Adam Brett's Blog - All Things Real Estate in Fullerton and Beyond

For the month of May the median selling price of homes in Orange County was $380,000 which is down 22.4% from a year ago and 41% below the peak that was reached in June 2007. 

In the current market, single family homes are selling for 41% less than their peak pricing and condos are selling for 47% below their peak.  Currently builder prices for new homes are 45% below their February ’05 top.

Over the last month, home buyers in Orange County purchased 2,451 residences – which is up 14.1% from a year ago.

April marked the 10^th straight month of sales gains vs. the year-ago period.  This follows a period of 33 consecutive months where sales gains failed to beat the previous years pace.

 

If you live in South Orange County, San Clemente specifically - and golf is your passion; Bella Collina Towne and Golf Club is the place to be.

The Private Club features:

27 Holes

255 Acres of Pristine Rolling Hills

30,000 sq.ft. Clubhouse

... and this is just what is visible.

Bella Collina is re-inventing the private club model with Vineyards, Organic Vegetables, Pilates, a business center complete with wireless and video conferencing, and in the works is a Tuscan Outdoor Amphitheature.

Take a look at this article for a great overview from the San Clemente Times:

Bella Collina Towne & Golf Club writeup.

Open enrollment has been reinstated in the Fullerton School District following a postponement because of budget concerns.

The enrollment period for the 2009-10 school year will be from March 30 to April 24, Administrative Services Director Marilyn White said.

"Because of potential budget cuts, we didn't know if we would have teachers or programs the parents would want," White said. "We decided to go forward with business as usual."

The program allows parents to apply to have their children attend a school other than their school of residence within the city.

Normally, the period is from early February to early March.

Intradistrict transfer forms are available at schools of residence.  For information, call 714-447-7528.

The US Coast Guard Aux Flotilla 15-08 would like to invite the public to come out and experience the Fly & Float Show at the Fullerton Municipal Airport.

Kick-off is Saturday, May 9th at 9:00 with an opening ceremony with California Assemblyman and "boating advocate" Mike Duvall.

The event is to kickoff the National Safe Boating Week. This is an important role the Coast Guard and many other emergency water responders play in providing lifesaving and recreational boating services in Orange County. In attendance will be US Coast Guard aircraft, patrol boats/PWCs and other equipment along with the Orange County Fire Authority, California Highway Patrol and Anaheim & Fullerton Police units. Commander Chuck Street, local air traffic reporter will be on hand with others from the media. Additional displays include vintage aircraft, Racing boats, hot rods and related display booths & food vendors. We will also be giving safe boating & first aid demonstrations and free promotional giveaways.

If you would like to join in and/or have a display booth- Please send an email:
rouch@auxguardian.com

 

 

 

 

 

Who is Eligible

• The $8,000 tax credit is available for first-time home buyers only.
• The law defines a first-time home buyer as a buyer who has not owned a home during the past three years.
• All U.S. citizens who file taxes are eligible to participate in the program.

 

Income Limits

• Home buyers who file as single or head-of-household taxpayers can claim the full $8,000 credit if their modified adjusted gross income (MAGI) is less than $75,000.
• For married couples filing a joint return, the income limit doubles to $150,000.
• Single or head-of-household taxpayers who earn between $75,000 and $95,000 are eligible to receive a partial first-time home buyer tax credit.
• Married couples who earn between $150,000 and $170,000 are eligible to receive a partial first-time home buyer tax credit.
• The credit is not available for single taxpayers whose MAGI is greater than $95,000 and married couples with an MAGI that exceeds $170,000.

 

Effective Dates for the Tax Credit

• First-time home buyers would receive a $8,000 tax credit for the purchase of any home on or after January 1, 2009 and before December 1, 2009. To qualify, you must actually close on the sale of the home during this period.

 

Tax Credit is Refundable   ***This is a good thing***

• A refundable credit means that if you pay less than $8,000 in federal income taxes, then the government will write you a check for the difference.
• For example, if you owe $5,000 in federal income taxes, you would pay nothing to the IRS and receive a $3,000 payment from the government.
• If you are due to receive a $1,000 tax refund from the government, your refund would grow to $9,000 ($1,000 plus $8,000 from the home buyer tax credit).
• You are allowed to claim the credit for a purhase in 2009 on your 2008 tax returns. Consult your tax preparer.

