Irvine Real Estate News

 

Feb. 6, 2020

Demand for homes is on a fast track for 2020

 

The demand for housing is coming at the market like a freight train, with the law of supply and demand on full display. The ongoing shortage of available homes for sale combined with a surge of homebuyers is forcing home prices up, according to Redfin. And where it stops, nobody knows.

 

This shortage can also be seen in Irvine where the Total Inventory of Properties available for sale as of January was 566,  down -17.1% from 683 in January of last year. Also, the number of New Listings in January 2020 was 278, down -13.7% from 322 in January of last year. Check out the latest Irvine homes to hit the market at https://ir-vine.house/AllIrvine 

 

HousingWire’s Julia Falcon reports that homebuyers are not waiting for spring, as usual, to buy, heating up home buying competition early in 2020. “In fact, there were only 1.4 million units available for sale in December, the lowest level in at least 20 years, according to the National Association of Realtors,” she says. She goes on to say that beyond that, December saw the largest year-over-year decline of housing inventory in almost three years, with inventory declining 12%.

 

 

Mortgage rates remaining historically low is a factor in all this. They are now at their second-lowest in three years. The double-edged sword in all this is that while low rates are driving some buyers into the market, they also contribute to many others holding onto their homes, happy to have their newly refinanced mortgage. Those with paid-off homes are enjoying the freedom of cash-out refinances at historically low rates, updating their homes and staying put.

 

“With every new release of data this year, I’m becoming more and more confident that demand will be strong in 2020—just as strong as, if not stronger than, in 2018 and 2017,” said Redfin chief economist Daryl Fairweather. “The big question for the housing market this year is supply. Will homeowners sit on the sidelines, content with their refinanced loans, or will they want to get in on the action too and move up, move down, or cash out entirely?”

 

There was a time when we thought bidding wars were behind us, but that was short-lived. “A rise in bidding wars and a continuous spike in home prices may soon be the result of a 10-year peak in home buying demand and 20-year low in the number of homes for sale,” says Falcon.  If you are thinking about selling, and wanting an instant computer-generated rough value, check out our home valuation page here.  

 

The silver lining in all this is that in some markets there will be some relief for home buyers hoping for more selection in the form of newly-built homes. Add this all together, and with 11 months left in the year, 2020 may turn out to be the most robust housing market in nearly a decade.

 

Source: HousingWire | Redfin, | NARTBWS

 

Rates Currently Trending: Neutral

 

Mortgage rates are trending sideways to slightly higher this morning.  Last week the MBS market improved by +25bps.  This was enough to move rates very slightly lower last week. We saw a bit of rate volatility last week.

 

Posted in News
Jan. 31, 2020

How To Throw A Great Superbowl Party

While your team may not have made it to the final game, the Superbowl is the perfect excuse to bring together your family and friends for a day of fun. Whether the 49ers or the Chiefs win, you can throw a party that will be sure to win. 

Here are a few tips that will help you throw the best Superbowl party on the block.

 

Have great snacks

Having the best food is an easy way to guarantee your guests will have a great time. Consider making football-themed snacks or if you want to be a little more festive, try your hand at Latin food (maybe Cubanos!) to celebrate the game taking place in Miami, a place known for their love of Latin food!

 

Make themed drinks

While beer is definitely known as the drink of football, you can use this opportunity to create a themed beverage based on the team of your choice (or both!) that can be served both with and without alcohol, especially if kids will be around during the party.

Check your channels

Make sure before you begin any planning, you have the channel that will be playing the Superbowl this year! 

 

Make your own games

Guests love to be engaged. Keep them involved by having everyone rate the commercials or take prop bets - like who will be MVP or if the halftime performer will get caught lip-syncing!

 

Have fun!

Especially if you’re a fan of a team in the game, keep in mind that it is just a game! Enjoy the company of your loved ones and have fun!!

 

Posted in News
Jan. 29, 2020

Pedal to the Metal

 

With the holidays in the rearview mirror, the 2020 Orange County housing market is revving its massive engine.

 

Getting Hot: Strong demand and a low supply of available homes is allowing the market to accelerate fast.

