Irvine Real Estate 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
Oct. 23, 2019

Nope - No Bubble

Many buyers are sitting on the sidelines in anticipation of a major housing downturn even though the facts illustrate it simply is not going to happen.

No Bubble: Housing data illustrates that there is not a housing bubble on the horizon.

It has happened to just about everybody. Driving down the road, unaware of your current speed, a look in the rearview mirror reveals there’s a police car with sirens blazing pulling you over. After receiving the ticket and driving away, for quite some time your driving habits change. You are more cautious, more aware of your surroundings, anticipating at any moment that, inevitably, you will be pulled over again.

Similarly, so many buyers and homeowners are mentally preparing for the next housing bubble to pop. Everybody knows somebody that was affected by the Great Recession when values dropped substantially, and countless homeowners lost their homes to foreclosures or short sales. With values surpassing record levels, isn’t housing a bubble again? Even though so many are anticipating another bubble, the answer is simple: NOPE.

The Great Recession was prompted by the housing market where anyone could purchase a home regardless of their true qualifications. Zero down payment loans, fudged loan documents, negative ARM’s, cash out refinancing, and subprime lending contributed to the run-up in values that filled the housing bubble that ultimately burst in 2007. As a result, the housing market collapsed, and home values plummeted. The writing was on the wall prior to the collapse. Housing data illustrated market conditions that were lining up in favor of buyers. The inventory ballooned while demand crumbled. As a result, the Expected Market Time (the time between hammering in the FOR SALE sign to opening escrow) rose to ridiculous heights.

The numbers were off a year prior to the subprime meltdown, which occurred in March 2007. In 2006, the Expected Market Time surpassed 150 days, a Deep Buyer’s Market, in June. It grew to 225 days by year’s end for ALL of Orange County. In 2007, it surpassed 150 days in March and by July, surpassed 290 days. By year’s end, it reached an Expected Market Time of 451 days. 

Thanks for this info, Steven Thomas!

Browse through all the Irvine homes currently listed for sale.

 

 

Posted in News
Oct. 22, 2019

Dipping interest rates help single family home permits surge ahead of predictions

It’s a numbers game, but it’s one everyone in the real estate and the home building industry watches. While construction of new houses fell more than 9% in September, there is a now a backlog of permits suggesting the dip is simply a brief pause in a real estate market reinvigorated by lower mortgage rates, according to Realtor’s Jacob Passy.

 

He adds that housing starts slid to an annual rate of 1.26 million last month from a revised 1.39 million in August, the government said Thursday, concentrated in new buildings with five units or more that typically get rented. Even though the number of permits to build fell slightly month-to-month, the number of permits filed was nearly 8% higher compared to a year earlier.

 

Construction of apartments, condo complexes, and other projects with five units or more have the potential to swing sharply from month to month. But new construction on single-family homes (about 75% of all homes sold) rose slightly to an annual rate of 918,000, marking the highest level since the start of 2019. Single-family starts have risen for four months in a row and are 2.8% higher compared to a year ago.

 

Passy says indicators illustrate that construction has perked up following a steep decline in interest rates, even though builders still are not producing enough new homes to satisfy demand.

 

Home-builder sentiment surged to a 20-month high of 71 in October from 68 in the prior month, the National Association of Home Builders said Wednesday. Readings over 50 are a sign that confidence is improving. Just 10 months ago, the index stood at a 3½-year low of 56.

 

Source: Realtor, MarketWatch, TBWS

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market worsened by -7bps.  This caused rates to move sideways on low volatility for the week.

 

Posted in 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.

 

CurrentMortgageRatesToday.org 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, currentmortgageratestoday.org, 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