 

Types of Homes that Qualify for the Tax Credit

• All homes, whether single-family, townhomes or condominium apartments will qualify, provided that the home will be used as a principal residence and the buyer has not owned a home in the prior three years. This also includes newly-constructed homes.

For more information please go to:  View Fullerton Foreclosures

You can view all foreclosure listings in the City of Fullerton as well as every other city in Southern California at 

Foreclosure Listing in Southern California.

Search Foreclosures like you never have before - on a map overlayed with great information.  Find neighborhood information including schools, crime statistics, stores and restaurants, mortgage calculators, and pricing estimates.

 

In one of today’s government reports at least two positive stats can be

• Foreclosure starts dipped 2.6% in the third quarter vs. the second quarter.
• For the first time this year loan modifications – started in Q3 – were 4% greater than completed foreclosures in the period. 

Unfortunately, other than those facts the report was fairly bleak.

The Office of Thrift Supervision and the Controller of the Currency reviewed 34.6 million first lien mortgage loans, or roughly 60 percent of all outstanding mortgages, from nine banks and five thrifts.

Some more positive facts:

• The lenders reviewed started 281,298 foreclosures in Q3, down 2.6% from Q2 but slightly higher than Q1.
• Of those lenders reviewed they initiated 133,106 loan modifications in the third quarter, up 83% from the first quarter and the 4% higher than the 127,738 completed foreclosures in Q3. In the first half of the year foreclosures surpassed loan modifications.

When a lender or loan provider agrees to change a loan’s term (by cutting the interest rate, extending the term, etc.) to make it more affordable it is considered a loan modification.

Sadly out of the borrowers getting the loan modifications, more than half started missing payments within six months.

Out of the loans that were modified in the first quarter, 37% were delinquent again in three months, and 55% were delinquent again in six months.  Loans modified in the second quarter fared even worse with 40% of borrowers becoming delinquent within three months.

Across the credit spectrum delinquencies increased, from prime (good credit) to Alt-A (fairly good credit often combined with stated income) to subprime (low credit score) through subprime.  The chart shows the proportion of loans 60 days or more past due, by type and by quarter.

 

 

The newest O.C. home market report says the following facts about distressed properties (which are properties that are listed as bank-owned foreclosure or short sales where lenders take less than they are owed):

• The number of distressed properties on the market is down 7.2% from last year with 5,379 on the market as of Thursday.
• Currently distressed properties account for 46% of the O.C. inventory of homes for sale.
• Short sales account for 76% of the distressed inventory while the remaining 24% are foreclosures.

“Since June, distressed properties have made up at least 50% of demand. Currently, two-thirds of demand is a distressed property. There is tremendous demand for distressed properties. Even though it is the Holiday market, the expected market time for all foreclosures is at 1.54 months, a DEEP SELLER’s market. It is hard for the lay person unfamiliar with the Orange County housing market to understand, but there is tremendous competition for distressed properties. The average sale to list price ratio for foreclosures is 101%, meaning that on average they are selling for above their list price.” – Steve Thomas

The chart shows a selection of the O.C distressed property market: total inventory listings; distressed property listings; and the share distressed listings have of total inventory supply on a percentage basis in each niche.

 

Statistics show that the 11,842 homes listed for sale as of Thursday marks a two-year low for Orange County homes.

It was mentioned that because many sellers took a year off it was an interesting year for inventory.

• In 2008, by the end of March inventory had reached its peak with 15,617 homes.  This was only a 4.5% increase from where the year’s home supply started.
• By September of 2007 the supply had grown 54% from the beginning of the year reaching 17,898 homes.
• The inventory grew 117% from the start of 2006 to August 2006 peaking at 16,006 homes.

It was noted that the demand for housing – specifically the new deals opened to buy – increased from 998 homes in January to a high of 3,060 in June.   The decrease in demand, down to 1,997 ad of Thursday, was referred to as a seasonal slowdown.  This slowdown still puts the demand up 94% from a year ago.

“Market time” is a benchmark that tracks how many months it generally takes to sell the entire inventory in the local MLS for-sale listings based on the current trend of pending deals being finalized.  Based on this theory:

• At the current pace it would take a buyer 5.93 months to by all the homes for sale vs. 5.34 months two weeks vs. 15.05 a year ago vs. 7.51 two years ago.
• 5.00 months is the market time for homes listed under a million dollars vs. the homes listed for more than $1 million dollars which have a market time of 27.71 months

 

The chart lists the data as of Thursday, for listings; deals pending; market time in months vs. 2 weeks ago, a year ago and 2 years ago.

