This Spring Could Be The Best Home-Buying Season In Years

I found a great article from the Forbes website today written by Morgan Brennan, Forbes Staff.

This will be posted in multiple parts over the next few days, so you can absorb all of the information that is inside. Keep coming back for the whole picture...

The lion’s share of home sales typically come in the spring and early summer. April, May, June and July account for more than 40% of all housing transactions annually, in large part thanks to weather. Economists, realtors and Wall Streeters have been quick to surmise that 2012 will be the year of the market bottom, and with that prognosis circulating, it begs the question of what sellers and buyers can expect in housing as that high season nears.

“The spring home buying season looks bright because of an elevated level of contract offers so far this year,” Lawrence Yun, chief economist of NAR, said in a statement earlier this week. February home sales, despite a slight dip from January to February, remain well above 2011 numbers.

The Pending Home Sales Index, which reflects signed contracts that have yet to close, from the National Association of Realtors (NAR) was 9.2% higher than February of 2011 and existing-homes sales, or closed contracts, were 8.8% higher than last year.

That increased demand from buyers has pushed inventory levels 19% lower than they were this time last year, with an estimated 2.43 million homes available for sale. In fact, housing inventory is at a five-year low nationally right now. It means owners tinkering with the thought of selling have less competition to contend with, compared to the past five years. It also means housing may be inching toward a long-awaited recovery.

National Housing Survey 2012

The 2012 National Housing Survey from Fannie Mae is out and the KCM Crew brings us some of the highlights...

Each quarter, Fannie Mae releases their National Housing Survey. They survey the American public on a multitude of questions concerning today’s housing market. I like to pull out some of the findings I deem most interesting each time it is released. Here they are for the most recent report:

84% of the general population believes that owning a home makes more sense than renting.

The Most Important Reasons to Buy a Home

When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. However, the study shows that the four major reasons a person buys a home have nothing to do with money. The top four
reasons, in order, are:

1. It means having a good place to raise children and provide them with a good education.
2. You have a physical structure where you and your family feel safe.
3. It allows you to have more space for your family.
4. It gives you control of what you do with your living space (renovations and updates).

The Home as an Investment

Though most people purchase a home for non-financial reasons, everyone realizes
there is a money component to homeownership. Here is what they said on this issue:

63% of the general population believes that homeownership is a ‘safe’ investment.
53% believe that homeownership has more potential as an investment than any other traditional asset class.

Rent vs. Buy

I'm always interested in the difference people see in renting vs. owning.

64% of renters have aspirations to someday own their own home.
70% of renters think that owning is superior to renting.


Bottom Line

My belief in the value of homeownership grows each time this survey is released

Buying a Home? The COST Is More Important Than the PRICE

When to buy has been the question on people's minds for some time now.

You'll hear many different answers to this question and most of those are focused on housing prices and when will we reach the bottom. My typical answer to that question surrounds the cost of the home vs. the price. Our friends at Keeping Current Matters have joined the chorus on this subject.

So when considering Buying a Home - remember - The COST Is More Important Than the PRICE!...

I've often advised buyers to look at the COST of purchasing a house more than the PRICE of the home. Obviously, price is part of the cost equation. The other piece, assuming you are not an all cash buyer, is the mortgage rate.

The mortgage rate to finance a purchase can have a dramatic impact on the overall cost. Recently, there are more people talking about the possibility that mortgage rates could begin to increase.

HSH.com studies trends in mortgage rates. They explain:

“A better economic climate almost always brings higher rates, and a lessening of the troubles in Europe from massive central bank assistance adds to the movement of money from safe havens to more risky assets, driving rates upward.”

Dan Green of The Daily Market Reports recently stated:

“The Fed sees growth coming faster than originally expected. There’s suddenly less chance that the Federal Reserve will intervene to help keep mortgage rates low. Absent Fed intervention, mortgage rates are apt to rise and Wall Street is now betting that the Fed has bowed out. With no stimulus, mortgage rates rise.”

Lawrence Yun, chief economist for the National Assoc of Realtors, recently wrote:

“Mortgage rates will be starting to rise. From the 3.9 to 4.0 percent average rate in the past five months on a 30-year fixed mortgage, the new rates will soon be in the range of 4.3 to 4.6 percent.”

Yun explains his logic here.

We do not attempt to predict future interest rates. We leave that up to the experts in the field. However, we want our readers to understand the potential impact on the cost of purchasing a home if they do rise. Here is a simple table that shows, even if the PRICE of a home softens, the COST of a home could increase.


Bottom Line

Many purchasers think they should wait until they are sure that prices have hit bottom. Deciding whether or not to wait should be determined by where the COST of a home is headed.

Three reasons why now is a good time to buy.

Interest rates are at historic lows.
It’s still a great time to take advantage of the historically low interest rates, and you can put down as little as 3.5% to 5% on many loan programs.


