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

Back in February 2006, the median contract of a new Orange County house was $1.29 million. In May of this year, a new house in Orange County costs $859,880. We have witnessed a drop of roughly $429,000, or 33%, from that peak in 2006. 

These figures, provided by Costa Mesa-based Hanley Wood Market Intelligence, are significant because they track sales contracts entered into escrow and break down new homes sold by housing type. Thus, we are able to see what is in the pipeline to be sold. The latest figures reveal that contracts in May for all types of new homes fell 37% compared to May of 2007, dipping to 174 units. Condos saw the steepest decline, dropping to 46 units, a decrease of 44% from last year. Contracts for houses were down 35%, dipping to 85 units, and contracts for townhouses or buildings consisting of one to four units (duplexes, triplexes, etc.) fell to 43 units, down 34%. 

Hanley Wood reported that the median price for all new housing types combined fell 2% to $623,000. Median prices were down year-over-year for all types of new housing, except condos, which saw prices increase 6% from May 2007.
Below are new Orange County homes based on contracts signed in May:

The second Quarter has been ugly for foreclosure rates, and there is potential for even more foreclosures in the Orang County area.

In only the first and second quarters of this year, foreclosure and default notices far exceded all those of 2007.

Within the next few days the Rigister will publish three maps that will be available online, that will show the areas of Orange County where most of the foreclosures are happening. This will be based on second quarter numbers by zip code fom DataQuick. Look for a link to these maps when this occurs.

Now, to give you some insight into this growing problem, and to explain why this situation is so urgent. The first stage of foreclosue is for the lending bank to send the buyer a Notice of Default. This usually occers after the buyer has missed three or more payments. The lender will usually give the buyer some options to try to save their home, therefore not all Notices of Default end in foreclosure, however the number of Notices of Default that have ended in foreclosure have increased significantly in Orange County. Comparing the foreclosure rates of 2007 and 2008 in the second quarter, DataQuick reported that 78% of buyers that recieved a Notice of Default in 2008 have lost their home, compared to 48% in 2007.

In the second quarter, Notices of Default have increased in all but two zip codes within Orange County. These two areas are in Newport Beach; 92662 and 92661.

After failing to be able to purchase a home through an auction-style arrangement through various auction companies, a couple has filed a lawsuit in the Los Angeles Superior Court against Real Estate Disposition Corp. of Irvine. They accuse the auction company of running a business with a bait and switch business model. 

The couple, Juan and Laura Torres, placed a bid of $146,000 for a specific Corona property. After arranging an escrow and signing the paperwork for the property at the auction, the couple agreed to buy a buyer's premium of approximately 5% making the total deal about $153,300. However, a month later the company informed Torres that she could not have the property unless she gave them another $50K. 

The Torress lawsuit is seeking class-action status for individuals who purchase homes through the use of an Catalist Homes Inc., auction. Whether or not it is believed that an auction is won by bidding the highest, the reserve price that the lender claim to have set for each property they owned, papers were signed at the auction. 

The president of the company defended the reserve price process to a news statement stating that this method is "effective and fully legal." Along with the Torress, two other plantiffs are included in the lawsuits stating they have experienced the same misfortunes. Some other defendants involved in the lawsuit is Dovebid Inc., Countrywide Home Loans Inc., and GMAC Mortgage LLC.

The Office of Thrift Supervision (OTS)'s recent report analyzed the influence of savings and spending for mortgage home owners. A major trend that was seen included increased loan delinquencies for those with good credit, while the number of delinquencies lowered on those with less than average credit scores. The agency analyzed data from five specific service porfolios including Washington Mutual, Merrill Lnch, Countrywide, IndyMac and Wachovia. After analysis, early loan delinquencies occured when foreclosures rose in the first 3 months of 2008 (first quarter). 

This report recognized three specific trends. Firstly, action taken for loss mitigation for companies increased nearly 26 percent from calendar month February to March, which is more than the number of new foreclosures opened (8.5%). Next, subprime mortgages were nearly 9% of the total loans created, while subprime loss action was 41% of the total action taken in calendar month March. Lastly, 71% of loss mitigation actions loans were initiated in March.

