Interested in viewing this property? It's easy: Call me at 949-444-1901 and I will get you in right away. Hurry, deals like this go fast!!!!!!Monday, August 25, 2008
Bank Owned Property: Southwest San Clemente
Did your real estate agent tell you about this deal that hit over the weekend? Are you ready? 3 blocks to the beach in the most desirable part of San Clemente (Southwest San Clemente). 4800 square feet, 4 bedrooms, 6 baths, 7, yes a 7 car garage!! Oh, and an ocean view as well! Asking price.......$1,000,000 even! If you are not familiar with short sales give me a call 949-444-1901
Interested in viewing this property? It's easy: Call me at 949-444-1901 and I will get you in right away. Hurry, deals like this go fast!!!!!!
Interested in viewing this property? It's easy: Call me at 949-444-1901 and I will get you in right away. Hurry, deals like this go fast!!!!!!
Friday, August 22, 2008
Historic Doheny Mansion in Dana Point For Sale: Built in 1929 - $2,995,000
Historic Doheny Mansion is now for sale for $2,995,000. The property was built in 1929 for Edward Doheny and has kept a lot of the original features from the early 1920's. It's one of the largest historical homes in the area with an approx. 4900 square feet of living space: 4 bedrooms & 6 baths. The property sits on a large 11,000+ square foot lot and has a detached 2 car garage. This is a rare find to have one of the largest historical properties available for sale. Property is shown by appointment only so please call our office at 949-444-1901 to set up a showing.New Advertising Partner: Wall Street Journal Online
Beach Cities Luxury Homes listings will now be featured on the real estate section of the Wall Street Journal. With the current value of the American dollar, we see more & more foreign investors coming into this marketplace. Currently, Beach Cities Luxury Homes Listings are featured on our affiliate site, http://www.luxuryrealestate.com/, the #1 viewed website for buyers looking for Luxury properties. Now, we have added another great website to reach International buyers, http://online.wsj.com/real-estate. If you are interested in getting global exposure for your property, please contact Beach Cities Luxury Homes at (949) 444-1901 or email at info@bclh.com
Thursday, August 21, 2008
San Clemente Real Estate Data Report
Current Data from May 2007 to July 2008 for the number of homes for sale, sold & pending. We had a spike in January & April and we should to see another spike in September as people rush to buy homes as the new school years starts
New Real Estate Section in Craigslist
Casual users of Craigslist may not have noticed a change last week to the Real Estate for Sale section. Recently, my bookmark for that section suddenly started showing fewer and fewer listings.Around August 4, it appears the ‘real estate for sale’ category was split into ‘for sale by broker‘ and ‘for sale by owner‘ buckets.
It's still one of the most popular sites to find real estate for rent & for sale. We have even helped clients who are selling furniture items in their home for sale by uploading them to Craig's list and It worked out great!
There were complaints about the previous real estate for sale section, like, “Why do brokers put their listings here (multiple times), when there is already an MLS?” The new categorization solves that issue if you just want to see owner listings. But when I looked in the ‘by owner’ section today, it seemed rife with spam, foreclosure ‘help’ ads, and other money schemes. Some policing will be needed.
With the split, is Craigslist prepping to charge California brokers to advertise their listings like they do in NYC? We shall see.
Million Dollar Listing: Bravo TV's New Show
I was intervied by Bravo TV for the 2nd season & I'm glad I didn't get the job. My hair needs to stand up more!
Tuesday, August 19, 2008
Capistrano Shores Residents Buy The Land On The Beach Front Mobile Home Park Here In San Clemente - Property Values Expected to Increase Dramatically!
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As reported in the OC Register, The largest beachfront parcel in San Clemente has new owners: Its residents. The Park was purchased from Amherst College for about $100 million, Realtor estimates, to the current property owners.
Capistrano Shores, a 90-unit mobile home park in North Beach, was purchased Jan. 25 from Massachusetts-based Amherst College, said Mark Howlett, president of the park's homeowners association. Howlett is a resident of San Juan Capistrano, but has owned a cottage in the park for a year and a half. He added that 97 percent of the park's cottages are secondary homes.
The oceanfront park stretches over seven-tenths of a mile, and Howlett estimated the post sale transaction value of the cottages to be $2.5 million per lot.
The purchase price and terms of sale could not be disclosed. Local Realtor Mike Cotter estimated the sale to be roughly more than $100 million.
"It's a really sweet deal for the residents there," Cotter said. "It's definitely the largest transaction lately in San Clemente."
The land was donated to the college in 2006 by alumnus Roger Holden, said Amherst spokesperson Caroline Hanna. Howlett said they've been working on the sale for 17 months. They wanted to secure the land for themselves and future generations, he said.
"Everyone found a way to do it," Howlett said. "In that the transaction took 17 months to complete, all residents were provided adequate time to provide financing for their homes."
He said residents were elated to finally control their own ocean cottages, and described the sale as a "team effort" and win-win situation for both homeowners and Amherst College.
"We are very pleased that the sale of the land – a gift from a generous Amherst alumnus – has enabled this group of dedicated homeowners to now also become landowners and remain on such a beautiful piece of property," said Amherst treasurer Peter J. Shea.
Howlett added that residents are pleased with the developments proposed for North Beach over the next several years, which they believe will enhance their property values.
Capistrano Shores, a 90-unit mobile home park in North Beach, was purchased Jan. 25 from Massachusetts-based Amherst College, said Mark Howlett, president of the park's homeowners association. Howlett is a resident of San Juan Capistrano, but has owned a cottage in the park for a year and a half. He added that 97 percent of the park's cottages are secondary homes.
The oceanfront park stretches over seven-tenths of a mile, and Howlett estimated the post sale transaction value of the cottages to be $2.5 million per lot.
The purchase price and terms of sale could not be disclosed. Local Realtor Mike Cotter estimated the sale to be roughly more than $100 million.
"It's a really sweet deal for the residents there," Cotter said. "It's definitely the largest transaction lately in San Clemente."
The land was donated to the college in 2006 by alumnus Roger Holden, said Amherst spokesperson Caroline Hanna. Howlett said they've been working on the sale for 17 months. They wanted to secure the land for themselves and future generations, he said.
"Everyone found a way to do it," Howlett said. "In that the transaction took 17 months to complete, all residents were provided adequate time to provide financing for their homes."
He said residents were elated to finally control their own ocean cottages, and described the sale as a "team effort" and win-win situation for both homeowners and Amherst College.
"We are very pleased that the sale of the land – a gift from a generous Amherst alumnus – has enabled this group of dedicated homeowners to now also become landowners and remain on such a beautiful piece of property," said Amherst treasurer Peter J. Shea.
Howlett added that residents are pleased with the developments proposed for North Beach over the next several years, which they believe will enhance their property values.
Thursday, August 7, 2008
Pre-Foreclosure Sale: 116 E Avenida Cornelio - $785,000
Looking for a Deal? Need a large 2200+ square foot house with an ocean view? Great Location Just A short walk to the beach. .jpg)
116 E Avenida Cornelio has been approved by WAMU for an Unbelievable Price for A Large 2200+ Square Foot House with an Ocean View!!! House is approved for short sale at $785,000. The house next door is listed for over $1.2 million! The home feautres Large Spacious Rooms with Large Landscaped Backyard, 2 Car Garage & Ocean View Master Bedroom with Ocean View Deck. Close to Beach & Shops. Hurry On This One!!! The property goes into foreclosure next week! Contact Sam Smith at 949.444.1901 for more info on this property.
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116 E Avenida Cornelio has been approved by WAMU for an Unbelievable Price for A Large 2200+ Square Foot House with an Ocean View!!! House is approved for short sale at $785,000. The house next door is listed for over $1.2 million! The home feautres Large Spacious Rooms with Large Landscaped Backyard, 2 Car Garage & Ocean View Master Bedroom with Ocean View Deck. Close to Beach & Shops. Hurry On This One!!! The property goes into foreclosure next week! Contact Sam Smith at 949.444.1901 for more info on this property.Tuesday, August 5, 2008
Housing Bill Passes: What this means to you.
The president has officially signed into law the Housing and Economic Recovery Act of 2008, also known as H.R. 3221. H.R. 3221, perhaps the most significant piece of housing related legislation we have seen in recent years, implements necessary consumer protections while promoting stabilization of the current market and industry through reforms to the Government Sponsored Enterprises (GSE’s), Fannie Mae and Freddie Mac, and the Federal Housing Administration (FHA) program.
This bill is very long, 789 pages to be exact, and covers several issues. I have outlined what I think are the main points of the bill that I believe will directly affect us most.
