Orange county
Market Overview a monthly real estate report | September 09
Housing sales up for the fourth consecutive month
Housing Sales Are Climbing
The month of August began cautiously
with mixed economic news, but by
the end of the month, the outlook for
September housing was greatly improved.
The Bureau of Labor Statistics reported
that job losses were continuing, but at a
slower pace.
Housing continued to improve, largely
driven by the first-time home buyer
tax credit. The National Association of
REALTORS reported that July existing
home sales jumped 7.2 % — the largest
monthly sales gain since 1999 and the
fourth consecutive month of growth.
If the current rate of improvement in
existing homes remains at a steady pace,
from 9.8 months on hand in June to 9.4
months on hand in July, the existing
housing market could be balanced
(on a national basis) in approximately
eight months.
On August 20, the Mortgage Bankers
Association announced that mortgage
applications were also up, as interest
rates crept down to a five-week low,
with purchase applications up for the
third consecutive week. Among the
reasons cited were the success of the
first-time home buyer tax credit and
price-to-income ratios falling below
historical trends.
Momentum in housing sales should
continue, spurred by the end of
first-time home buyer tax credits on
November 30, 2009. With new banking
and appraisal rules adding time to the
typical closing process, first-time home
buyers should open escrow by the end of
September if they hope to close on time
and qualify for these credits.
Reasons to Buy Now
The economy is improving
The worst recession since the Great
Depression may be winding down, said
The Conference Board on August 20, 2009.
The analysts found that leading economic
indicators rose 0.6% in July, following a
0.8% rise in June. That’s two consecutive
months of improvement halting eight
months of declines.
While the indicators can certainly slide
backward on new data, serious home
buyers should realize the days of wholesale
bargains may be numbered. This could
explain why California entry-level prices
are rising, and luxury home owners are
starting to stick to their prices.
Inventory is being absorbed
We appeared to hit bottom during the
second quarter of 2009. Since then we
have seen a steady rise in closed sales.
Existing, or pre-owned, home inventories
are being absorbed and are close to a
balanced market at 9.4 months of supply.
At their highest during the recession, new
and existing home inventories hovered at
11 months on hand. A balanced market
is approximately six months of inventory
on hand.
Average sales prices are starting to rise
Lawrence Yun, chief economist for the
NAR, says that improved affordability has
driven sales, with first-time home buyers
taking advantage of the tax credit. “The
demand for foreclosed and lower-priced
homes has spiked, and lack of inventory
is becoming a common complaint,”
he notes. In many Southern California
communities, homes priced at or below
conforming loan levels have little inventory
on hand, allowing sellers to raise prices
and entertain multiple offers.
Advice for Home Buyers
Since May 2009, Federal Housing
Finance Agency appraisal regulations
have slowed home sales transactions. The
National Association of REALTORS®
has found that 76% of its members
reported delays in closing.
As the first-time home buyer tax
credit comes to a close, banks will be
inundated with loan applications for
an already narrow production pipeline.
Home buyers should allow at least 60
days closing, which puts some first-time
home buyer loans at risk of not meeting
the November 30, 2009, deadline if
they are not in escrow by the end of
September 2009.
Advice for Sellers
Price your home for today’s market, not
what you think it will do in two or three
months. Lenders are very cautious about
appraisals.
While demand is picking up, the
percentage of foreclosures in the
second quarter 2009 was the highest
ever recorded by the Mortgage Bankers
Association. The trade organization
says foreclosures will continue to grow,
peaking at the end of 2010 — placing
continued pressure on pricing.
To avoid delays in closing, make sure
your home is in top repair and you have
all your property disclosures ready for
the buyer’s inspection. You may see some
buyers still waiting for signs of a bottom,
but motivated buyers will respond
immediately to a well-priced home in
great condition.
ORANGE COUNTY
Orange County is experiencing a seller’s market in affordable homes priced below $899K.
Only homes priced above $900K are selling more slowly at nearly 13 months of inventory
on hand, but that is far from the highest inventory in luxury homes in Southern California.
Detached homes are single-family homes that share no walls with other properties. Attached homes have at least
one shared wall, such as condos, duplexes, or townhomes.
Attached homes are selling well below
$699K, while those priced over
$900K have nearly 21 months of
inventory on hand.
Detached homes are selling well below
$899K, while those priced over $900K
have nearly 12 months of inventory
on hand.
Detatched Properties – Inventory in Months
Attached Properties – Inventory in Months
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
0.0 5.0 10.0 15.0 20.0 25.0
The availability of near-same comparable
homes makes list to sold prices somewhat
closer, according to price per square foot.
However, lower backup offers than closed
prices indicate that buyers know there is
plenty of room to negotiate.
Detached home listings and sales volumes
have grown exponentially since January
2009, but sales volume has yet to
overtake the number of new homes for sale
that are entering the market.
Active listings are priced much higher per
square foot, supporting data that housing
is selling much faster in lower price ranges.
Higher pending and backup offers than
solds suggest that buyers know a bottom
when they see it.
New Listings Listings Absorbed
Detached Properties – Listing Taken and Absorbed – 12 Months through July, 2009
Detatched Properties – List Prices Per Square Foot by MLS Status
Attached Properties – List Prices Per Square Foot by MLS Status
$0 $100 $200 $300 $400 $500 $600
$0 $100 $200 $300 $400
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Attached Properties – Listing Taken and Absorbed – 12 Months through July, 2009
Detached Properties – Listings Sold – 12 Months through June, 2009
Detached home prices have trended
downward for the last two years, but they
rose in Q-2, 2009 for the first time due to
attractive pricing.
Sales volume in attached homes has
outpaced new listings on the market since
June 2009.
With prices down sharply for two years in
attached homes, the trend reversed itself
with a price increase and sales volume
spike in Q-2, 2009.
Attached Properties – Listings Sold – 12 Months through June, 2009
New Listings Listings Absorbed
Avg Sales Price Listings Sold Units
Avg Sales Price Listings Sold Units