 

Drag racecars are loud. After a quick burn of the tires to get them hot and ready to go, the cars back up behind the starting line and wait for the race to begin. The drivers are ready, and the initial light goes on. The yellow flashes next indicating that the start is moments away. It is quickly followed by a green light… it is GO TIME!! The race cars accelerate down the track at a mind-blowing speed. The 2020 housing market is looking a lot like a drag race. The green light just went on and the market is already propelling down the racetrack at an amazing speed.

 

It was just a year ago that housing was moving along at a much slower pace. Buyers were taking their time and it definitely was not a race to purchase. Mortgage rates were at 4.5%, eating into a buyer’s motivation to find a home. Flash forward a year later and there is no lingering inventory from the prior year. Interest rates are at 3.75%. The low interest rate environment is the rocket fuel that is propelling the market down the drag strip. Multiple offers are once again the norm. Homes that are priced well and in good condition are selling quickly. In most cases it is the winning bidder who finds success.

 

Everything priced below $1 million is experiencing a HOT market. It all boils down to supply and demand. Current demand is extremely strong, and the active inventory is at exceptionally anemic levels. Compared to last year, there are 34% fewer homes on the market right now, and demand (new pending sales over the prior month) is up by 19%.

 

This inventory challenge can also be seen in Irvine, the number of New Listings in December 2019 was 129, down -40.6% from 217 last month and down -21.3% from 164 in December of last year.  Check out the latest homes to hit the market at https://ir-vine.house/AllIrvine

 

 

Posted in News
Jan. 27, 2020

Mortgage rates have fared better than anyone expected

 

Reflecting back on 2019, we discover that the mortgage market in 2019 had its best year since the height of the pre-crisis boom, even though it was anyone’s ball game judging by what was going on early last year.

 

“Lenders extended $2.4 trillion in home loans last year, the most since 2006, according to industry research group Inside Mortgage Finance,” says Realtor’s Orla McCaffrey. “That was also a 46% increase from 2018.”

 

Robust mortgage lending is always regarded as a good sign for housing, which has seen a rebound in price growth and home sales after a period of declining gains. “A refinancing frenzy, induced by last year’s trio of interest-rate cuts, fueled the mortgage making and helped steady the industry,” says McCaffrey. “The refinancing boom also bodes well for the broader economy, since homeowners saving on their monthly mortgage payments are likely to spend more on goods and services.”

She goes on to quote Freddie Mac’s chief economist Sam Khater, who says when a large and cyclical part of the economy—housing—is starting to improve, it’s a good sign for the economy at large. Also cited is the Mortgage Bankers Association, which estimates that refinances made up 38% of mortgage originations last year.

 

The average rate on the 30-year fixed-rate mortgage, the most popular home loan in the U.S., dropped considerably by the end of 2019, and the average rate is now its lowest level in more than three months. December sales of existing homes jumped nearly 11% from the year before, according to the National Association of Realtors. While the uptick in mortgage lending is a boon, it does not mean it will be easy to buy a home this spring, according to McCaffrey. “Major barriers including a lack of housing supply and relatively tight bank-lending standards are pushing homeownership out of reach for many Americans.” The price of homes continues to rise faster than incomes, meaning affordability will remain an issue. Still, there is an expectation that interest rates will hold steady or even keep falling — a good sign for mortgage lending in 2020, analysts say.

 

Orange County Demand: In the past two-weeks demand increased by 19%.

Demand, the number of new pending sales over the prior month, increased from 1,434 to 1,702, an additional 268 pending sales, up 19%. Demand will continue to rise from here, peaking in late April to mid-May. The current pace of new pending sales is outstripping the increase in the active inventory, which is why the market is currently getting hotter. Check out new inventory at https://www.homesforsaleinirvineoc.com/search/advanced_search/.

 

Source: TBWS & OC Housing Report

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning.  Last week the MBS market improved by +30 bps.  This was enough to move rates or fees lower last week. We saw high rate volatility on Thursday of last week.  Otherwise, there was very little movement.

 

Posted in News
Jan. 15, 2020

Home buying heats up as the new decade begins, led by the West

 

New home sales numbers are coming out as we begin 2020, and they’re encouraging ones. According to Realtor’s Jacob Passy, the index of pending home sales increased 1.2% in November from the previous month, as reported to the National Association of Realtors.

 

In Orange County December Property sales were 2,412, up 37.9% from 1,749 in December of 2018 and 10.2% higher than the 2,189 sales last month. December 2019 sales were at their highest level compared to December of 2018 and 2017. 

