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

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.

In 2003, Vijay Soni was convicted of forgery, falsifying real estate documents, identity theft and grand theft by a jury in Orange County, California.

Vijay was a real estate agent who was caught using the personal information of his prospective clients to make large purchases which Vijay and his wife Supriti kept, saddling the poor clients with huge quantities of debt they were forced to clean up on their own.

For this, Vijay spent a year in prison and was forced to give up his real estate license, and his wife Supriti received three years.

Despite this sordid past, Washington Mutual gave the Sonis over $24.5 million dollars in loans, which they used to purchase properties for family members and friends.

The properties were soon in default, leaving Washington Mutual in ownership of houses worth much less than the loans that had been used to buy them, while the Sonis pocketed the difference. How could a major corporation be so foolish?

Washington Mutual had no one to blame for themselves for getting suckered into the Sonis's real estate fraud.

When the Sonis went to Washington Mutual for their loans, Washington Mutual neglected to even run a simple criminal background check, which would have proven that the Sonis could not be trusted.

With such blatant negligence when it came to checking the backgrounds of the people they were lending to, it's no wonder Washington Mutual found itself holding the bag when the Sonis scheme came crashing down.