First Time Homebuyer Credit
Allows first time homebuyers of a principal residence to receive a tax credit of 10% of the purchase price, up to $7,500. A first time homebuyer is classified as someone who has not owned a home in the last 3 years. This applies to home purchases made between 4/9/08 and 6/30/09. The tax credit is given to the homebuyer as a check and is repaid over 15 years at $500 per year. A single tax filer with income up to $75,000 will qualify for this tax credit. The tax credit will phase out as a single filer at $95,000 a year income. A joint tax filer with income up to $150,000 will qualify for this tax credit. The tax credit will phase out as a joint filer at $170,000 a year income. If the home is sold before the tax credit is paid back, the homeowner may or may not have to payback the full tax credit. If the homeowner sells the home at a loss, the remaining amount owed on the tax credit is forgiven. If the home is sold at a profit and the profit is less then the remaining amount owed on the tax credit, the tax credit is forgiven. If the homeowner dies, the remaining amount owed on the tax credit is forgiven.
New Agency Conforming Loan Limits
The current agency conforming loan limits maximize at $729,750 depending on the area where the property is located. The current limit is due to expire on 12/31/08. As of 1/1/09 the new maximum conforming loan limits for high cost areas will be adjusted to a cap of 150% of the current GSE loan limit of $417,000 for one unit properties or $625,500. Areas not regarded as high cost, the limits will be set to 115% of the local area median home price or $417,000 for a mortgage secured by a single family residence, $533,850 for a 2 family residence, $645,300 for a 3 family residence, and $801,950 for a 4 family residence.
FHA Modernization
Seller funded down payment assistance programs will be eliminated as of 10/1/08. Minimum cash required from the buyer is increasing from 3% to 3.5%. Up front mortgage insurance premium is increasing to 3% as of 10/1/08.
Hope for Homeowners Plan – FHA Rescue
The purpose of this plan is to ensure that loans are made available to distressed homeowners who could benefit from a refinance in order to be able to stay in their home. It allows owner occupant homeowners to avoid foreclosure by reducing their principal outstanding balance and their current interest rate. Participation in this program is voluntary.
The main requirements under this plan are:
· It must be your principal residence
· Borrowers mortgage debt to income ratio (including all existing mortgages) as of March 1, 2008 must be 31% or higher
· LTV is limited to 90%
· Existing lien holders must waive any prepayment penalties and fees
· Existing lien holders must agree to accept the proceeds as payment in full of all indebtedness and release of all liens
· Minimum 30 year term loan must be secured
· Maximum loan amount allowed under this program cannot exceed $550,400 (may be different for high cost areas)
· No second liens allowed for 5 years
· CLTV can not exceed 95%
· The loan must be underwritten with full income documentation
· Equity appreciation will be shared on a graduated scale with the lender
Sale or refinance within year 1 entitles HUD to 100% of the equity appreciation
Sale or refinance more than 1 year and less then 2 years entitles HUD to 90% of the equity appreciation
Sale or refinance more than 2 years and less then 3 years entitles HUD to 80% of the equity appreciation
Sale or refinance more than 3 years and less then 4 years entitles HUD to 70% of the equity appreciation
Sale or refinance more than 4 years and less then 5 years entitles HUD to 60% of the equity appreciation
Sale or refinance within year 5 entities HUD to 50% of the equity appreciation
The most noticeable changes in the bill are with FHA. Begininning October 1st, 2008, the down payment increases from 3% to 3.5%. In addition, as predicted, FHA will no longer allw the down payment assistance programs like Nehemia. Any loan in process must have full credit approval by FHA on September 30th. The last big change is the mortgage insurance will no longer be "one rate fits all". It will now be driven by credit scores and loan to value. The overall rate will go down making for less payment to the borrower.
The second biggest change is on December 31st, 2008, the temporary high balance of $729,000 will end. Under the new housing bill it will be reduced to $625,500 for both FHA and FNMA and FHLMC. It would have become $417,000 again if not for this bill. These balances apply to Orange County, California as well.
This bill is very long, 789 pages to be exact, and covers several issues. I have outlined what I think are the main points of the bill that I believe will directly affect us most.
First Time Homebuyer Credit
Allows first time homebuyers of a principal residence to receive a tax credit of 10% of the purchase price, up to $7,500. A first time homebuyer is classified as someone who has not owned a home in the last 3 years. This applies to home purchases made between 4/9/08 and 6/30/09. The tax credit is given to the homebuyer as a check and is repaid over 15 years at $500 per year. A single tax filer with income up to $75,000 will qualify for this tax credit. The tax credit will phase out as a single filer at $95,000 a year income. A joint tax filer with income up to $150,000 will qualify for this tax credit. The tax credit will phase out as a joint filer at $170,000 a year income. If the home is sold before the tax credit is paid back, the homeowner may or may not have to payback the full tax credit. If the homeowner sells the home at a loss, the remaining amount owed on the tax credit is forgiven. If the home is sold at a profit and the profit is less then the remaining amount owed on the tax credit, the tax credit is forgiven. If the homeowner dies, the remaining amount owed on the tax credit is forgiven.
New Agency Conforming Loan Limits
The current agency conforming loan limits maximize at $729,750 depending on the area where the property is located. The current limit is due to expire on 12/31/08. As of 1/1/09 the new maximum conforming loan limits for high cost areas will be adjusted to a cap of 150% of the current GSE loan limit of $417,000 for one unit properties or $625,500. Areas not regarded as high cost, the limits will be set to 115% of the local area median home price or $417,000 for a mortgage secured by a single family residence, $533,850 for a 2 family residence, $645,300 for a 3 family residence, and $801,950 for a 4 family residence.
FHA Modernization
Seller funded down payment assistance programs will be eliminated as of 10/1/08. Minimum cash required from the buyer is increasing from 3% to 3.5%. Up front mortgage insurance premium is increasing to 3% as of 10/1/08.
Hope for Homeowners Plan – FHA Rescue
The purpose of this plan is to ensure that loans are made available to distressed homeowners who could benefit from a refinance in order to be able to stay in their home. It allows owner occupant homeowners to avoid foreclosure by reducing their principal outstanding balance and their current interest rate. Participation in this program is voluntary.
The main requirements under this plan are:
· It must be your principal residence
· Borrowers mortgage debt to income ratio (including all existing mortgages) as of March 1, 2008 must be 31% or higher
· LTV is limited to 90%
· Existing lien holders must waive any prepayment penalties and fees
· Existing lien holders must agree to accept the proceeds as payment in full of all indebtedness and release of all liens
· Minimum 30 year term loan must be secured
· Maximum loan amount allowed under this program cannot exceed $550,400 (may be different for high cost areas)
· No second liens allowed for 5 years
· CLTV can not exceed 95%
· The loan must be underwritten with full income documentation
· Equity appreciation will be shared on a graduated scale with the lender
Sale or refinance within year 1 entitles HUD to 100% of the equity appreciation
Sale or refinance more than 1 year and less then 2 years entitles HUD to 90% of the equity appreciation
Sale or refinance more than 2 years and less then 3 years entitles HUD to 80% of the equity appreciation
Sale or refinance more than 3 years and less then 4 years entitles HUD to 70% of the equity appreciation
Sale or refinance more than 4 years and less then 5 years entitles HUD to 60% of the equity appreciation
Sale or refinance within year 5 entities HUD to 50% of the equity appreciation
The most noticeable changes in the bill are with FHA. Begininning October 1st, 2008, the down payment increases from 3% to 3.5%. In addition, as predicted, FHA will no longer allw the down payment assistance programs like Nehemia. Any loan in process must have full credit approval by FHA on September 30th. The last big change is the mortgage insurance will no longer be "one rate fits all". It will now be driven by credit scores and loan to value. The overall rate will go down making for less payment to the borrower.
The second biggest change is on December 31st, 2008, the temporary high balance of $729,000 will end. Under the new housing bill it will be reduced to $625,500 for both FHA and FNMA and FHLMC. It would have become $417,000 again if not for this bill. These balances apply to Orange County, California as well.
Thursday, July 31, 2008
Cypus Shore Ocean View Property: 4016 Calle Louisa - $2,999,000 - Exclusive San Clemente Gated Community with Private Beach Access!
Rarely a great ocean view property comes on the market in the gated community of Cyprus Shore under $3 million. 4016 Calle Louisa has come on the market and is a great buy!!. A legendary community of ocean front properties, world class surfing, private beachs, views beyond belief from Cottons Point to Dana Point with the Islands in between. This is an incredible opportunity for you to own this beautiful contemporay single level home offered at the LOWEST PRICE OF ANY PROPERTY CURRENTLY ON THE MARKET in Cyprus Shore. This is truly a beach lifestyle with community pool, tennis courts, spa, club house and park. Offered at $2,999,000. Listing courtesy of Century 21 OMA
Short Sale and Home Foreclosure Debt Cancellation Information
Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.
This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
The amount excluded reduces the taxpayer’s cost basis in the home. More information on claiming this exclusion will be available soon.
The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.
This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
The amount excluded reduces the taxpayer’s cost basis in the home. More information on claiming this exclusion will be available soon.
The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.