During the first quarter of 2008, home loan delinquencies and home foreclosures were statistically higher for those with prime loans versus those who had standard loan or credit issues. These findings, which were released by the Office of Thrift Supervision, or OTS, suggests that perhaps the housing market crunch may be due to shady loan practices, which approved mortgages for individuals who would not have qualified otherwise. 

The study by OTC collected data from large savings and loans corporations, such as Merrill Lynch and Washington Mutual. Prime loans were defined as those which were over a certain dollar amount, and that also were given to customers with at least average credit. A total of 11.4 million loans, or in other words, $2.3 trillion dollars worth of loans, were tabulated. In essence, these large corporations accounted for roughly 21 percent of all outstanding home loans across the nation at this time. 

Despite the seemingly bleak economic situation, Orange County Residents can afford a home again. Consumers are advised to choose a lower loan amount, a smaller home, and carefully consider their financial situation in a realistic fashion. Likewise, lenders must refrain from issuing loans to consumers who would not otherwise qualify.

Just when we think the Feds new lifeline is going to solve this mortgage crisis mess, the next round of foreclosures will hit the market, drive prices even lower and create negative economic impact on communities. Those areas that have seen home prices spiral downward are still going to experience a negative trend. The West Coast, Northeast, and Florida will continue to watch home costs decrease by up to 20%. 

As ARM's continue to adjust upward, and homeowners combat the far reaching effects of rising oil prices, there won't be money coming into American households to handle the increase in mortgage payments. And while some lenders are trying to work with homeowners, the majority are tightening credit standards. With tighter standards, when it's time to refinance the ARM into a long term fixed rate, homeowners can't qualify due to lower credit scores and decreased income.

In those same areas, more and more homeowners will choose to walk away from what they consider is an overpriced home in a depressed market and a mortgage they may feel they were forced to take from an overzealous mortgage broker. As they turn in the keys, the homes may sit on the market, depressing prices further, and creating a downward spin.

This has all ready occurred in some of the major markets, (and even minor markets such as Memphis, and Detroit) however, those markets are still poised for a down trend in home sales and prices. They say lightening doesn't strike the same spot twice, but the next round of foreclosures will probably occur in those areas hit hardest in 2007.

Fannie Mae and Freddie Mac are following the in the slippery and sliding slope that has befallen many mortgage companies. They are a state of financial distress. Unlike many of the smaller mortgage firms Fannie Mae and Freddie Mac are going to be bailed out by the Fed. The Fed has decided to help these mortgage giants to try and ease any fears about the failing mortgage systems. Fannie Mae and Freddie Mac hold over half of the US mortgages and have needed to in recent times borrow more money from the Fed to keep afloat.

The Fed’s plan is to extend the lines of credit for the two financial companies. In the end the plan also has the Fed taking a consultative type role for these companies. The plan must be approved by congress before it goes into effect. This is yet another move by the government to try and boost the confidence of the market in the mortgage company. Whether it will work or not is still yet to be seen. However if Fannie Mae and Freddie Mac fall in this hard time for the housing market the mortgage industry may have a harder time remerging from its fall.

Orange County Realtor^® and Fullerton Real Estate Agent Eases Real Estate Load in the Area

With Realtor^® Adam Brett and his web site as your local real estate guide you can cut to the chase and focus on the essential elements needed to achieve your real property goals.   Adam Brett’s site can help also you diligently evaluate and analyze real estate agents so you can make the informed choice of who can best help you achieve your real estate needs.

When you are embarking on a real estate investment or making a decision to purchase a house you can call home, it pays to do your homework up front. Avoid the pitfalls of working with an un-experienced agent or one who is not knowledgeable of the local markets you are considering.

Financial instability can result from a bad or ill-time real estate investment, not all real estate agents are created equal. It pays to work with a qualified real estate agent who not only has professional real estate credentials, but one who has the tools and ability to streamline the process by using the power of the Internet combined with local knowledge and outstanding customer service – that person is Realtor^® Adam Brett.

Resource Box

An Orange County Realtor^® or a Fullerton real estate agent will give you the right services from Realtor Adam.

