OC Realty Blog

At the top of the most frequently asked questions’ list is, “How will we know when the market has ‘bottomed out’ and we should buy a home?”Historically, two major indicators that a market has bottomed out are: a decline in the number of listings and an increase in listing and sold prices. Obviously the key here is making your move at the right time-which would be right before these two items begin to manifest in the market.

Based on sales data provided by MLSs, it appears that we are beginning to realize a slight decline in listing volume. I say “appears” because with the factors affecting the market today-and the foreseeable future-this may be a seasonal issue or being caused by any number of things.

Tracking the listing volume over the next several months will provide additional information regarding this question. In regard to sold prices, this is more difficult. Real estate-owned property or property in some stage of the foreclosure process has been driving the price point for real estate for some time now. 

With a significant volume of lending institution-owned property on the market selling at what historically, could be viewed as discounted prices, we do not anticipate seeing an increase in sales prices in the near future.

With sales showing increases compared to last year in most areas and declines in listing volume, it would appear that the market is slowly changing from the buyer’s market we have experienced for the past several years.

However, a point to keep in mind is that self respect and common sense should remain at the top of everyone’s list. This has been-and remains to be-the basis of business success.

RIS Media, Walt Baczkowski, 8/5/08

Orange County Home Prices & Sales (source DataQuick):

For the 22 business days ending May 15, sales for all types of Orange County home sales decreased 35.1 percent. The median sales price increased 0.8 percent for all types of housing, however, Resale Homes were up 1.4%.  The median is where half the homes sold for more and half for less.  Types of homes selling, as well as home value changes, cause the median to change.

Although sales were down, prices still remain constant.  The featured city this week:

Laguna Hills Real Estate (Zip 92653)

• Median Sales Price = $720,000  (up 6.7%)
• Number of Homes Sold = 31  (down 38.0%)

For a complete city list of Orange County Real Estate , click on the below link.

http://www.ocregister.com/ocregister/money/housing/article_1715548.php

Mortgage rates increased for the fifth consecutive week, with the average
30-year fixed mortgage rate rising to the highest point since August,
according to Bankrate.com’s weekly national survey of large lenders.

The average 30-year fixed mortgage rate is now 6.47 percent and has an
average of 0.26 discount and origination points.

The average 15-year fixed rate mortgage, popular for refinancing, increased by a similar amount, to 6.21 percent. With larger loans, the average jumbo 30-year fixed rate climbed to 6.68 percent. On adjustable rate mortgages, the average one-year ARM nudged higher to 6.09 percent while the 5/1 ARM jumped up to 6.37 percent. 
(Click Image To See Full Graph)

“Mortgage rates often show short spurts of volatility and prolonged periods of little movement,” Bankrate notes in its survey report. “Mortgage rates had been confined to a narrow range of approximately one-third of a percentage point for nearly seven months - including weeks on end with virtually no movement. But they broke out of that range with this week’s move, as hopes for a Fed interest rate cut continue to wane.”

Fixed mortgage rates have increased nearly one-third percentage point since mid-March. At the time, the average 30-year fixed mortgage rate dipped to 6.16 percent, meaning that a $165,000 loan would have carried a monthly payment of $1,006.30. With the average 30-year fixed rate now 6.47 percent, the same loan originated today would carry a monthly payment of $1,039.66.

Fixed mortgage rates still remain a compelling refinancing alternative for
adjustable rate borrowers facing sharp payment adjustments.

Bankrate’s national weekly mortgage survey is conducted every Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

- REALTOR® Magazine Online

Rates obtained from our local lender, First Capital.

First, the good news: interest only loans increase house affordability by 20 percent. If you qualify for a $250,000 loan, you now can get $300,000; $300,000 becomes $360,000; and $400,000 becomes $480,000.  In other words, you can qualify for a more expensive home than you would with a traditional mortgage.  And the payments are dramatically different.  On a five-year interest-only loan at 3.875%, your payment is $1,615.  On a five-year hybrid at 3.750%, your payment jumps to $2,316. And on a 30-year fixed at 5.750%, your payment $2,918.  Quite a difference there.