Monday, July 28, 2008
Magnifcant 6,000 Square Foot Waterfront Home with Boat Dock - Weekly Rental - 16989 Edgewater, Huntington Beach, CA
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Luxurious Weekly Rental. This Custom French Estate in Huntington Harbor accomodates 18 people with a 60' foot boat with strking views of the water & ocean. Expanisve floorplan with dramatic entry way with 45 foot ceilings. Renting this property will be the most unforgetable vacation you will ever have. Water & Sunset View from the Living, Dining, Kitchen, Master Bedroom & Bath, 2nd Family Room & Patio and a Huge Rooftop Deck with Expansive Views of the Ocean and Perfect for Entertaining. The master bedroom suite opens up to a balcony looking directly out at beautiful Huntington Harbor. Private Elevator with access to all 3 levels & private front & back balconies. The most impressive room in this home is the waterfront great room. It combines towering ceilings, with a huge bar, fireplace, pool table, family room, and dining room. The great room area alone is 2000+ square feet. The couches can be moved in this room to create a perfect area for a dance floor if you have a special event.$7,000/week and $350 cleaning fee. Call Sam Smith for available dates. House sleeps 18 people comfortably.
Tuesday, July 22, 2008
Online Real Estate Search Surpasses All Other Media
Research now shows that consumers are 500% more likely to sell a home through the Internet than through the newspaper according to the 20007 National Association of REALTORS Profile of Home Buyers & Sellers. It's an important to choose a Realtor that understands how to advertise your home over the Internet vs traditonal print media. The website for Beach Cities Luxury Homes is perfect example of showcasing your home for sale (www.bclh.com). Email me to get a free market evaluation of your home.
Friday, July 18, 2008
O.C. Home Prices Rise For 1st Time In 7 Months In June
O.C. home prices rise for 1st time in 7 months in June according to the Orange County Register.
July 16th, 2008, 9:22 am · posted by Jon Lansner / O.C. Register columnist
DataQuick’s final stats for June show the median home-selling price at $495,000, a 2% increase above May — though pricing is still down 23.3% vs. a year ago. That’s when the current all-time high of $645,000 was set.
We chose to note the monthly price increase, certainly a modest one, because it’s the first time price have increased month-to-month since November. Even with steep discounting, Sales remain sluggish: June buying was 26.9% below a year ago.At the local level, only 6 of 83 O.C. ZIPs saw improved pricing vs. a year ago. (The ZIP-by-ZIP analysis of OC Resales for June is HERE!)
July 16th, 2008, 9:22 am · posted by Jon Lansner / O.C. Register columnist
DataQuick’s final stats for June show the median home-selling price at $495,000, a 2% increase above May — though pricing is still down 23.3% vs. a year ago. That’s when the current all-time high of $645,000 was set.
We chose to note the monthly price increase, certainly a modest one, because it’s the first time price have increased month-to-month since November. Even with steep discounting, Sales remain sluggish: June buying was 26.9% below a year ago.At the local level, only 6 of 83 O.C. ZIPs saw improved pricing vs. a year ago. (The ZIP-by-ZIP analysis of OC Resales for June is HERE!)
Friday, July 11, 2008
Price Reduction: 34 Marana - Sea Pointe Estates, San Clemente, CA - $1,995,000
34 Marana has just lowered their price to $1,995,000 today (7/11/08) in Sea Pointe Estates. It was previously listed for $2,100,000. It has 4 bd/4ba and approx. 3800 square feet on at 11,100 square foot lot. Here is a brief description from the listing broker "Come enjoy life at the top of San Clemente in prestigious guard-gated Sea Pointe Estates! Commanding views of the ocean and white water by day and romantic views of the city lights at night, from the moment you enter the dramatic 2-story entry foyer of this newer, custom-built masterpiece. Newly built with all the upgrades including travertine flooring, a speclatular kitchen, built-in sound system inside and out. One can enjoy or entertain friends and family in the large, flat, private backyard with spa as you pass through the over-sized double sliding glass doors. An additional game room with wet bar and large deck to enjoy the views. A main floor master suite makes this a very rare find indeed! Association pool, tennis courts and clubhouse. Near award winning schools, freeway access, shopping, restaurants and theaters. Come enjoy luxury living by the beach! Photo & listing info courtesy of Thomas, Jerry of Coldwell Banker.
Please contact Sam Smith at 949-444-1901 or info@seapointeestates.com for info on this or any Sea Pointe Estates properties. Sea Pointe Estates Blog courtesy of Beach Cities Luxury Homes.
Tuesday, July 1, 2008
Sales Trends For Orange County, CA - Condo Sales Under $500,000 Are Up - Investors Are Back In The Market!
Here Are All The Sold Units for Orange County, CA over a 12 month period from May 2007 to May 2008. The Red Markings Show Sales in Single Family Homes & the Blue Markings are Condo's Sales. Bottom chart shows all price ranges and Top chart shows solds in the under $500,000 price range. Notice the increase in SFR sales in the under $500,000 range. Investors are coming back into this market and picking up the bargain basement prices on condo's under $500,000. This is a great time to pick up great buys!
Monday, June 30, 2008
New Listing - 2111 Via Teca, San Clemente, Ca 92672 - $759,000!!
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Short Sale!!! Looking for an Ocean View home in San Clemente? This property features Ocean & Catalina Views from both levels In This Exclusive Gated Commnunity of Marblehead. Prime Location With Breathtaking View From The Master Bedroom & Downstairs Living, Kitchen & Dining Room. Elegant Hand Crafted Staircase With Formal Dining Room. Huge Master Bedroom With Large Walk-In Closet. Two Stone Fireplace & Newer Appliances & Views Abound. Property features 3 bedrooms & 2 baths with approx. 1900 square feet of living space on a 5,000 square foot lot. Priced at $759,000. This is a great buy for an ocean view home in San Clemente. Interested in learning more about this property? Email: sam@bclh.com or call us at 949-444-1901. A Beach Cities Luxury Homes Listing: http://www.bclh.com
Tuesday, June 24, 2008
Sales Are Starting To Rebound!
That was the headline of the Orange County Register on Tuesday, May 20th 2008. The accompanying photo was a very crowded entry to an open house. What’s happening? The bottom of this market is approaching, that’s what. This is exactly what was reported in this newsletter last month. Prices have gone down so far, so fast, that it’s hard for waiting buyers to resist. We saw an upward trend in open escrows as mentioned last issue, but the main ingredient is the upward swing of the affordability index which is growing every month to a higher percentage of people who can now buy a home. This correction in the market was not only inevitable, it was necessary. When the market topped out in 2006, we were down to 11% affordability. When only 11 people out of 100 can afford to buy a home, that market is in trouble. According to Dataquick sales were still off 19% from the same period last year, but that is a lot better than 36% off the mark. But still, there is a long recovery period ahead. The OC Register reported, using Dataquick numbers, that April (the latest complete month stats available), was 46% below the average April since 1988. According to the article, “Sales for the January through April period were down 57% compared with the 20 year average.”
But the upward trend is significant. Both investors and homebuyers are on the hunt for the perfect deal. Certainly the raise in FHA loan limits has helped significantly as well as FNMA interest rates remaining at their near historic lows. Should you buy? That’s up to each individual to decide according to their need. But it should be mentioned that THE TODAY SHOW aired a segment on real estate the last week in May. Their conclusion: DON’T WAIT! BUY A HOUSE! This is the same morning show, viewed by millions that 2 years ago proclaimed, “Whatever you do, don’t buy a house right now.” So the fact that they are on board with a bottoming market, is at the very least, interesting.
But the upward trend is significant. Both investors and homebuyers are on the hunt for the perfect deal. Certainly the raise in FHA loan limits has helped significantly as well as FNMA interest rates remaining at their near historic lows. Should you buy? That’s up to each individual to decide according to their need. But it should be mentioned that THE TODAY SHOW aired a segment on real estate the last week in May. Their conclusion: DON’T WAIT! BUY A HOUSE! This is the same morning show, viewed by millions that 2 years ago proclaimed, “Whatever you do, don’t buy a house right now.” So the fact that they are on board with a bottoming market, is at the very least, interesting.
Saturday, June 21, 2008
Price Reduction: 69 Marbella - Sea Pointe Estates, San Clemente, CA - $1,100,000
Price Reduction today for 69 Marbella in Sea Pointe Estates. Property was listed for $1,299,000 and now is on the market for $1,100,000. This is the lowest price Sea Pointe Estates home by almost $600,000 as of today! The next lowest price home is 28 Campanilla at $1,699,000. This may be you chance to get into this wonderful gated community in San Clemente. I've had several requests from buyers looking for homes over 2500 square feet or bigger. This property is approx. 2,485 square feet and is on a huge 10,000 square foot lot. Marbella is the main street as you enter Sea Pointe Estates and this is at the top of the street with Ocean Views as seen in the photo above. The property has 3 bedrooms & 3 baths. Listing info & photo courtesy of Flock, Candice of Prudential California Realty.Call Sam Smith at 949-444-1901 or sam@bclh.com to get more information on this newly reduced Sea Pointe Estates home.