 

It’s important to note that in a year where the amount of homes for sale in Orange County has fallen 24%, a new crop of sellers has popped up in some expensive communities near the beaches. 

Looking at statistics that have to do with home-inventory 2007 vs. 2008 It was concluded that five of the six Orange County communities who showed a rise in their homes-for-sale inventory were beachside: Corona Del Mar, Laguna Beach, Newport Coast, Seal Beach and Newport Beach.

This was no fluke! The weakness in beach-close communities was also found when looking at the stats for the town’s with the largest percentage drops in demand for O.C. homes for the year, as measured by new escrows opened. In a year where demand for housing in O.C. practically doubled Laguna Beach, Seal Beach and Newport Beach were three of the five demand losers. 

Note: The charts detail the best and worst O.C towns – in terms of percentage change of supply and demand from Dec ’07 to Dec ’08.

 

 

Credit Suisse predicts that roughly 16% of U.S. households with mortgages or over 8 million mortgages will go through foreclosure over the next four years.

If the recession is severe analysts Rob Dubitsky and Lang Yang write that foreclosures could reach 10.2 million.

If banks successfully modify the loan process to assist the borrowers with their mortgages - something the analysts doubt - the number of foreclosed mortgages drops to 6.3 million.

Although those are huge numbers, 32% of all owner-occupied households, or roughly 23.9 million, have no mortgage at all, according to census data.

By the end of this year Credit Suisse estimates 1.8 million mortgages will have entered foreclosure.

This following is a clip from the report:

Despite some initial signs that subprime foreclosures were near a plateau, the combination of severe weakening in the economy, continued decline in home prices, steady increase in delinquencies, particularly in the prime mortgage space, ensure that foreclosure numbers, absent more dramatic intervention, will march steadily higher. While loan modifications and similar interventions (such as the Hope for Homeowners FHA refinancing program) could help to reduce the march of foreclosures, the proliferation of generally timid loan mod programs with confusing loan features raises significant doubt as to whether the current loan mod momentum is sufficient to reduce foreclosures materially. Further, though mortgage walkaways have been important, the disease hasn't infected the general population. However, should the downward spiral in home prices, neighborhood condition and equity deterioration continue, more and more mainstream borrowers are likely to walk away from their homes. Thus far, the population of subprime borrowers in the US is relatively small. However, the severe recession that appears more and more likely, coupled with the collapse of confidence in housing and resultant foreclosures and the impact on credit scores, risks transforming the US into a subprime society. That is, the deeper the foreclosure crisis penetrates into the gene pool, the greater the percentage of American consumers with impaired credit, and therefore limited ability to access credit. Therefore, foreclosures aren't only a housing-related phenomenon and should foreclosures spread, a large percentage of of the population could suffer impaired credit, which in turn would hurt credit availability.

I have said it before, and I will say it again, real estate always, eventually, appreciates.

History has shown us, particularly in Southern California, that prices will always rebound.

That doesn’t mean that buying a home isn’t a serious decision in uncertain economic times.

But these prices may never come around again, because most economists are calling this a “once in a century” economic travesty.

UCLA EXPERTS PREDICT A RECOVERY IN THE HOUSING MARKET WILL SPUR THE ECONOMY. (Register headline Oct. 28)

The article predicts the bottom will hit in summer 2009.

They expect a fall of 9% in 2009 and then to rise just 3.5% to 6% over the next 4 years after that.

They predict a median rise to $523,563 in 2013. The thing about real estate, unlike other investments, is that it doesn’t go anywhere.

That house, or apartment building, or land, is a fixed object, a part of the earth.

As Will Rogers once said, “Buy land, God’s not making any more of it.” However, this is a somber time in our history.

Decisions are not easy to make. If you have questions on anything from loan modifications, to short sales options, or having home equity and needing to sell in this tumultuous time, I am here to serve you.

Please call my office for any questions or concerns regarding your situation.

The number of default notices filed against California homeowners fell last quarter for the first time in 3 years.

But the good news isn’t good. It’s primarily due to changes made at the state level.

But on this note, the Bailout will change the current status quo on foreclosure. Look for many people to opt for loan modifications; if they can qualify, and if not, we may see a rise in short sales, as they may be fast tracked for a quick sale rather than the additional cost to lenders of going all the way to foreclosure.