Orange County Realtor^® and Fullerton Real Estate Agent Eases Real Estate Load in the Area

Can recent economic happenings in the country like high inflation be a great time to purchase a home if you can beat the price and other home seekers? If you are hell bent on finding homes in foreclosure, check out an Orange County Realtor^® and take advantage of the market while you can. Realtor^® Adam Brett can be of help.  Advice from a professional will help you avoid hurried decisions and costly mistakes.

In this market you need an agent who is responsive and available so that you can act on opportunities when they occur. Time is a valuable commodity and working with a Fullerton real estate agent who knows the local market and has the experience and track record of success can save you both time and money.

Resource Box

An Orange County Realtor^® or a Fullerton real estate agent will give you the right services from Realtor Adam.

Fullerton Real Estate - Information on Homes for Sale and Foreclosures

To get a good picture of the Fullerton real estate market visit Adam Brett’s web site, www.RealtorAdam.com, it is an excellent site to view available Fullerton properties including new homes, foreclosure sales and homes listed on the MLS. The site provides a comprehensive resource for real estate information such as guidelines to help you search for the right real estate agent by reviewing an agents’ experience and sales production, and how to gauge the true value of your home in the current market.

No matter if you are a first-time homebuyer or a seller looking for a fast sale, Adam Brett has the experience and the local knowledge to help you achieve your real property goals.  He is known for his integrity, he won’t tell you want to hear, but what you need to hear so that you get the results you want and expect.

Don’t limit your choices by working with someone who is just a buyer’s agent or a sellers’ agent, pick an agent that is well rounded and knows the real estate business and the local market inside and out!

There’s one other facet to consider when picking a Fullerton real estate agent… in this day and age, it makes excellent sense to work with an agent who not only knows conventional marketing methods, but is also comfortable integrating modern technology with conventional marketing. Adam Brett has been given awards by the National Association of Realtors for his outstanding use of technology, and has received accolades by his clients for his ‘old fashioned’ customer service. Experience, local knowledge of Fullerton communities, technology skills and superb customer satisfaction are what Adam Brett brings to the table for his clients.

Why you should use a Fullerton Realtor^® for the Fullerton Real Estate Market

When there is a buzz regarding Fullerton real estate, it is best to ask a qualified Fullerton real estate agent who is also a Realtor^®. A professional Realtor^® like Adam Brett will know the prevailing rates, how safe it is to buy homes in foreclosure, market updates, and information about houses that can appear to be good deal, but may have hidden issues that should be considered.  A local real estate agent like Adam Brett has the knowledge to answer these types of real estate questions and as a Fullerton Realtor^® he is able to advise what homes have taken a big turnaround and would be a good purchase.

By using a Fullerton agent for Fullerton real estate transactions you get the enhanced value of working with a local expert who knows the market and is intimately familiar with local neighborhoods.  But not all agents should be considered equal – don’t be fooled, make sure you are working with a Fullerton agent who has a proven track record of success – someone like Adam Brett.

There was an Associated Press article whose headline read, "US Housing Slump a Prelude to Recession."  

It was a brief article and had 3 main points:

1) if history is any guide, a recession is most likely around the corner because a recession followed 6 of the last 7 housing downturns.  

2) Housing stats are at all-time lows since after WWII

3) after the recession ended, housing starts typically rebounded strongly after inventory fell and home sales picked up.

What I would add to this equation for Southern California in general and Orange County specifically should inspire hope.  I'm not trying to be naïve.  

I know we are months from a full recovery.  Obviously we have economic woes beyond housing, i.e. food and gas, to name just two.  However, let me add that the Associated Press also noted that immigration growth would be a key factor in rejuvenating the market.  

We also have tremendous economic diversity that is currently being overshadowed by the mortgage meltdown but won't be forever.  Prices falling every month mean more buyers that can enter the market each month.  

All these first time buyers are planting the seeds for the first true move up market in almost a generation.  We need these buyers to start the cycle in a recovering housing market.  Finally, generation "Y" is the first generation to be as big as the boomers.  

Expect them to fuel a housing market as they turn 25 to 35 in the coming years.  With mortgage practices returning to normal, money should be available to those who qualify and expect a return to normal appreciation.  With as much trepidation as the next year may bring, it will also bring the same level of opportunity for many.  

I am always here to answer any questions you may have.  See you soon!