 

“The index records transactions that have not yet closed but where a contract has been signed,” says Passy. “As a result, the index serves as an indicator for existing-home sales reports in the coming months.” This means as compared to November of 2018 contract signings were up 7.4%.

 

The wild West <US> is where sales increased substantially, bumping the increase to 5.5%, while contract signings only saw marginal changes in the Northeast (down 0.1%), South (down 0.2%), and Midwest (up 1%). When compared with last year, sales were up in all four regions.

 

Passy says the inventory of homes for sale will remain a challenge, quoting NAR’s chief economist Lawrence Yun: “Despite the insufficient level of inventory, pending home contracts still increased in November. The favorable conditions are expected throughout 2020 as well, but supply is not yet meeting the healthy demand.”

 

In Orange County the Total Inventory of Properties available for sale as of December was 4,499, down -13.1% from 5,178 last month and down -26.5% from 6,121 in December of last year. December 2019 Inventory was at a mid range compared to December of 2018 and 2017.

In the homebuilding arena, most economists expect things to pick up next year, but not enough to fully meet the demand. That means home prices should continue to increase at healthy — if somewhat slower — pace.

 

“Mortgage rates are anticipated to remain at their current, historically-low levels in 2020, but that may not be enough to make buying a home affordable for would-be buyers struggling to get enough money together to make a purchase,” says Passy.

 

Source: Realtor, TBWS

 

Rates Currently Trending: Neutral

 

Mortgage rates are trending slightly higher so far today.  Last week the MBS market improved by +5bps.  This caused rates and fees to remain mostly unchanged. We saw moderate rate volatility throughout most of the week.

 

Posted in News
Jan. 15, 2020

Bone-Dry: A Supply Problem

For years, there have not been enough homes on the market, and the start to 2020 is especially pronounced.

 

Low Supply: The active inventory is extremely low to start the year, down 34% compared to the start to 2019.

 

Life is a time crunch. Inevitably, important errands are left to the last minute. It’s happened to everybody at one time or another. With Valentine’s Day on the horizon, it will happen again. Many will head to the grocery store on February 13th and make a bee line to the greeting card aisle, only to find twenty other procrastinators hurriedly looking for the best card. Squeezing between the crowd reveals a half empty shelf with the best cards undoubtedly already taken. The whole ordeal is frustrating. Similarly, buyers this year are just as frustrated.

 

The Orange County housing shelves are half empty. It is tough being a buyer looking for a home in today’s market. The year started with 3,692 homes, the third lowest start in decades behind 2013 and 2018. There were 5,565 homes to start 2019, 51% more than January 1, 2020. There were a lot more choices a year ago, but not today. The trend of the supply problem dates to the beginning of the Great Recession, 2008. Ever since then, fewer and fewer homeowners have placed FOR SALE signs in their front yard. This trend is hardly a blip on the radar screen; instead, it has continued for twelve consecutive years.

 

Last year may have seemed like a better year with more homes to choose from, but that was caused by diminished demand due to higher interest rates. Homes that typically would have sold in prior years lingered on the market until interest rates dropped to historical lows, dropping from 4.5% at the start of 2018 to below 3 by the end of May.

 

All Irvine's active inventory can be seen at this link.

 

Posted in News
Jan. 8, 2020

Low housing inventory persist as the decade begins

While getting perspective on what the real estate market was like a decade ago can help make you appreciate the current market, it won't make some realities disappear. Back in 2010, many homeowners were desperately hoping to hang on to their homes. Others were desperate, doing everything they could to attract buyers.

Those buyers were happy with being courted by home sellers but were struggling to get financing from lenders who had seen their industry take a cautious turn after having so much flexibility for so long.

According to realtor.com's managing editor Cicely Wedgeworth (using data collected by its chief economist Danielle Hale), the past ten years have been the most consequential stretch in American real estate history —one that has fundamentally altered the landscape. "Cosmopolitan coastal cities are out; affordable midsize cities are in," she says. "Baby boomers and Gen Xers are no longer the dominant forces in buying, ceding that turf to millennials. Yet after all this time, it seems that home buyers still can't get much of a break."