Sea Pointe Estates New Listing - 16 Cresta Del Sol - $1,769,000
A New listing has hit the market in Sea Pointe Estates. 16 Cresta Del Sol is listed for $1,769,000. The property was previously on the market and now the owners are motivated to get it sold! The property features 5 bedrooms & 6 baths, 4000 square feet of living space with a 3 Car Garage. Here is a brief description of the property: "What a view for this price! Panoramic views of ocean, canyon and city lights the moment you enter the elegant 2-story entry foyer. Newer, custom-built Tuscan style home offers several sets of French doors from many rooms to entertain friends and guests or step out onto the oversize deck to enjoy the spectacular views of the ocean, hills and golf course by day or romantic city lights at night! Chefs will love the bright, open kitchen while enjoying the ocean view. The master suite has commanding views and a large private deck to unwind after a long day, a fireplace and luxurious master bath. Come enjoy luxury living by the beach is prestigious, guard-gated Sea Pointe Estates. Near beaches, shopping, restaurants, movie theaters, schools, and of course, the cool ocean breezes, with NO MELLO ROOS! Listing Text & photo courtesy of Thomas, Jerry of Coldwell Banker.The property does require an appointment to view this property.
Please contact us at info@seapointeestate.com to view this property or call 949-444-1901 to schedule an appointment.
Saturday, May 31, 2008
Just Sold: 126 Avenida San Dimas - $695,000
Newly Listed Beach House in San Clemente! Property features 3 large bedrooms with 2 baths and bonus office room in garage! Over 1500+ square feet of living space and ideally located next to golf course and easy walk to World Class Trestles surfing beach! Property is currently listed for $695,000 by Sam Smith. Here is a brief description on the propety "Great Value In San Clemente. Large 3 Bedroom Home With Ocean & Golf Course View Deck! Easily Walk To Trestles Beach & State Park & San Clemente Golf Course Is Within Steps Of The Property! Home Features Newer Windows, Roof, Wood Flooring & Closet Organizers. Property Is Completely Fenced In For Dogs & Kids to Play! The Property Has Lots Of Natural Light and The Rooms Flow From One Room To The Next. Bonus Office Room Set Up In The Garage. Interested in seeing this property? Contact Sam Smith at 949-291-0424 or sam@bclh.com
Monday, May 26, 2008
31 Campanilla: Sea Pointe Estates Murder Mystery
SAN CLEMENTE, Calif. -- Sea Pointe Estates. As reported by KNBC, An investigation continued Monday into the deaths of five adult family members whose bodies were found in a home in a San Clemente gated community, authorities said. Click here to see Video.Orange County Sheriff's Department spokesman Jim Amormino said relatives had asked for welfare checks at the home prior to the discovery of the bodies, but authorities had checked only the outside of the home previously. Sheriff's Lt. Erin Guidic said the bodies were discovered Sunday by a relative who went to the home at about 3:50 p.m. and then called 911.Sheriff's deputies arrived about 4 p.m., Sunday, at 31 Campanilla St., in Sea Pointe Estates, and found the bodies of five adults.The victims, all members of the same family, had been shot, the Orange County Register reported. They may have been dead for two to three weeks, according to the newspaper.KNBC reported that the stench from the decomposing bodies was so bad that workers wore masks as they removed them.The hillside neighborhood has large homes worth $1.5 to $2 million, according to the real estate Web site Zillow.com.Amormino would not speculate on whether the deceased were victims of a murder or murder-suicide, but judging from evidence at the scene, the deaths were "definitely foul play," he said.Authorities would not say if they believed the killer or killers were among the dead, but Lt. Guidic told the Register, "I don't think there is any reason for the community to be fearful."The dead, all found in a first-floor bedroom by a relative Sunday afternoon, were described as a couple in their late 40s or early 50s, an older woman and twin sisters in their 20s.Two handguns found in the house were taken into custody as evidence, authorities said.Autopsies on the bodies were under way Monday, and results were expected on Tuesday.
According to True Crime Web Blog, 31 Campanilla was the San Clemente address for accident reconstruction specialist Dr. Manas Ucar. Ucar's expertise was in vehicle fires, explosions, and seat belts.At one time Dr. Ucar was a professor at Syracuse University in Syracuse, NY. Several newspaper articles about Dr. Ucar were published in the Syracuse Post-Standard in the 70s and 80s. Interesting in light of this story was a small announcement published in that paper in October, 1986. It told of twin daughters being born on September 6 that year to Mr. and Mrs. Manas Ucar of 734 Westscott St.
The OC Register reported today that Fingerprint experts are expected to help identify the badly decomposed bodies of five family members who were discovered in a house here over the weekend, Sheriff’s officials said Monday.The bodies could have been in the house for two to three weeks, said Sheriff’s officials, who believe the deaths resulted from an isolated incident and that there is no danger to the community.Two handguns were found in the house on Campanilla Street in the gated Sea Point Estates neighborhood overlooking the ocean, officials said. The bodies were discovered late Sunday afternoon after relatives went to the house.Sheriff’s Lt. Erin Giudice declined to give the exact street address for the house, but neighbors said it was 31 Campanilla. That house is owned by Manas Ucar, property record show. Ucar is listed as a consulting engineer and an expert witness for accident investigations, according to ca-experts.com – an online California database of expert witnesses.Property records also list a Margaret or Margrit Ucar at the address.The neighborhood, set on a hillside, has large homes worth between $1.5 million and $2 million, according to Zillow.com.Found dead in the house were a man and a woman in their 40s or 50s, twin sisters in their 20s, and an older woman in her 70s or 80s, Giudice said.The middle-aged man and woman were found near a closet off a first-floor bedroom, each with a handgun nearby. One of the guns was registered to the woman, Giudice said; she did not know to whom the second was registered, or whether either gun had been fired.The two younger women and the older woman were found nearby, in the first-floor bedroom. Giudice said there was no sign of a struggle and nothing else in the bedroom appeared to be amiss.The man appeared to have suffered a gunshot wound, Giudice said. One more of the dead might also have been shot, she said, but the bodies were so badly decomposed that investigators were not certain.Autopsies of the five bodies began on Monday morning, but Giudice said it would likely take until Tuesday to get any results, including the identities of the dead. Fingerprint experts are expected to arrive Tuesday to help identify the bodies.The family that owned the house, the Ucars, had twin daughters in their early 20s, said Roxie Weaver, a neighbor.In an interview with KDOC-TV’s Daybreak OC news show, to be aired Tuesday, Weaver said “You could hardly tell (the twins) apart because they always dressed exactly alike.”Grace and Margaux Ucar were 2004 graduates of San Clemente High School, according to a yearbook Weaver showed to KDOC. A Grace and Margo Ucar studied human biology at UC San Diego, where they were due to graduate this year, according to a list posted on the university’s Web site.The twins’ mother had a jewelry store at the atrium in Fashion Island, Weaver said. She said the family had lived in the gated neighborhood for 17 or 18 years and were “very private.”Three relatives – at least two of them brothers – found the bodies on Sunday afternoon after breaking a window to get into the house, Giudice said. The smell was so overwhelming that investigators had to wear Scuba-like breathing masks when they entered.The relatives had called the Sheriff’s Department a few days earlier, asking that deputies swing by the house and make sure everything was all right. The relatives said they thought the family was on vacation.Deputies visited the house on Saturday and checked the doors and windows, but found nothing out of the ordinary, Giudice said. They even called a tow truck to help them get into a car parked outside, but did not find keys or a garage-door opener. The relatives asked them not to force their way into the house.It was the second time this month that deputies had visited the house, Giudice said. On May 14, a neighbor had called to say the family appeared to be away on vacation, and asked that deputies check on the house.Giudice described the people who lived in the house as a “very, very quiet family.”
Saturday, May 24, 2008
Dana Woods Home for sale - 25091 Danacoral - $829,000
Just Listed! Looking for a home by the beach? This Large Two Story Home In The Beach Community of Dana Woods in Dana Point Is now for sale for $829,000! It's One of the most popular floorplans in this community with 4 Bedrooms & 3 Baths. It has a Large Open Floorplan with Gracious Size Rooms. Downstairs features a Main Floor Bedroom & Bath & Inside Laundry. Upstairs features 3 Bedrooms Including a large Master Suite. Property Is Located On A Very Quiet Cul-De-Sac Location. An exclusive listing of Beach Cities Luxury Homes: Please Contact Sam Smith at (949) 291-0424 for more information on this home. Please visit http://www.25091danacoral.com/ for more photos of this property. Online brochure at http://www.dana-woods.com/
Wednesday, May 14, 2008
Understanding Today's Real Estate Market
If you have every wondered how the real estate market got to the point where it is today you need to go back several years to get a perspective on what created today's market conditions. Here's a view of what happened according to the Institute of Luxury Home Marketing.