Tax advantages of owning a home.
Whether you’re a first time home buyer, a buyer moving up or one moving down, you may qualify for a tax break every year. Interest paid on your primary residence mortgage, (up to the home’s value), and property taxes are typically deductable.

Another great thing is that for most homeowners, there’s no capital gains tax when their primary residence is sold.


Inventory of REO properties.
These are also called Real Estate Owned, Bank Owned, Lender Mediated or Lender Owned properties, and appeal to bargain hunters who have a lot of patience!

Inventory down and prices going up in Orange County

Inventory of homes in Orange County did it's seasonal dip the past few months, and if past years' trends are anything to go by, more & more homes will be hitting the market from now until the summer.

This chart shows inventory of Single Family homes over $500K in the county, since June last year.


Nice to see that the prices have been rising the past few months! Look at this chart, also of Single Family homes over $500K in the the good ol' OC!



From $480 per square foot in September, average prices rose, rose, and rose again to $554 in December. Does this mean that a 2,000 square foot home would have fetched $960,000 in September, and $1,108,000 three months later?

Well, numbers don't lie, or do they?

Prices vary from city to city, and even from tract to tract.

Interested in seeing how much your home might sell for, or looking for some tips on timing? Let's talk!

Cost of borrowing still well below historic norms

Mortgage rates surveyed by Freddie Mac bounced back from historic lows this week, but aren't expected to soar in the New Year.

This is an article I saw Inman News yesterday & wanted to share it with you :)

Rates on 30-year fixed-rate mortgages averaged 3.95 percent with an average 0.7 point for the week ending Dec. 29. That's up from 3.91 percent last week -- an all-time low in records dating to 1971 -- but still well below the 2011 high of 5.05 percent seen in February.

The 30-year fixed-rate loan has averaged at or below 4 percent for the past nine consecutive weeks, Freddie Mac noted in releasing the results of its Primary Mortgage Market Survey.

Rates for 15-year fixed-rate mortgages averaged 3.24 percent with an average 0.8 point. That's up from 3.21 percent last week, an all-time low in records dating to 1991, but down from the 2011 high of 4.29 percent registered in February.

For 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.88 percent with an average 0.6 point. That's up from 2.85 percent last week, an all-time low in records dating to 2005, but down more than 1 percentage point from the 2011 high of 3.92 percent seen in February.

Rates on 1-year Treasury-indexed ARM loans averaged 2.78 percent with an average 0.6 point. That's up from 2.77 percent last week, an all-time low in records dating to 1984, but down from a 2011 high of 3.4 percent in February.

Freddie Mac's rate survey is based on loans offered to borrowers with good credit scores who will be making down payments of at least 20 percent. Borrowers with damaged credit or making smaller down payments can expect to pay higher rates.

Mortgage rates are largely determined by demand for mortgage-backed securities (MBS),
bonds that fund the vast majority of home loans.

The Federal Reserve helped push mortgage rates down in 2009 and 2010 by buying $1.25 trillion in MBS. Since then, the European debt crisis has helped keep mortgage rates down, as investors seek the relative safety of government-backed mortgage bonds, whose payments are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

In a Dec. 20 forecast, economists at Fannie Mae project that rates for fixed-rate mortgages will average 4.0 percent in 2012 and 4.3 percent in 2013, down from 4.5 percent this year and 5 percent in 2009.

The Mortgage Bankers Association predicts rates on 30-year fixed-rate loans will average 4.2 percent in 2012 before rising to 4.7 percent in 2013. The National Association of Realtors projects rates on 30-year fixed-rate loans will hold steady at 4.5 percent in 2012.

What SOLD in November, and what's FOR SALE right now, in Woodbridge, Irvine

The prices of Woodbridge homes for sale right now, range from $169,900 for a 1 bedroom attached REO condo on Echo Run, to
$1,050,000 for a 4 bedroom 2,900 square foot SFR on Whistling Isle in the Summerfield tract, listed by my office!

Presently there are only 84 Woodbridge homes currently listed for sale!

Only two homes are offered for sale in "The Landings", and these are 8 Rainstar in Landing I, and 30 Foxboro in Landing II.

Usually when one is offered for sale, it is snapped up pretty fast!

30 Foxboro is a model "C" 4 bedroom house, with over 1,000 square feet of travertine, new granite counters, new maple kitchen Cabinets, new appliances, built-in fridge, new toilets and tankless water heater.

It has a 3 car garage. Nice!

Landings homes 11 Woodflower & 25 Whispering Wind are in escrow.

16 Woodbridge home sold in November 2011, at prices from $167,500, (a 1 bedroom attached REO in the Park Vista tract), to $910,000 for 4 bedroom standard sale Single Family home on Buckthorn in the Gables.