In her housing trends study, Hale admits that while there will be opportunity for millennial buyers in the coming decade, in many ways the challenges buyers have faced for years are going to persist—challenges like difficulty finding the home that's right for them, and competing with other buyers, especially at affordable price points. Low inventory has been making things tough for buyers since 2015, and next year inventory could reach historic lows, with single-family home construction increasing but falling well short of keeping up with demand. The bright side? Mortgage rates are expected to remain reasonable.

 

Orange County & Irvine's housing inventory shows a similar challenge -- as of December in Orange County inventory was 3,038, down 23.7% from 3,980 in December 2019.

Irvine's inventory as of December was 267, down 14.7% from 313 in December 2019. 

All Irvine's active inventory can be seen at this link.

Here is some data on Irvine's List Price and Days on Market today.

Millennials continue to be the driving force, while achievable prices are continuing to present challenges for them. According to Hale, they often place themselves in positions to overpay, especially if they are trying to find homes in larger cities. Price points are driving them to smaller cites, where sales are expected to be healthier.

 

"Texas, Arizona, and Nevada are expected to welcome an influx of home shoppers priced out of California," says Wedgeworth. "Meanwhile, would-be buyers from pricey Northeastern markets will likely head to the Midwest or Southeast. There, they can find affordable housing as well as solid, diversified economies."

 

Millennials are no longer the new kids on the block." The largest cohort of millennials will turn 30 in 2020—historically, that's when people tend to think of buying their first home," says Hale. This means the oldest millennials will be turning 39 and the demographic will account for more than 50% of mortgages taken out in the country — more than all other generations combined.

 

While millennials (those born between 1981-'97) are big on buying experiences instead of "stuff," they are not that radically different from past generations, partnering off and starting families, which triggers home-buying decisions. Having kids is a huge driver for home sales. "But while they may be motivated, they'll face a lot of competition for the scarce homes on the market—from roughly 71 million of their peers nationwide," says Hale.

 

What about everyone else? Wedgeworth notes that Gen Xers and boomers are pretty comfortable where they are. Boomers, not quick to accept older age, are living longer, healthier lives, and staying in their houses longer, while Gen Xers aren't quite ready to retire, making them stay right where they are. What this translates into is fewer homes on the market.

 

As for new construction, Wedgeworth notes, "After the housing crash in 2008, which wiped out quite a few builders, those who remained have largely focused on higher-end developments with bigger profit margins. Although they're finally showing signs of a shift toward building more entry-level homes, faced with overwhelming demand, it will take a few years for a significant number to come to market."

 

Sources: Realtor. TBWS

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this today.  Last week the MBS market improved by +33bps.  This was enough to move rates or fees lower last week. We saw high rate volatility at the end of the week.

 

Posted in News
Dec. 18, 2019

Orange County Housing Report: What a Difference a Year Makes

The housing market is a lot hotter than many think and 2020 is going to line up heavily in favor of sellers.

A Warm December: With an Expected Market Time of 70 days for all of Orange County, this is the warmest December since 2017 when housing was hot.

So much can change in the course of a year. From one year to the next, professional sports teams can go from the bottom of the standings to playing in the playoffs, babies go from crawling to running, and kids go from picking up an instrument for the first time to playing in the school orchestra.

It’s not an immediate change; instead, it is a slow evolution.

That is precisely how the Orange County housing market has evolved, going from a slight Buyer’s Market last year to a slight Seller’s Market today. 

Active inventory in Irvine

December is the slowest time of the year in terms of new escrows and the number of homes that pop on the market. Both buyers and potential sellers divert their attention from housing to enjoying the holiday season. Yet, despite all of the holiday distractions, it has been a slight Seller’s Market every December since 2012 other than two years, 2014 and 2018.

Many intuitively think that because it is the slowest time of the year that housing lines up in favor of buyers; it is just not true. While it may be true that demand drops to its lowest point of the year by the end of the month, so does the active inventory. The muted demand is offset by a drop in supply.

And, this year the inventory has dropped by 40% since July, shedding 3,055 homes. Demand (last 30-days of pending sales) dropped by only 22%, 556 escrows. As a result, the Expected Market Time (the amount of time it would take from hammering in the FOR SALE sign to opening escrow) dropped from 91 days in July to 70 days in the middle of December.