What created today's market conditions?
The conditions leading to the current credit crunch and real estate slowdown are largely a result of a frenzy of demand - demand created by the global investment market and by individual investor/speculators. Beginning in 2000, the world's pool of investment money exploded. In 2000, there was a pool of about $35 trillion dollars invested or seeking investments. But in the short time between 2000 and 2006, that global money pool doubled to about $70 trillion. This translates to a huge number of cash-rich investors -- from pension funds to sovereign funds - all competing for good investments.
Money to spend!
Pools of mortgage loans (mortgage backed securities) have historically been viewed as safe, desirable investments. So, the growth in investment funds meant demand for these investment vehicles soon outstripped supply. Mortgage companies recognized that if they could generate more loans, they could sell them. Wall Street created new ways to package these mortgages, sell them, and pass the benefits and risks on to investors. In addition, more loans supported the political objective of increasing home ownership.
At first it seemed like a win-win. Mortgage money fueled home ownership. The lenders made money, Wall Street prospered and the risk to investors was evaluated based on historical data showing low loan default rates in the U.S. The problem was that in the rush to make more loans, lenders' underwriting requirements lipped. What lenders call "liars loans' became common. These loans required no verification of income or assets. The lender took your word that you had a job and that your income and assets were what you said they were. They simply checked your credit score and made the loan. Adjustable rate loans, interest-only loans, and other loans previously used for special situations, went main stream and were often misused.
This flood of cheap, easy money (designed to produce the maximum number of loans) attracted small investors who decided to join the home buying party. In 2004, a less than terrific stock market caused many investors to look for alternative investments. The California, Florida, Washington D.C. markets (plus a few other major markets) were attractive locations for investment due to strong population growth, healthy job markets, and good overall economic prospects. Investors swarmed into these markets under the assumption that money invested in residences would generate higher returns than the stock market or other investment options. They were right. However, in lock step with investors, came swarms of speculators (we're defining speculators as investors who really couldn't invest without special financing.) The low underwriting standards allowed them into the market.
The demand created by these two groups created a buying environment in these targeted markets where flipping became the norm. It ceased to matter whether a property would cash flow or even be rented. There were quick profits to be made. Return-on-investment was high. Strong demand allowed investors and speculators to contract for a property with a small deposit and sell the property at a profit prior to closing. Others bought, held briefly, and resold for more money. Price appreciation soared with the demand. Developers and builders followed the money and inventories began to rise.
2005: The frenzy moved to new markets
By 2005, many savvy small investors felt the top markets of 2004 offered less opportunity and they looked for new markets where economic fundamentals were good and prospects for home appreciation were strong. In short, they wanted to duplicate the smart investments of 2004 in new markets. This shift or "spillover" into new markets like Phoenix/Scottsdale (AZ), Las Vegas (NV), Reno (NV), Seattle (WA), and Cape Coral (FL), created new demand in these markets. Speculators followed, as did builders and developers. Second home buyers also jumped into the fray, adding to the demand. Government home ownership programs encouraged those at the bottom of the economic pyramid to buy. Money was fueling the market. Homeowners who didn't want to sell, refinanced instead using the high valuations on their homes to take out cash. Home equity was used like cash from an ATM machine to fuel consumer purchases contributing to a more robust economy. The total number of loans soared.
During 2005, almost 40% of all home buyers were investor/speculators or second home/vacation buyers (27.7% & 12.2% respectively). The difference between the two is primary intent. Investors were looking for return on their investment, while second home buyers' primary motivation was to use a property as a residence. Appreciation soared in these spillover markets in 2005. For example, Phoenix/Scottsdale prices jumped almost 40% in 12 months.
This was not a normal market, nor one which thoughtful observers would expect to continue. Bubbles were being formed. However, the housing boom was an economic engine and everybody wanted on board. Anyone looking closely at the situation should have seen trouble on the horizon. But, consumers were getting dream homes, lenders and Wall Street were raking in profits, home ownership was growing, industry job creation was strong, old statistics promised the investments were safe, and regulators, must have been dozing.
2006: The real estate market slowed down
By 2006, some homeowners began having difficulty making their loan payments as loans ballooned or rates clicked up. When lending practices began to tighten in 2006 and some loans had significant rate adjustments, there were fewer qualified buyers and more available inventory, so market conditions changed. Many buyers fund themselves with properties they couldn't afford and loans that were upside down - more was owe on the properties than they were worth. There were fewer investors pursing residential investments and those that were out there shifted their target markets looking for new opportunities for good returns. Speculators began to fall out of the market.
In 2006, 36% of buyers fell into the investor/speculator or second home buyer category. The percentage of investors had declined to 22%, while the percentage of second home buyers had increased to 14%. Despite the overall slowdown, there were still some markets with good appreciation (investor/second home buyer demand, a booming oil business and Katrina relocations all being important factors). Top appreciation rates in 2006 were about half of what they'd been in 2005. Overall, national home sales slipped 10.8% in 2006, compared to the previous year. However, mortgage securities were still a hot commodity.
2007: The slowdown continued
By 2007, the downturn in housing had gained momentum. Lenders were facing a secondary loan market which was becoming a bit more selective about loan purchases. Money was getting tighter. Job losses and other economic issues in markets like Cleveland and Detroit contributed to the slowdown. By the end of the year, The National Association of Realtors reported that the housing market was off by 12.8% compared to 2006 (which, remember was already down about 10% compared to 2005). The new home market had suffered even more, falling a whopping 26%, according to the National Association of Home Builders.
2008: Credit Crunch
2008 brought a serious "credit crunch." The creative packaging of loans into new forms of mortgage securities, (which had fueled the market by keeping money flowing for home investment) suddenly became a more visible problem. As buyers defaulted, the value and marketability of the mortgage securities became questionable. The financial market took a closer look at these securitized mortgages and realized that ratings based on old underwriting standards were irrelevant and the risks were significantly higher than projected. Defaults and foreclosures soared, home inventories rocketed up, and home prices softened. Available money dried up and the financial market face liquidity and solvency issues. The bubble had burst. The loan frenzy was over, leaving an industry questioning how to deal with the resulting problems.
So what's ahead? With money tighter, home inventories high, an economy that is either in or on the brink of recession, a weak U.S. dollar, and lower demand for housing, it seems safe to assume that the short term economic news is not good for residential real estate. We have not yet seen the full extent of problems in the housing market and may soon have to deal with similar problems with auto loans and credit card debt. It will probably take the rest of 2008 and all of 2009 before we work our way out of the housing downturn.
The luxury market continues to perform well
It's not all doom and gloom. The top of the market continues to be healthy. Many of the country's most affluent zip codes are still enjoying price appreciation. Recent research by The Harrison Group for American Express revealed that the affluent view today's real estate market as an opportunity. In fact, those who earn at least $500,000 annually not only see an opportunity; they plan to buy residential real estate in the next 12 months. Of the 40% who report buying plans, the majority say their planned purchase will be a second or third home. This demand will be supplemented by wealthy international buyers who view our residential properties as "on sale" and are continuing to purchase in many major markets.
Bottom line - the market overall is soft and will be for awhile; however, the top of the market is out performing other segments.
What created today's market conditions?
The conditions leading to the current credit crunch and real estate slowdown are largely a result of a frenzy of demand - demand created by the global investment market and by individual investor/speculators. Beginning in 2000, the world's pool of investment money exploded. In 2000, there was a pool of about $35 trillion dollars invested or seeking investments. But in the short time between 2000 and 2006, that global money pool doubled to about $70 trillion. This translates to a huge number of cash-rich investors -- from pension funds to sovereign funds - all competing for good investments.
Money to spend!
Pools of mortgage loans (mortgage backed securities) have historically been viewed as safe, desirable investments. So, the growth in investment funds meant demand for these investment vehicles soon outstripped supply. Mortgage companies recognized that if they could generate more loans, they could sell them. Wall Street created new ways to package these mortgages, sell them, and pass the benefits and risks on to investors. In addition, more loans supported the political objective of increasing home ownership.
At first it seemed like a win-win. Mortgage money fueled home ownership. The lenders made money, Wall Street prospered and the risk to investors was evaluated based on historical data showing low loan default rates in the U.S. The problem was that in the rush to make more loans, lenders' underwriting requirements lipped. What lenders call "liars loans' became common. These loans required no verification of income or assets. The lender took your word that you had a job and that your income and assets were what you said they were. They simply checked your credit score and made the loan. Adjustable rate loans, interest-only loans, and other loans previously used for special situations, went main stream and were often misused.
