Irvine Real Estate Blogger

There is light at the end of the tunnel…

It began this spring with whispers and mumblings in the real estate community and blogesphere. Buyers were emerging from their winter doldrums and showing up at Open Houses–at first checking house prices; not commiting, but still demonstrating a measurable interest in real estate.

While the reports from the established media were still cast in colors of May gray, and June gloom, the tweets and twitters from the chorus of real estate agents in their respective local nests were singing a different tune and what a sweet tune it has turned out to be.

Open the curtains, raise the windows, throw open the doors, and inhale the fresh air of a changing season in the real estate market. The flowers are in full bloom and their fragrance fills the air. The birds are singing and a new day is dawning here in Irvine and in the local housing markets around Orange County.

Psst…if you haven’t heard, homes are selling and they are selling in healthy numbers. Active listings down; pending sales up; inventory is rapidly being absorbed–these positive trends continue to emerge in the Irvine, California and Orange County real estate markets.

Irvine and Orange County housing sales reported to the MLS continues to be strong. The past two weeks have seen sales in greater numbers. Inventory continues to fall by an average of about 100 listings per week, compared to increases of approximately 200 listings per week at this time last year. The current inventory in Orange County number 1600 fewer homes than at this time last year. Active listings in Orange County have fallen below 15,000, and the index of how long it would take to sell/absorb the existing inventory at the current rate of sales is at its lowest point since August of 2006. In our local Irvine housing market, we currently have a total of 839 active listings in the Multiple Listing Service. Those homes/condos reported as in Back-Up or Pending Sales (in escrow) number 272 which indicates that it would take only three months to absorb/sell the existing inventory at the current rate of sales.

Buyers have a real opportunity to realize their dream of home ownership at significantly lower prices and favorable interest rates.

When I decided to take up blogging, thanks to an inspiring web 2.0 seminar held by two great instructors/coaches and self-described geeks or propeller heads, Kevin Boar of 3OceansRealEstate.com and Pat Kitano of TransparentRE.com, I promised myself that I was going to do this blogging thing the right way. I would not be a once-in-awhile, maybe-I’ll-get-around-to it-tomorrow sort of blogger. No, not me. I wasn’t going to be just a middling blogger. I was going to throw myself into this new medium and do it the right way–blog frequently and provide useful, if not inspiring, real estate content. As a newbie blogger, I would blog consistently and with gusto.

Like everything else I pursue, I threw myself into this new blogging thing, and was having a great time honing my imperfect writing skills and overcoming my initial write fright, when the business of real estate hit me square in the center of my blogging life.

While all those would-be buyers and sellers were waiting for the market to plummet or soar (depending on their respective perspectives), I was blogging away, and having a great time doing so. Then all of a sudden, out of the sunny, southern California blue skies came a bolt of buyers, who actually wanted to buy the houses they had looked at, and sellers who actually wanted to price their homes and condos realistically to sell. Taken by surprise, I found myself awash in paperwork (albeit digital paperwork, but nevertheless,paperwork–the stuff of purchase contracts, disclosures, and inspections sort of paperwork) and no time to blog!

Now my days (and nights) are filled with doing the business of real estate, i.e., showing properties, arranging for photo shoots and virtual tours, inputing listings/homes for sale, writing contracts, scheduling property inspections–in short, I am engaged in the practice of buying and selling real estate which is what, after all, I am supposed to do. But now the guilt has set in. I feel like a binge-eater after abandoning a healthy diet and exercise program. Blogging is like exercise, you need a frequent dose of it to lead a healthier, happier, more productive interactive, social-networking life.

And so this blogger is back…and so is the business of buying and selling real estate in Irvine, CA. And I can attest to that.

They are both solid investments in your future.

According to the National Association of Realtors, on average the value of a home doubles every ten years. In addition, most people’s personal wealth comes from real estate. A personal note: I bought a condo in Irvine in 2000 for $178,500; I sold it in 2007 for $429,000. You can do the math, and see that I made a nice profit, even after paying all costs of the sale.