Remember a short sale is when a property sells for less than is owed to the bank, but sells subject to bank approval.

If you become involved in such a transaction, make sure you consult your CPA and your lender for all tax consequences and financial liability, if any.

California had statewide estimated sales for September (the latest month available) of 40,317 including new and resale houses and condos. That number is up 6.1% from 37,988 in September a year ago.

A number that is staying fairly consistent throughout the state and held true for Southern California is that approximately half of all sales are bank owned properties.

The overall median price in California dropped to $283,000, down 6% from the previous month and the median for Orange County dropped to $425,000, a drop of 25.4% from a year ago.

The total number of sales for O.C. was 2,667, an increase of 62.3%. The break down of those numbers is as follows: 1,732 single family resale, 750 condos, and 185 new homes.

Housing construction will not rebound much from the lows of 2008. According to the Kiplinger California Letter, “The latest Construction Industry Research Board report forecasts…work to start on only 74,000 homes, about half of them condos.

By contrast, there were 113,034 housing starts in 2007 and 212,960 in 2004.” (Dataquick)

The question of whether the current housing market is good or bad depends on your perspective and position in the transaction. Clearly, this is a good time to buy, just check out the headlines of the past few weeks: BARGAIN HUNTERS HELP SHRINK HOUSING GLUT (Wall Street Journal), or LOW HOME PRICES LURE MORE BUYERS (LA Times), or FORCLOSURES HELP SEPTEMBER HOME SALES SOAR 65% IN STATE and O.C. HOME DEMAND NEARLY DOUBLE LAST YEAR’S (O.C. Register). But these driving headlines are not the same thing as positive headlines.

Yes, buyers that can buy are loving this market. Soon, investors will enter the fray and they will like it too. But it all has come at a price. The credit crisis has stabbed America in its heart of hearts, the right to the American Dream, i.e. home ownership. Many Americans are forfeiting that right, albeit through their own poor decision making. We all know now, there is no free money. The question many are asking is, “When will the bottom come?”

According to Dataquick, and as quoted in an article by Peter Hong in the LA Times, “the Southland median is 33% less than a year ago.” This includes some sorely troubled areas in the Inland Empire, also in Los Angeles, and a few spots in O.C. such as Santa Ana and south Orange County. The demand for OC housing did double from last year, but pending deals have fallen in the past two weeks, likely seasonal as much as anything else. Projections for 2009 call for another decrease of 5% to 9% (the Kiplinger Editors project 10%) and possibly more properties in the multi-million category as they truly haven’t taken a substantial hit yet. (OC Register)

The fact of the matter is that houses are not stocks, a house is where you live, raise your family and get shelter. Everyone needs to have a home, and timing can play a crucial role in what is best for you. How do you know if it’s the right time for you?

A Realtor® you can trust is at the root of making an informed decision about your home buying process. If you have been waiting for the market to ‘adjust’ there are some good reasons to get into the market now. 1) Selection – more demand means that inventory is shrinking, the Orange County active listing inventory dropped to it’s lowest point in 18 months, 2) increased competition - you have a good chance of getting the home you want, especially if you are looking to buy a ‘distressed’ property if you work with an agent who has already established a relationship with banks who own property. Right now most offers on bank owned (REO) properties are coming from people who plan to occupy the property, this will change as investors start to enter the picture probably sometime in 2009. 3) Interest rates are still in the 6 to 6.5 percent range buyers should be aware that this may not be the case for 2009 and finally 4) home ownership provides tax savings and advantages.

Affordability has been re-introduced into the Orange County market – at the end of the selling frenzy and sub-prime debacle affordability was a scant 11%. Now affordability has risen to a healthy 50% or better. Don’t wait too long to jump into the homebuyers market, the market has made some big adjustments in the past few months and with a good inventory, low mortgage rates and tax advantages for buyers, (like the FHA first-time homebuyers package with a $7500 tax credit) there is no time like the present to purchase a home. The tide has turned, buyers are beginning to come back into the market and are making offers. The abundance of overpriced property is gone, either by price reduction or removal from inventor. The current market is healthier and more robust now that demand is 156% stronger than this time last year.

If you are a buyer looking for a distressed home know that you have a lot of company. Distressed homes in great condition and in a good location attract multiple offers, be prepared to compete and for the best chance at success, select an agent who not only knows the local inventory, but who is a strong negotiator and who has already enjoys established relationships with banks who handle REO properties.