This flood of cheap, easy money (designed to produce the maximum number of loans) attracted small investors who decided to join the home buying party. In 2004, a less than terrific stock market caused many investors to look for alternative investments. The California, Florida, Washington D.C. markets (plus a few other major markets) were attractive locations for investment due to strong population growth, healthy job markets, and good overall economic prospects. Investors swarmed into these markets under the assumption that money invested in residences would generate higher returns than the stock market or other investment options. They were right. However, in lock step with investors, came swarms of speculators (we're defining speculators as investors who really couldn't invest without special financing.) The low underwriting standards allowed them into the market.
The demand created by these two groups created a buying environment in these targeted markets where flipping became the norm. It ceased to matter whether a property would cash flow or even be rented. There were quick profits to be made. Return-on-investment was high. Strong demand allowed investors and speculators to contract for a property with a small deposit and sell the property at a profit prior to closing. Others bought, held briefly, and resold for more money. Price appreciation soared with the demand. Developers and builders followed the money and inventories began to rise.
2005: The frenzy moved to new markets
By 2005, many savvy small investors felt the top markets of 2004 offered less opportunity and they looked for new markets where economic fundamentals were good and prospects for home appreciation were strong. In short, they wanted to duplicate the smart investments of 2004 in new markets. This shift or "spillover" into new markets like Phoenix/Scottsdale (AZ), Las Vegas (NV), Reno (NV), Seattle (WA), and Cape Coral (FL), created new demand in these markets. Speculators followed, as did builders and developers. Second home buyers also jumped into the fray, adding to the demand. Government home ownership programs encouraged those at the bottom of the economic pyramid to buy. Money was fueling the market. Homeowners who didn't want to sell, refinanced instead using the high valuations on their homes to take out cash. Home equity was used like cash from an ATM machine to fuel consumer purchases contributing to a more robust economy. The total number of loans soared.
During 2005, almost 40% of all home buyers were investor/speculators or second home/vacation buyers (27.7% & 12.2% respectively). The difference between the two is primary intent. Investors were looking for return on their investment, while second home buyers' primary motivation was to use a property as a residence. Appreciation soared in these spillover markets in 2005. For example, Phoenix/Scottsdale prices jumped almost 40% in 12 months.
This was not a normal market, nor one which thoughtful observers would expect to continue. Bubbles were being formed. However, the housing boom was an economic engine and everybody wanted on board. Anyone looking closely at the situation should have seen trouble on the horizon. But, consumers were getting dream homes, lenders and Wall Street were raking in profits, home ownership was growing, industry job creation was strong, old statistics promised the investments were safe, and regulators, must have been dozing.
2006: The real estate market slowed down
By 2006, some homeowners began having difficulty making their loan payments as loans ballooned or rates clicked up. When lending practices began to tighten in 2006 and some loans had significant rate adjustments, there were fewer qualified buyers and more available inventory, so market conditions changed. Many buyers fund themselves with properties they couldn't afford and loans that were upside down - more was owe on the properties than they were worth. There were fewer investors pursing residential investments and those that were out there shifted their target markets looking for new opportunities for good returns. Speculators began to fall out of the market.
In 2006, 36% of buyers fell into the investor/speculator or second home buyer category. The percentage of investors had declined to 22%, while the percentage of second home buyers had increased to 14%. Despite the overall slowdown, there were still some markets with good appreciation (investor/second home buyer demand, a booming oil business and Katrina relocations all being important factors). Top appreciation rates in 2006 were about half of what they'd been in 2005. Overall, national home sales slipped 10.8% in 2006, compared to the previous year. However, mortgage securities were still a hot commodity.
2007: The slowdown continued
By 2007, the downturn in housing had gained momentum. Lenders were facing a secondary loan market which was becoming a bit more selective about loan purchases. Money was getting tighter. Job losses and other economic issues in markets like Cleveland and Detroit contributed to the slowdown. By the end of the year, The National Association of Realtors reported that the housing market was off by 12.8% compared to 2006 (which, remember was already down about 10% compared to 2005). The new home market had suffered even more, falling a whopping 26%, according to the National Association of Home Builders.
2008: Credit Crunch
2008 brought a serious "credit crunch." The creative packaging of loans into new forms of mortgage securities, (which had fueled the market by keeping money flowing for home investment) suddenly became a more visible problem. As buyers defaulted, the value and marketability of the mortgage securities became questionable. The financial market took a closer look at these securitized mortgages and realized that ratings based on old underwriting standards were irrelevant and the risks were significantly higher than projected. Defaults and foreclosures soared, home inventories rocketed up, and home prices softened. Available money dried up and the financial market face liquidity and solvency issues. The bubble had burst. The loan frenzy was over, leaving an industry questioning how to deal with the resulting problems.
So what's ahead? With money tighter, home inventories high, an economy that is either in or on the brink of recession, a weak U.S. dollar, and lower demand for housing, it seems safe to assume that the short term economic news is not good for residential real estate. We have not yet seen the full extent of problems in the housing market and may soon have to deal with similar problems with auto loans and credit card debt. It will probably take the rest of 2008 and all of 2009 before we work our way out of the housing downturn.
The luxury market continues to perform well
It's not all doom and gloom. The top of the market continues to be healthy. Many of the country's most affluent zip codes are still enjoying price appreciation. Recent research by The Harrison Group for American Express revealed that the affluent view today's real estate market as an opportunity. In fact, those who earn at least $500,000 annually not only see an opportunity; they plan to buy residential real estate in the next 12 months. Of the 40% who report buying plans, the majority say their planned purchase will be a second or third home. This demand will be supplemented by wealthy international buyers who view our residential properties as "on sale" and are continuing to purchase in many major markets.
Bottom line - the market overall is soft and will be for awhile; however, the top of the market is out performing other segments.
Doom & Gloom All The Way To The Bank
As Reported In This Month's Issue of Dream Homes Magazine, San Diego Issue, La Jolla Homeowners Gained 315% in the Last Decade. Did you know that in the slums of some rust belt cities affected by major manufacturing job losses, such as Detroit, the federal government is selling homes for as little as $1? You can’t even call them “homes,” really – they are the skeletons of homes that have been vandalized and looted and occupied by squatters in neighborhoods that aren’t safe even in broad daylight. And yet those homes – and foreclosed homes bought back by lenders who simply want to recoup the amount still owed on the mortgages and short sales by people who want to avoid foreclosure – are thrown into the mix when the powers that be decide what the national average home price is.
That’s why it’s absurd that the mainstream media is alarming the public about the housing market when it reports facts such as that the national average price has declined by 6.45 percent to $201,000 in the last year; alarming both potential homebuyers and home sellers into becoming paralyzed and doing nothing. “Nobody is buying, nobody is selling,” is the mantra of the mainstream media. Well, mainstream media, you’re a major part of the problem with the huge fall in confidence out there with your national numbers and your sob stories about people who are being foreclosed on…mostly people who didn’t do their due diligence when purchasing a home, did not read or understand their loan documents, were lied to by their mortgage broker or lied about their own incomes and bought way more house than they could realistically afford – the excuses go on and on.
And second, mainstream media, you are wrong. People are continuing to buy and sell in upscale communities – such as the San Diego County coast, Orange County coast, Westside L.A., Silicon Valley, and Seattle – just as they always have, because business, outside the financial, real estate, and construction sectors, is booming. In addition, most of these upscale area homes are actually appreciating in price, not depreciating…again, just as they always have. To demonstrate this, we took a look at one community, La Jolla. The average price of a La Jolla house in 1977 was $118,700. In 1987, the average had jumped 409% to $485,900. In 1997, the average increased another 157% to $763,500. In 2007, the average price in La Jolla had appreciated another 315% to $2,408,900.
And second, mainstream media, you are wrong. People are continuing to buy and sell in upscale communities – such as the San Diego County coast, Orange County coast, Westside L.A., Silicon Valley, and Seattle – just as they always have, because business, outside the financial, real estate, and construction sectors, is booming. In addition, most of these upscale area homes are actually appreciating in price, not depreciating…again, just as they always have. To demonstrate this, we took a look at one community, La Jolla. The average price of a La Jolla house in 1977 was $118,700. In 1987, the average had jumped 409% to $485,900. In 1997, the average increased another 157% to $763,500. In 2007, the average price in La Jolla had appreciated another 315% to $2,408,900.
The average of those three huge percentage jumps is 294% per decade. Using that figure, we predict the average price will be more than $7 million in 2017 and more than $20 million in 2027.
The most important point to take away from this article is this: All real estate is local…and not just by city but by neighborhood.
Now let’s look at stocks versus real estate. Even stock market cheerleader The Wall Street Journal had this to say recently: “The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.”
The most important point to take away from this article is this: All real estate is local…and not just by city but by neighborhood.
Now let’s look at stocks versus real estate. Even stock market cheerleader The Wall Street Journal had this to say recently: “The stock market is trading right where it was nine years ago. Stocks, long touted as the best investment for the long term, have been one of the worst investments over the nine-year period, trounced even by lowly Treasury bonds.”