Housing is actually hotter today than it was in July! What happened? How is housing hotter today than July? With mortgage rates dropping all year, the housing market slowly thawed. The thaw continued through the Autumn Market as rates reached their lowest levels of the year and remained between 3.5% and 3.75%. Demand climbed and the housing inventory dropped. That is the recipe for a Seller’s Market where housing stands today. Year over year, the differences are staggering. The active listing inventory is down by 36% compared to December 2018. 

 

Posted in News
Dec. 17, 2019

The housing market continues to see strength in 2019

 

Bankrate's Natalie Campisi reports that as the third quarter of 2019 closed, homebuyers were in control, with lower rates and slowing home price appreciation. Housing inventory, however, remains squeezed.

 

Campisi quotes Fannie Mae's chief economist, Doug Duncan: "Our view is that the housing market peaked in 2017, we saw about a 3 percent drop in sales in 2018. The pace of home price increases started to slow in 2018. Starting at the beginning of 2019, rates started to come down, and then we saw this big drop in rates. We didn't expect such a significant drop-off — it was 30 points more than we forecasted."

 

According to Bankrate's weekly indexes, during the third quarter of 2019, mortgage rates fluctuated nearly 50 basis points, with the China-US trade talks prodding investors toward shelter in US Treasuries, all of which helped flatten interest rates. "Most experts predict that rates will remain flat, but there's no promise as things can change overnight," says Campisi.

 

Inventory, however, remains low. (See the low number of Irvine homes for sale here.) "On the for-sale side, the homes that are being started are priced above what many homebuyers are prepared to pay, so there's an affordability problem," says Michael Neal, a senior research associate in the Housing Finance Policy Center at the Urban Institute.

 

It's no secret that construction costs and labor shortages continue to plague the entry-level construction market. "Costly resources, including everything from building materials and permit prices to labor, drive up construction costs, which filters through to the price of the home. This is one reason folks are staying in their houses longer," says Campisi.

 

While millions of homeowners are refi eligible, many might be waiting for better deals before locking in a rate. However, experts warn that homeowners could end up losing out if there's an uptick in rates.

 

Sources: BankRate, FannieMae, WellsFargo, TBWS

 

Rates Currently Trending: Neutral

Rates are trending sideways to slightly higher so far today. Last week the MBS market improved by +10bps. This caused rates to move sideways for the week on relatively low volatility.

 

Posted in News
Dec. 10, 2019

Housing inventory expected to naturally free up over the next 20 years

 

It’s being called the Silver Tsunami. Zillow analysts report that over the 2017-2027 period, 920,000 baby boomer-held homes will be freed up yearly, with 1.17 million materializing in the succeeding years, from 2027-2037. That means 20 million more properties, (approximately 27 percent of the current owner-occupied stock) will flood the market, as the elder generation passes on or gives up their homes.

 

Zillow’s report says the boom compares to the construction onslaught before the recession and could counterbalance home-building in the next 20 years.

 

Arizona and Florida, the two states that have the most retirees, will have the highest inventory jumps, with boosts expected to top 30 percent. Zillow’s economist Jeff Tucker explains, “In many parts of the country, the Silver Tsunami will dampen new-home construction, as a flood of existing homes vacated by boomers comes on the market. The places best situated to absorb that new inventory and still drive new construction are ones with booming job markets and plenty of buildable land.”

 

The National Association of Realtors says that with inventory issues persisting, the boomer drop may be a kind of panacea for housing shortages, as existing-home inventory shrank to 3.9-months supply in October, compared to 4.3 months the prior year.

 

What is still in doubt regarding the supply side of real estate is the ability of the nation’s builders to keep up with demand due to costs, labor, and land shortages. This means accessibility and affordability concerns remain, including the need to retrofit properties.

 

Changing demographics are a powerful force. Tucker adds, “Demographic trends are critical to the real estate industry because the most common reasons for home purchases and sales are demographic life events, such as births, deaths, marriages, and divorces. Along with job relocations, these factors drive the underlying demand for housing around the country, and at the population level they can actually be predicted fairly accurately.”

 

Sources: Rismedia, Zillow, NAR, TBWS

 

Rates Currently Trending: Neutral

Mortgage rates are trending sideways this morning. Last week the MBS market worsened by -2bps. This caused rates to move sideways for the week on low volatility.

 

Posted in News