Like any young professional Mike McAdam yearned for his independence, to move out of his parents’ house into a home of his own. He finished college, got a job and planned find a place to rent with the long term goal of homeownership. Recognizing the affordability challenge in Southern California, his dad advised him to stay at home a while longer – rent free and save for a down-payment.

For ten years McAdam diligently saved and started looking. As a first-time homebuyer and a paraplegic, McAdam had many concerns. He didn’t have a lot of money, and buying a ‘repo’ or a distressed home that needed lots of work wasn’t a good option for him. Frustrated by working with several agents who kept advising him to ‘wait a while longer’ he was finally referred by a friend to Fullerton Realtor Adam Brett.

“We just clicked” said McAdam who says that Brett is not just his Realtor, he has become McAdam says “My friend – first and foremost”. McAdam frustrated by the misleading financial information he had been given earlier that almost scuttled his homeownership dream, said that Brett put all his experience and business acumen to work on helping him craft a financial plan that would help him achieve his homeownership goal. Part of that plan involved applying for a $10,000 down payment assistance grant through the Pacific West Association’s of Realtors, “Opening Doors” First-Time Down Payment Assistance Program.

The “Opening Doors” program was created and is supported by local Realtors with the objectives of helping ‘challenged but worthy’ first-time buyers to bridge the down payment gap, and help make the dream of home ownership a reality for families in northern Orange and southern Los Angeles counties.

According to Brett, by providing down payment assistance, the program positively affects housing affordability by creating buyer equity, a lower monthly payment, and a guaranteed market interest rate on a safe mortgage product. Said Brett, “This program is structured to help close the housing affordability gap by bringing the opportunity of homeownership to challenged buyers. It was a perfect fit for Mike McAdam. “

“It was a team effort and everyone worked very hard to make this happen” acknowledged Brett who also noted that McAdam who works for a local school district has outstanding credit scores, and his dad hand carried the reams of completed paperwork and documentation to the Association of Realtors, and after years of looking and previewing, ‘the dream home’ had been found and an offer accepted – everything was finally in place.

One month ago McAdam delightedly moved into his dream home. Said Brett, “The ‘Opening Doors’ program really did open doors for Mike who used some of the grant funds to widen doorways in the home to accommodate his wheelchair and special needs. “Mike is an amazing man, it was an honor to help him” said Brett who acknowledged that everyone involved in the process, from seller to lender felt the same way about McAdam.

In turn McAdam feels the same way about Brett, “Without Adam’s help, I’d still be waiting. Adams is a special real estate agent. You can trust him, and he really cares about his clients. You can tell Adam is not just out to make a buck. He has become a great friend to me – I can’t say enough good stuff about him!”

“In these turbulent financial times where negative real estate stories abound, it’s nice to hear some good news for a change” noted Mike McAdam’s dad Bill McAdam who also commented, “Adam Brett really did go above and beyond to make my son’s homeownership dream a reality.”

As for Mike McAdam he can’t wait to invite the folks to his house for Thanksgiving dinner and to string up lights for the holidays…all the simple pleasures of home ownership.

Adam Brett is a sales associate with RE/MAX North Orange County. He can be contacted at (714) 496-8116 or (800) 977-ADAM or visit

Orange County home loans were sold off at half price to real estate entrepreneur, Robert Campbell; who purchased 99 mortgages from an investment bank.

Mr. Campbell paid 50 cents on the dollar of the total unpaid balance. The properties were spread out across California, Oregon and Washington.

The difficult real estate market has demanded increasingly creative solutions to ensure that real estate investments retain their value.

The government, banks and investors are attempting to find credible restructuring instruments for mortgage assets, that help homeowners to continue to make their payments.

Mr. Campbell has assembled a talented real estate team, which will use an array of different financial strategies to assist homeowners in mortgage repayment.

Some of the loans might be resold, if located together. Short sales are also a possibility. One of the overriding goals for investors is the maintenance of a positive income stream with the mortgages.

Mr. Campbell's team can also modify loan arrangements; as long as homeowners continue to make payments during a "probationary period", they might qualify for a lower interest rate.

Challenging economic times call for complex financial solutions. Orange County is hoping that clever entrepreneurs (like Mr. Campbell), will find a way to balance all interests - so homeowners, banks and investors will all benefit.