Bottom line: Buying real estate in an upscale community is still your best investment. Homebuyers and sellers need to take a longer view; years, not months or days. Compare the lack of growth in stock prices with the growth displayed by La Jolla over the past decade.
Wednesday, May 7, 2008
Tuesday, May 6, 2008
The Housing Crisis Is Over?
As Reported In Today's Opinion section of the Wall Street Journal "The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won't happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest level ever. So what's going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.
Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.
Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.
The next question is: Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.
In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.
The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months.
Inventories are declining because construction activity has been falling for such a long time that home completions are now just about undershooting new home sales. In a few months, completions of new homes for sale could be undershooting new home sales by 50,000-100,000 annually.
Inventories will drop even faster to 400,000 – or seven months of supply – by the end of 2008. This shift in inventories will have a significant impact on prices, although house prices won't stop falling entirely until inventories reach five months of supply sometime in 2009. A five-month supply has historically signaled tightness in the housing market.
Many pundits claim that house prices need to fall another 30% to bring them back in line with where they've been historically. This is usually based on an analysis of house prices adjusted for inflation: Real house prices are 30% above their 40-year, inflation-adjusted average, so they must fall 30%. This simplistic analysis is appealing on the surface, but is flawed for a variety of reasons.
Most importantly, it neglects the fact that a great majority of Americans buy their houses with mortgages. And if one buys a house with a mortgage, the most important factor in deciding what to pay for the house is how much of one's income is required to be able to make the mortgage payments on the house. Today the rate on a 30-year, fixed-rate mortgage is 5.7%. Back in 1981, the rate hit 18.5%. Comparing today's house prices to the 1970s or 1980s, when mortgage rates were stratospheric, is misguided and misleading.
This is all good news for the broader economy. The housing bust has been subtracting a full percentage point from GDP for almost two years now, which is very large for a sector that represents less than 5% of economic activity.
When the rate of house-price declines halves, there will be a wholesale shift in markets' perceptions. All of a sudden, the expected value of the collateral (i.e. houses) for much of the lending that went on for the past decade will change. Right now, when valuing the collateral, market participants including banks are extrapolating the current pace of house price declines for another two to three years; this has a significant impact on the amount of delinquencies, foreclosures and credit losses that lenders are expected to face.
More home sales and smaller price declines means fewer homeowners will be underwater on their mortgages. They will thus have less incentive to walk away and opt for foreclosure.
A milder house-price decline scenario could lead to increases in the market value of a lot of the securitized mortgages that have been responsible for $300 billion of write-downs in the past year. Even if write-backs do not occur, stabilizing collateral values will have a huge impact on the markets' perception of risk related to housing, the financial system, and the economy.
We are of course experiencing a serious housing bust, with serious economic consequences that are still unfolding. The odds are that the reverberations will lead to subtrend growth for a couple of years. Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway, right now.
Mr. Moulle-Berteaux is managing partner of Traxis Partners LP, a hedge fund firm based in New York
Friday, May 2, 2008
In Depth: How Low Will Real Estate Go?
In A Recent Forbes.com article, the national real estate market remains bleak--in some neighborhoods vacant homes outnumber those that are occupied and sellers are being forced to lower asking prices in a bid to lure bargain hunters--it's assumed that when housing dips to a point where buyers think it represents a bargain, they'll buy back in.The problem is many of the markets that experienced steep 2007 price drops are still a long way from recovery. There is a silver lining reported in the San Diego market (read below).
That's based on a Moody's Economy.com report prepared for Forbes.com. It predicts that 2008 isn't going to be any gentler than last year on slumping markets like Los Angeles, Sacramento, Calif., Las Vegas and Tampa, Fla., where market weakness is expected to cause 10% to 25% drops over the next year.
Moody's model incorporates inventory levels, job growth or loss, and the availability and cost of credit based on current mortgage rates and the Federal Reserve's Senior Loan Officer Survey, which asks lenders about their mortgage standards.
The model also measures home buyer expectations on a market-by-market level, based on an 18-month moving average of home prices. The more sharply prices fall, the more likely buyers are going to stay out and wait for a bottom; in a quickly accelerating market, buyers are more likely to jump in, expecting future home price increases.
Falling Figures
Price drops result from a convergence of factors including overbuilding and speculating and rapid price increases.
But large-scale job loss has the most potent effect, note Eric Belsky and Daniel McCue, economists at the Harvard Joint Center for Housing Studies. Markets can overheat, overexpand and digest flippers and overexuberant builders, but housing prices are most likely to fall when people lose their paychecks.
Belsky and McCue studied housing downturns from 1980 to 2004 and discovered that the most likely cause of housing price declines were spikes in unemployment. Consider the industrial cities of Cleveland and Detroit, which have lost jobs steadily since 2000 and now post unemployment rates of 6% and 7.7%, respectively, well above the national average of 5.1%. Of the 10 cities on our list of cities experiencing the greatest price drops, they are the only two where prices are lower than in 2000.
Surprised? Don't be. While prices are falling, they are, for the most part, higher than earlier this decade. In 2000, Inland Empire prices, for example, were $138,560. Moody's has Riverside-San Bernardino, Calif., home values declining another 23% this year, to $291,590.
"In a normal housing market, we have ratios that you qualify for a certain amount of house at your income level," says Anthony Sanders, a professor of finance at Arizona State University. "Since banks have tightened credit, we're starting to revert back to those lending standards, and prices are going back to reflecting a ratio of income and median house value."
Of course, these price increases are largely because of new development and bloated McMansions--and not necessarily of normal appreciation. Between 1980 and 2000, home values consistently ran 3.7 times the median family's income in San Bernardino-Riverside, but by 2006 that figure swelled to a multiple of 7.6. If home prices return to the area's historic growth rate, Inland Empire prices would balance at $200,000 in present dollars.
Bottom line: "The continued decline," says Sanders, "is going to be very problematic for homeowners--but also for secondary investors."
Moody's model incorporates inventory levels, job growth or loss, and the availability and cost of credit based on current mortgage rates and the Federal Reserve's Senior Loan Officer Survey, which asks lenders about their mortgage standards.
The model also measures home buyer expectations on a market-by-market level, based on an 18-month moving average of home prices. The more sharply prices fall, the more likely buyers are going to stay out and wait for a bottom; in a quickly accelerating market, buyers are more likely to jump in, expecting future home price increases.
Falling Figures
Price drops result from a convergence of factors including overbuilding and speculating and rapid price increases.
But large-scale job loss has the most potent effect, note Eric Belsky and Daniel McCue, economists at the Harvard Joint Center for Housing Studies. Markets can overheat, overexpand and digest flippers and overexuberant builders, but housing prices are most likely to fall when people lose their paychecks.
Belsky and McCue studied housing downturns from 1980 to 2004 and discovered that the most likely cause of housing price declines were spikes in unemployment. Consider the industrial cities of Cleveland and Detroit, which have lost jobs steadily since 2000 and now post unemployment rates of 6% and 7.7%, respectively, well above the national average of 5.1%. Of the 10 cities on our list of cities experiencing the greatest price drops, they are the only two where prices are lower than in 2000.
Surprised? Don't be. While prices are falling, they are, for the most part, higher than earlier this decade. In 2000, Inland Empire prices, for example, were $138,560. Moody's has Riverside-San Bernardino, Calif., home values declining another 23% this year, to $291,590.
"In a normal housing market, we have ratios that you qualify for a certain amount of house at your income level," says Anthony Sanders, a professor of finance at Arizona State University. "Since banks have tightened credit, we're starting to revert back to those lending standards, and prices are going back to reflecting a ratio of income and median house value."
Of course, these price increases are largely because of new development and bloated McMansions--and not necessarily of normal appreciation. Between 1980 and 2000, home values consistently ran 3.7 times the median family's income in San Bernardino-Riverside, but by 2006 that figure swelled to a multiple of 7.6. If home prices return to the area's historic growth rate, Inland Empire prices would balance at $200,000 in present dollars.
Bottom line: "The continued decline," says Sanders, "is going to be very problematic for homeowners--but also for secondary investors."
In Los Angeles, Calif. the expected year-end median home price: $471,320 with a Percent drop: 17%. Prices in Los Angeles nearly tripled from 2000 to 2006, going up 161% to $575,550 from $217,220. Income growth did not match that rate. The median home price in 2000 was 4.7 times the median family income, but by 2006, home prices were 10 times the median income level, making L.A. the least affordable housing market in the country.
In San Diego, Ca, the expected year-end median home price: $471,300. Percent drop: 18.7%
There's a silver lining in San Diego's slumping market. Though the city is experiencing steep price declines, transactions have started to pick up over the last three months, reports Radar Logic, a New York real estate research company. This is a sign that buyers are starting to re-enter the market, which is expected to help slow price declines.
There's a silver lining in San Diego's slumping market. Though the city is experiencing steep price declines, transactions have started to pick up over the last three months, reports Radar Logic, a New York real estate research company. This is a sign that buyers are starting to re-enter the market, which is expected to help slow price declines.