Education produces the same profit potential. High school graduates don’t have much future earning power. College graduates at the B.A. or B.S. level have a much higher earning power. And it increases exponentially with a Master’s Degree or Doctorate Degree. Whether it’s for yourself or your children… just keep writing those tuition checks… there will be future pay-back in terms of long-term earnings.

In Irvine, we are fortunate in having several higher level education opportunities. Several two-year colleges in the area, regional four-year colleges including the award-winning Chapman University, and the Irvine campus of the prestigious University of California.

And what about current investment in real estate? Interest rates are still at historic lows, and prices of Irvine real estate are comparatively low. It’s a great time to buy! A possible scenario: a home you could have bought two years ago for $600,000 is now priced at $500,000 or less. Given that real estate always appreciates over time, doesn’t that sound like a good time to call a Realtor?

As of 6 pm on April 23rd there are 887 active listings in Irvine; 479 of them are under $729,750 (the new guidelines for first time buyer loan programs); 411 of them are two bedrooms or more with one or one and one-half baths; 391 of them are two bedrooms and two baths. If you are not a first-time buyer, there are still many opportunities for continued home ownership: 133 2-bedroom, 2-bath homes priced up to $500,000; 258 2-bedroom, 2-bath homes priced up to $600,000.

Isn’t it a good time to call a Realtor?

I usually make it a point to scan the Real Estate sections of the L.A. Times, the Orange County Register, and the New York Times at some point over the weekend. However, I overlooked an article regarding 10 zip codes in Southern California that actually experienced price appreciation in the 1st quarter of 2008 as compared with the 1st quarter of 2007. Thankfully I came across Elaine Carlson’s article in PalosVerdesSource.com entitled Hottest SoCal Zip Codes.

The numbers were based on at least 20 sales in each of the zip codes as reported by DataQuick Information Systems. In Orange County, Irvine’s zip code 92603, which encompasses the villages of Quail Hill, Turtle Rock (including Shady Canyon), and Turtle Ridge, experienced an 18.0% increase in the median sales prices for existing single family detached homes as compared to the 1st quarter of 2007, Newport Coast’s 92657 zip code had an increase of 27.4% in the median sales price, and Newport Beach’s 92663 zip code encompassing Lido Isle and Balboa Peninsula had a 66.8% in the median sales price as compared to the 1st quarter of 2007.

Why do “some markets sizzle, while others fizzle?” Proximity to the beach where demand is high and inventory is relatively low has a great deal to do with price appreciation. These coastal areas have buyers who are able to qualify for good fixed rate loans, whereas the interior part of the state had borrowers who were stretching to afford homes, many of whom fell victim to the sub-prime mortgage debacle. (See my article entitled Which Cities are on Top for Home Sellers in California).

To view the cities with the biggest losses, Click here.

If you are a home owner looking to actually sell your home in this season of 2008 in the current Irvine real estate market, and not just hoping to sell, then pricing your home realistically makes the best sense–that is not at 2006 sales prices but at today’s comparable home sale prices. If the home is priced commensurate with the recent sales, then the home will sell.

The buyers out there, (and, yes, there are lots of buyers looking and comparing homes and prices) are savvy buyers. They are looking for the best deals. If there’s one thing of which Buyers are aware, it is the prices/values of homes and condos for which they have been looking–often for the better part of a year or more. Moreover, buyers are acutely aware of the foreclosure and short-sale market. These properties scream motivation–even if they are, in fact, a past buyer’s folly or mistake. That’s the buzz, and the buyers are sticking to it…at least that’s what we’re seeing.

Buyers are comparison shopping. Their antennae goes up when a new home comes on the market. Prospective buyers have frequented all of the comparable new homes around and have visited many Open Houses. Buyers are searching on the internet for those real estate web sites and blogs for active real estate listings and comparable home sales, or are seeking the advise of friends and family who may have purchased homes or read about properties for which the debt now exceeds the market value. Thus, buyers are very cautious about the real estate market in general.

Laurie Manny of LongBeachRealEstateHome.com correctly suggests in her article entitled, 8 Deadly Selling Mistakes, that overpricing a home may lead to the opposite result–ultimately a lower price–in other words, chasing the market down. Indeed, overpricing your home will send buyers off to look at and choose to purchase those homes that are reasonably priced in today’s market, leaving the overpriced home a bridesmaid, and never the bride. Moreover, chasing the market down not only can result in a greater loss in the home seller’s net equity, but may also could push a financially shaky seller into a short-sale or foreclosure situation.