How interest-only loans work: Interest only loans do not prohibit you from paying down the principal balance.  Most are available only with adjustable rate mortgages.  Most are five, seven or ten year interest-only periods, where the rate is fixed.  After the initial period, the rate can rise up to six percentage points.  For instance, a 5/1 ARM rate is fixed for five years and the i/o may only be for five years, and the next 25 would be traditional principal plus interest-greatly increasing your payment.  After the initial interest-only period, the loan becomes a fully amortized 30-year mortgage loan with no pre-payment penalty.

Now for the (potentially) bad news.  The payment differences break down as follows over the life of a five-year interest-only ARM:  Years one through five at 3.875%, your payment is $1,615.  Years six through eight at 6.875%, your payment is $2,864.  Years eight through ten at 9.875%, your payment is $4,114.  Years 10 through 30 at 9.875%, your payment is $4,783.  This last jump is due to the fact that during the last 20 years of the loan, the principal is spread out over 20 years as opposed to the traditional 30.

You may want an interest only loan if you:  Are disciplined with money;  Are a risk taker;  Aren’t taking on more than you can handle comfortably;  Expect your income to rise sharply in the next five years;  Have an irregular income (like commissioned sales) so that the lower payment is manageable during lean periods and when the money is coming in can pay down the principal;  Are content to let rising markets build your equity for you;  Are confident that home prices will continue to rise.

You don’t want an interest only loan if you:  Have a lot of consumer debt you can’t get a handle on;  Plan on being in your house longer than the interest-only period;  Are undisciplined with finances;  Are borrowing a small amount;  Plan on spending the extra cash on “discretionary” items;  Plan to sell or refinance before the interest-only period ends;  Want to lock in today’s low interest rates.

If you live in or are moving to Orange County California and want to find out which loan option is best for you, just call or email me or visit my mortgage broker’s website at http://www.ocloanteam.com/Home

Source:  Assest Preservation, Inc.  For more information on 1031 Exchange, visit http://apiexchange.com

As the property market cools down, it becomes a good time for buying real estate.  If you don’t have that much money to spend on a house, but you’re absolutely convinced that it’s the right time for you to move (or if you’ve found an intriguing real estate investment property) then you need to learn how to make the offer you want — and get it accepted.

First and foremost, learn what types of properties you’re looking for in terms of both the house and the seller.

The House:

The properties you’re interested in have been on the market more than a month.  There’s not necessarily anything seriously wrong with them, but they’re just not generating much attention.  Maybe they’re unattractive, on a busy street, or in disrepair.  The key is to find properties that maybe need a little repair work, but nothing major.  Your offer isn’t worth much if you have to spend all the money you saved on structural or wiring work.

The Seller:

When selling real estate, the seller you’re looking for needs to move ASAP.  Perhaps they’re relocating to a job in another city, or they’ve already bought another house but want to sell the old one before leaving town.  Maybe they’re selling the home of a recently-deceased relative, and they just want to get the whole thing over with.  Maybe they’ve defaulted on their mortgage payments and the house is foreclosing.  These are motivated sellers and they’re more willing to accept a low offer on their property.

The Secrets:

• Get pre-approved for a mortgage before you start shopping.  It’ll make you more attractive to sellers.  Also shop for the best mortgage loan rates. 
• Shop at the right time — one of the best times to look is during the week between Thanksgiving and New Year’s, simply because very few people are looking then.  If you find the right house or the right seller at this time, it’s a great opportunity for getting a low offer accepted.
• Make an initial offer that’s below what you want to pay, and prepare to be rejected.  Let the seller feel that they’re negotiating a better deal with you and they’re more likely to accept your second or third offer.  (Note: in a competitive market this strategy isn’t advisable, but in a slow market it’s worth trying.)
• Make offers on several properties.  The more opportunities you create, the more likely you are to have a seller accept your offer.
• Hire a buyer’s agent.  The seller’s agent is trying to get the best possible deal for their client and they’re not going to help you get a low offer accepted.  A dedicated buyer’s agent will, and they’ll most likely have more in-depth knowledge of the neighborhood and current market prices, too.
• Don’t use the list price as an indication of a property’s true market value.  List prices are often inflated, so do your own research.  Have your Buyer’s Agent get a Current Market Analysis for the area and find out how accurate that list price really is.
• Give the seller a good reason to accept your price.  Offer to close quickly, offer to pay in cash, and be flexible on inspection dates.  Accommodate the seller in every way possible, and if they’re motivated to sell they’ll be more amenable to your offer.

If you’re interested in purchasing Orange County Real Estate, call or email me so I can help you structure the best offer for your next home!

Orange County Home Prices & Sales (source DataQuick):

For the 22 business days ending April 25, sales for all types of Orange County home sales decreased 26.5 percent. The median sales price decreased 0.6 percent for all types of housing, however, Resale Homes were up 2.1%.  The median is where half the homes sold for more and half for less.  Types of homes selling, as well as home value changes, cause the median to change.

Although sales were down, prices still remain constant.  The featured city this week:

Laguna Beach Real Estate (Zip 92651)

• Median Sales Price = $1.546,250  (down 33.5%)
• Number of Homes Sold = 36  (up 5.9%)

For a complete city list of Orange County Real Estate , click on the below link.

http://www.ocregister.com/ocregister/money/housing/article_1691591.php

Deciding how much house you can afford is a personal decision.Many factors come into play.How much can I borrow?  How much can I put toward my down payment?  What size monthly payment can I afford? 

There are no black and white answers to these questions.  Its a matter of give and take.  If you plan on a 30 year mortgage, you can probably make a lower down payment (or perhaps no down payment at all) and still manage the monthly payments.  If, on the other hand, you plan on a 15 year mortgage, youll probably want to make a larger down payment to keep your monthly payments in line with what you can afford. 

How large a down payment can I make?

Many buyers look at their cash on hand as their only source for their down payment.  This simply is not the case.  One way to fund or partially fund a down payment is by using a gift.   Parents, grandparents and other family members are often eager to help by making a cash gift toward the purchase of your home. 

There are also down payment assistance charities that can help you.  And, of course, if you are selling a home, the equity youve built up can be applied to your down payment.

But these are not your only options.  We can help you explore all your down payment options, including low down payment and 100% mortgage financing options that might be right for you. 

What size monthly payment can I afford?

When determining what size monthly payment you can afford, youll want to consider what other monthly expenses you have.   Tangible expenses such as car payments, day care and utility bills, all play a role in how large a monthly payment you can afford. 

There are also the intangible expenses or lifestyle expenses that youll want to consider.  Things such as dining out, travel and when you buy your next car can effect how much you can afford.  Are you willing to curtail or delay some of these expenses in order to afford a larger monthly payment? 

How much can I borrow?

This is a question you’ll want to get answered before you begin your home search.   This is something that I can help you with.  Here is my loan broker’s http://www.ocloanteam.com/MortgageCalculators to help you see how your down payment, monthly payment and the amount you borrow are all interrelated. 

I can answer any questions you may have about the mortgage process.  But the best way I can help is by getting you pre-qualified for a mortgage loan.  To get started, simply complete call or email me.  I look forward to helping you buy your dream home.

The question as to when to sell an investment property depends on many factors, including: the likelihood of future appreciation, the cash flow it produces, the ease or difficulty of managing the property, and the property’s fit in an investor’s overall investment portfolio.

When selling real estate, many sellers want to know how long their home will take to sell.

If you’re interested in getting an estimate on how much time to plan for your next South Orange County real estate move, please call or email me. I would be happy to provide you with an updated market evaluation for your home and discuss a timeline that will work for you, so you can accomplish your moving goals.