Wednesday, April 30, 2008
5505 Costa Escondida - San Clemente, CA 92673
We just listed this great property in the Ridgemore area of Forster Ranch. More information can be found on this property by going to our website: www.bclh.com or email me at sam@bclh.com
Fed cuts short-term rate for 7th time
Short-term interest rates will come down again, for the seventh time since September.
The Federal Reserve cut its target for the federal funds rate by a quarter-point, from 2.25 percent to 2 percent. The prime rate will fall by a quarter-point, from 5.25 percent to 5 percent. The move spells good news to people who borrow money on loans, such as home equity lines of credit, that are linked to the prime rate. It's not such good news for savers who want to put their money in short-term certificates of deposit.
The rate-setting Federal Open Market Committee has been slashing rates to encourage consumers to borrow, and therefore stimulate the faltering economy. At the beginning of September, the federal funds rate stood at 5.25 percent; since then, the Fed has cut it by 3.25 percentage points. It has been an unusually rapid series of rate reductions, as the Fed has tried to catch up with the economic slowdown brought on by the housing slump.
"Recent information indicates that economic activity remains weak. Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation have risen in recent months. The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to moderate growth over time and mitigate risks to economic activity," according to the Fed announcement.
This rate cut had been expected, with futures markets pricing in a 1-in-5 chance that the Fed would keep rates unchanged, and a 4-in-5 chance of a quarter-point cut. To the extent that anyone expected the Fed to keep rates unchanged, that sentiment stemmed from the inflation picture. As anyone who drives to the grocery store knows, prices for gasoline and food have been skyrocketing and threatening to eventually push up prices for everything.
Typically, rate cuts make inflation worse. That makes the case for holding short-term rates steady. But this isn't a typical situation. Prices aren't rising because the economy is booming; instead, they are rising despite an economic downturn.
"It's a compromise between two equally persuasive arguments," says Richard DeKaser, chief economist for National City Corp. "On the one hand, there's an increasingly legitimate argument that inflation needs to be pre-empted more aggressively." On the other hand, he says, "there is still risk to the economy in terms of weaker growth."
Downward-facing dollarOn the inflation side, DeKaser says, the Fed has been counting on a weaker economy holding wage growth down, which in turn is supposed to put a lid on inflation. By that reasoning, the Fed can continue to goose the economy by cutting rates, and can put off worrying about inflation until after economic growth resumes. But commodity prices are surging and the dollar is weakening in relation to other currencies. Both of those factors exert upward pressure on prices, especially for imports.
By cutting short-term rates while European central banks keep their rates steady, the Fed contributes to further erosion in the dollar's relative value. In turn, foreign companies either raise prices on exports to the United States to maintain profits, or they sell their goods to countries with stronger economies. Either way, through straight-out price increases or through scarcity, foreign-made goods become more expensive in the United States.
Inflation-fighting takes backseatHow do you turn that around? You could raise interest rates, which would eventually make prices of imports more competitive, but higher rates would restrict overall economic growth. Right now, the Fed prefers to stoke the economy by cutting rates again. Inflation-fighting is a secondary priority at the moment.
"The ongoing concerns related to inflationary pressures have to be weighing very heavily on their minds," says Jim Baird, chief investment strategist at Plante & Moran Financial Advisors in Kalamazoo, Mich.
"They've pumped a lot of liquidity into the system, particularly since the beginning of the year, and I wouldn't be surprised to see them take a step back and let this filter its way through the system at this point. They have to look at which of the battles they want to fight -- keep prices in check to a greater degree or reduce the risk of further softening of the economy and at the same time try to provide some liquidity and stabilize the credit markets."
Consumer impactThis rate cut's impact on consumers "is not likely to be very impactful, but in combination with past rate actions, it has quite a bit of impact," says DeKaser. He believes that a lot of this impact will come via reducing the monthly debt payments that some mortgage holders will have to make.
Specifically, rates on home equity lines of credit will go down again, and that will reduce the minimum monthly payments that borrowers carrying balances will have to pay. And declining short-term rates mean less payment shock for some people with adjustable-rate mortgages.
Long-term rates, such as those for fixed-rate mortgages, don't respond directly to the Fed's rate decisions. Instead, long-term rates are guided by inflation expectations. They could go either way, depending on whether the bond market decides whether the Fed's rate policy is too restrictive, too permissive or just right.
The federal funds rate is the target interest rate for banks borrowing reserves among themselves. The discount rate is the interest rate that the Fed charges banks to borrow reserves from the Federal Reserve. The Fed wants to be the lender of last resort: It wants banks to borrow from one another at the federal funds rate before borrowing from the Federal Reserve at the higher discount rate.
The Federal Reserve cut its target for the federal funds rate by a quarter-point, from 2.25 percent to 2 percent. The prime rate will fall by a quarter-point, from 5.25 percent to 5 percent. The move spells good news to people who borrow money on loans, such as home equity lines of credit, that are linked to the prime rate. It's not such good news for savers who want to put their money in short-term certificates of deposit.
The rate-setting Federal Open Market Committee has been slashing rates to encourage consumers to borrow, and therefore stimulate the faltering economy. At the beginning of September, the federal funds rate stood at 5.25 percent; since then, the Fed has cut it by 3.25 percentage points. It has been an unusually rapid series of rate reductions, as the Fed has tried to catch up with the economic slowdown brought on by the housing slump.
"Recent information indicates that economic activity remains weak. Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation have risen in recent months. The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to moderate growth over time and mitigate risks to economic activity," according to the Fed announcement.
This rate cut had been expected, with futures markets pricing in a 1-in-5 chance that the Fed would keep rates unchanged, and a 4-in-5 chance of a quarter-point cut. To the extent that anyone expected the Fed to keep rates unchanged, that sentiment stemmed from the inflation picture. As anyone who drives to the grocery store knows, prices for gasoline and food have been skyrocketing and threatening to eventually push up prices for everything.
Typically, rate cuts make inflation worse. That makes the case for holding short-term rates steady. But this isn't a typical situation. Prices aren't rising because the economy is booming; instead, they are rising despite an economic downturn.
"It's a compromise between two equally persuasive arguments," says Richard DeKaser, chief economist for National City Corp. "On the one hand, there's an increasingly legitimate argument that inflation needs to be pre-empted more aggressively." On the other hand, he says, "there is still risk to the economy in terms of weaker growth."
Downward-facing dollarOn the inflation side, DeKaser says, the Fed has been counting on a weaker economy holding wage growth down, which in turn is supposed to put a lid on inflation. By that reasoning, the Fed can continue to goose the economy by cutting rates, and can put off worrying about inflation until after economic growth resumes. But commodity prices are surging and the dollar is weakening in relation to other currencies. Both of those factors exert upward pressure on prices, especially for imports.
By cutting short-term rates while European central banks keep their rates steady, the Fed contributes to further erosion in the dollar's relative value. In turn, foreign companies either raise prices on exports to the United States to maintain profits, or they sell their goods to countries with stronger economies. Either way, through straight-out price increases or through scarcity, foreign-made goods become more expensive in the United States.
Inflation-fighting takes backseatHow do you turn that around? You could raise interest rates, which would eventually make prices of imports more competitive, but higher rates would restrict overall economic growth. Right now, the Fed prefers to stoke the economy by cutting rates again. Inflation-fighting is a secondary priority at the moment.
"The ongoing concerns related to inflationary pressures have to be weighing very heavily on their minds," says Jim Baird, chief investment strategist at Plante & Moran Financial Advisors in Kalamazoo, Mich.
"They've pumped a lot of liquidity into the system, particularly since the beginning of the year, and I wouldn't be surprised to see them take a step back and let this filter its way through the system at this point. They have to look at which of the battles they want to fight -- keep prices in check to a greater degree or reduce the risk of further softening of the economy and at the same time try to provide some liquidity and stabilize the credit markets."
Consumer impactThis rate cut's impact on consumers "is not likely to be very impactful, but in combination with past rate actions, it has quite a bit of impact," says DeKaser. He believes that a lot of this impact will come via reducing the monthly debt payments that some mortgage holders will have to make.
Specifically, rates on home equity lines of credit will go down again, and that will reduce the minimum monthly payments that borrowers carrying balances will have to pay. And declining short-term rates mean less payment shock for some people with adjustable-rate mortgages.
Long-term rates, such as those for fixed-rate mortgages, don't respond directly to the Fed's rate decisions. Instead, long-term rates are guided by inflation expectations. They could go either way, depending on whether the bond market decides whether the Fed's rate policy is too restrictive, too permissive or just right.
The federal funds rate is the target interest rate for banks borrowing reserves among themselves. The discount rate is the interest rate that the Fed charges banks to borrow reserves from the Federal Reserve. The Fed wants to be the lender of last resort: It wants banks to borrow from one another at the federal funds rate before borrowing from the Federal Reserve at the higher discount rate.
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