On the other hand, homeowners who price their homes to sell can entice multiple offers and actually wind up selling the home for above the asking price–an anomaly in this market, but an increasing event. In her article of April 13th in the New York Times entitled, “Bidding Wars? In This Market?, Elsa Brenner, writes, of an owner in the Westchester area of New York who originally listed their house at $1.2 million, much less than they would have hoped for in better times, but, instead, the relatively low price drew three offers in five days. “In the end, the house sold for $1.35 million, which is what the asking price probably would have been in 2005, when the market was far stronger.”

It is also important to keep in mind most home sellers are, at the same time, home buyers –looking to either size up or down or, if relocating to a new city, purchase a home once they have settled in a new area. So, if the seller can get their home sold fairly quickly, then they can typically negotiate a better price on their new home purchase rather than having a contingency fettering their sale, or, perhaps, the lost opportunity to buy a great home value.

Two elementary schools within the Irvine Unified School District were named a California Distinguished School for 2008, the state’s top honor for individual schools. Based on the results of test scores, only 5% of all schools statewide are awarded this prize, and the award rotates between the elementary, middle, and high school campuses each year. This prestigious prize was awarded to Alderwood Basics Plus elementary school, located in the village of Quail Hill and Canyon View elementary school, situated in the village of Northwood in Irvine, CA.

In an article in Monday, April 7th’s Forbes.com, written by Matt Woolsey, the author outlines the best cities in the country for home sellers. At first glance it was surprising to find that the top two cities named in the article are in California, considering all the doom and gloom the media has been reporting about in the housing sector: however, San Jose, CA, and San Francisco, CA were named #1 and #2, respectively, for home sellers.
The reasons outlined were as follows:

“San Jose’s tough regulatory measures make it difficult to overbuild. In addition, new home construction dropped 63% last year, while jobs grew by 1.2%. Home vacancies, which were already low at 1.6%, fell to a national bottom at 0.8%, helping make San Jose one of the country’s tightest markets.”

“Farther north, San Francisco’s conforming loan limit jumped from $417,000 to the maximum $729,750, which makes getting credit a simpler affair for many of the city’s home buyers. In 2006, the market felt a softening that pushed vacancy rates up to 2.4%, but a 56% cut in construction has cut vacancy rates in half. The increased access to credit, thanks to the new Fannie Mae and Freddie Mac limits, and the lack of available properties plays to sellers’ interests.”

The top 40 friendly seller cities on the list were analyzed and “ranked by its 2007 unsold vacancy rate, calculated by the U.S. Census American Housing Survey, and how much the market had tightened or loosened when compared with 2006 conditions.”

Next the construction starts were reviewed as tracked by the National Association of Home Builders in order to see if building starts would “compound or alleviate vacancy woes.” In addition, the Bureau of Labor Statistics was reviewed for job creation as a “way to measure the local economy’s ability to absorb or offset housing losses.”

Lastly, the degree to which new conforming loan limits from Freddie Mac and Fannie Mae will improve each market’s lending conditions was factored into the mix. “When Freddie and Fannie get more involved, lenders get the implicit backing of the Federal Government, something that softens the risks that have slowed lending elsewhere, as jumbo, or nonconforming loans, can be expensive losses.”

San Jose and San Francisco came out on top because they fit the profile of a sellers’ market–low inventory rates that were still shrinking, good job creation, a large scale cutback in new home construction and a boost in the credit market from new Fannie and Freddie loan limits.

On the other hand, in an article written on April 8th, in the Los Angeles Times, entitled Southern California Beach House Prices Remaining Afloat, Ronald White outlines the reasons why homes in the beach cities of the South Bay have faired far better than those located in the inland empire counties of Riverside and San Bernardino.

Moreover, Elaine Carlson, in her article entitled, Now You’re Talking…remarks that the areas of Malibu, Palos Verdes, and Newport Beach are doing even better than the 18 beach side zip codes that were included in the study by the Times for their relative affordability.

