a home instead of a condo so they can open a back door and let their canines romp.


While homeownership has always been touted as the American Dream, you’d think those earning six figures would buy instead of rent. But that is no longer the case. Many can afford to buy a home but simply decide to avoid the hassle of homeownership. Unlike renters, homeowners are often hit with hidden costs, more responsibility, and fewer amenities than rental dwellers.


With the high costs of land, a labor shortage, and expensive materials, builders are struggling to build neighborhoods of entry-level homes and expect to make a profit — a likely reason for the shift toward rental properties and communities. Big homebuilders like Lennar and Toll Brothers have begun building homes specifically to sell to investors as rentals. They see less risk in the short term in the build-for-rent market.


Source: CNBC, TBWS


Rates Currently Trending: Neutral 


Mortgage rates are trending sideways to slightly higher so far today.  Last week the MBS market improved by +19bps.  This was enough to move rates slightly lower from historically low levels. We saw high rate volatility at the end of the week.


Posted in News