Fewer sub-prime loans were made in the coastal areas, where the buyers tended to have less trouble qualifying for good fixed-rate loans, said Stuart Gabriel, a finance professor and director of the Ziman Center for Real Estate at UCLA.

“The sub-prime problems are focused on lower-income and lower-credit borrowers who were stretching to afford homes. Those areas are very visibly and geographically concentrated in the interior parts of the state,” Gabriel said.

Again demand for homes in the beach cities are high, while availability of inventory remains low. Those areas of the inland empire that have seen the steepest declines in the price of houses (losses of almost half the value from the highs) are those areas in which there was unbridled building and development, and risky lending to those buyers who were lower-income and lower-credit borrowers who were stretching to afford homes.

On the other hand, “The individuals who had the income and wealth to own in the beach areas have not seen any significant decline in their situations.”

In an April 1st Day article entitled “Market Bottom Officially Reached at 2:34 pm This Afternoon; Impasse Between Buyers And Sellers Finally Resolved,” Kevin Boar, of 3OceansRealEstate.com, blogged about a property in Stockton, CA that had finally sold after going through five real estate agents, several thousand dollars in price reductions and 30 long months on the market, signaling that the absolute bottom in the housing market had indeed been reached at this particular hour on this appointed day, at which time we could all breathe a collective sigh of relief.
While written tongue and cheek, there is a great deal of truthiness to this, if I can quote Steven Colbert’s newspeak word. If the housing market is in the tank, then why are all these buyers pouring through Open Houses recently? Is it just curiosity? Or do that many people simply have nothing better to do with their free time on the weekends than to frequent Open Houses? (A cheap form of entertainment, maybe?) My take on this up tick in Buyer foot traffic is that:

1. Buyers intuitively feel down deep in their gut that the housing market has “bottomed,” or “corrected.” (Truth be told, Buyers all seemingly appear out of nowhere and disappear into nowhere as a group.)
2. Buyers are experiencing housing market withdrawal in what is coined in real estate speak as “pent up buying demand.” (There has been a house buying strike since the mortgage debacle of the summer of 2007, and the fence sitters appear to be getting antsy.)
3. Re-sale housing inventory has shrunk dramatically since last year at this same time. (Sellers who don’t have to sell have taken their homes off the market, and we are not seeing the re-sale inventory increase dramatically for this “springtime” of the year.)
4. New home builders have either opted out of the current market by postponing new building, while, at the same time, cutting existing new home prices to reduce their current inventories quickly.
5. Buyers are becoming increasingly aware of the new favorable lending guidelines, i.e., the temporary increase of the conforming rate loan limit (previously capped at $417,000) up to $729,750 through the end of 2008, while interest rates continue to remain attractively low (30 year fixed rates continue to hover around the 6% mark with good FICO scores (above 720).

So what does it all mean? Well my “gut feeling” tells me that Buyers have their ear to the ground. Buyers intuitively know when a new listing comes on the market, and are in tune with what they consider to be a “good buy/value.” Buyers know when a home is “over priced” or “priced-to-sell.” Buyers know when other Buyers are interested in the same property that they are interested in. Buyers know when a home looks and shows well, and is priced right, because Buyers today are well educated…have done their homework, and then some.

Real estate is, after all, local, and what we’re seeing in the Irvine, CA housing market is an increase in demand as evidenced by the number of houses and condos going into escrow (that is, selling), and a diminished housing supply for this time of year. Both of which should translate into higher homes sales and stabilizing prices.

Sounds like the impasse between Buyers and Sellers may be passe…yesterday’s news. And that’s the truthiness of the housing stalemate…it’s over. And that’s no April Fools’ joke!

Everyone has his/her own reason for moving from one place to another. Over the past century we have become an increasingly mobile people. We uproot ourselves and our families seeking a better life, reinventing ourselves.

We move for a job relocation. We move to improve the quality of our lives and of those of our children or grandchildren. We are looking for a vacation or second home. We are looking for a retirement community. We are looking to move near excellent schools for our children or future families. We are seeking to move close to a university environment. We are looking to move from a colder to a milder climate. We are looking to move from a large single family home into a condo, town home or high-rise. We are seeking to move from a condo or town home into a larger single family home. We are looking to move to a golf course community. We are seeking to move to a coastal or a beach community. We are looking to move to a safer environment. We are looking for cultural enrichment.

In short, welcome to Irvine, CA whose everyday motto is “another day in paradise.” Irvine, CA has a dynamic and healthy business environment. Irvine, CA has real estate catering to the taste of one and all: homes, properties, condos, high rise and low rise town homes, second homes, vacation properties, golf course communities, beach communities, and retirement communities.

Welcome, home to Irvine, CA where lifestyle and real estate meet and fulfill the wants and needs of people of all ages in which one and all find their very own piece of paradise.

Venturing into real estate can be compared to jogging in that just as you would want to get a health check-up before embarking on any serious exercise program, so too would you also want to get pre-approved by a lender to see if your current financial “health” can support a housing payment.

Exercising, like real estate, can seem daunting: it takes research and commitment to do both right. But while you can exercise on your own, some choose to seek the assistance of a fitness trainer or coach to help follow an exercise program; similarly, some find that looking for real estate on their own suits their needs just fine, while others, though, recognize and seek the value that a real estate professional can provide to the process.

While jogging ultimately enhances your overall well-being, energizes both your body and your mind, and allows you to take charge of your life, real estate instills a sense of pride of ownership, enhances your self-esteem, and allows you to be the master/mistress of your own castle.

Furthermore, as jogging or any consistent aerobic exercise will stave off diseases and extend the quality of your life, owning your own home has historically been a source of tax relief, enhancing your net income, and allowing you to have more disposable income for even a little self-indulgence on occasion. (Like, for example, enjoying that aged-to-perfection glass of wine—which, coincidentally, could help break down plaque build-up in your arteries just as a morning or afternoon jog would!)

As jogging and exercising regularly could actually add quantitative and qualitative years to your life (if coupled with other healthful lifestyle changes and activities, of course), owning your own home is a major step towards enhancing your future, securing your retirement—and fulfilling the American Dream of home ownership.

I came across an article entitled “Buyers jump into murky housing market,” by Zack Fox, a staff writer for the North County Times. The story is about how home prices in San Diego county’s Oceanside are finally becoming affordable enough for some buyers to “take the plunge,” while others still are playing “the waiting game.” This concern can, of course, be extrapolated to our local market as well, here in Irvine, CA.

The article features a couple of buyers who have been waiting to buy for years, and with median prices falling, the question for them is whether to buy now or to continue their wait. Some real estate agents suggest that prices will not go any lower and first-time buyers should act now. Some economists, on the other hand “laugh at the notion and advise patience.” One buyer’s view is voiced by an Oceanside teacher, Julie Beck, who is not as concerned with whether the real estate market has bottomed out or not, but rather she is “tired of dumping $2,000 a month in rent into a property where she cannot paint the walls.” “I’m not looking at a home for an investment. I’m looking at a home for a home,” said Beck, who said she plans to keep her 4-year-old twin daughters and 8-year-old son in Oceanside schools through graduation. “I won’t be ready to sell for the next 12 years, so it doesn’t matter if prices drop some more.”

Does her sentiment make sense? In our experience it makes perfect sense, if…and this is a big if

1. The buyer has a secure job, that is, no chance of being laid off or relocated in the next few years
2. The buyer plans to stay in the home for at least five to seven years (the normal course of a real estate cycle to come full circle)
3. The buyer has good credit (these days a FICO score above 700 is a must)
4. The buyer has the down payment, income requirements, credit history, job history, and can afford to make a housing payment (Principal, interest, taxes, insurance, and association) does not exceed approximately one-third of the gross monthly income
5. The buyer’s debt to income ratio does not exceed 38% of the gross monthly income (that is the total housing payment in #4 + revolving credit card debt (car payment, student loans, store credit card debt, etc.)
6. The buyer has access to a down payment (either from savings, gift, investments, etc.) of 20% of the purchase price (again, this is the “old school way”)

If you can say yes to the above, then, yes, it makes sense to move off of the fence/rental and into your very own home.