Condominiums: 96 (Prices from $107,000 to $409,900)
Average condo price:  $210,764 ($201/sq ft)

Houses: 111 (Prices from $349,900 to $1,550,000)
Average house price:   $565,345 ($280/sq ft)

Short Sales and REOs:  93

Available properties by price range:

Under $300,000: 85

$300,000 – $499,999: 61

$500,000 – $699,999 : 48

$700,000 & Up:  16

Properties put into escrow last week: 19

Least expensive house: The least expensive home that went into escrow last week was listed at $389,900. It was a short sale, so there is no guarantee that it will be approved by the lender at that price.

Least expensive condo: The least expensive condo that went into escrow last week was $120,000.  It was also a short sale.

Most expensive home new escrow : The most expensive home that sold last week was listed at $649,999 and was on the market for only 36 days.  It was 4 bedrooms, 3 baths, with a 3-car garage and over 2700 square feet on an 8000 foot lot.  It appeared to be in upgraded condition and was not a short sale.

Most expensive closed escrow : The most expensive closed sale was a lake front home that was sold as a short sale.  When the price was reduced from $849,000 to $699,000 it sold in 8 days, then closed at $725,000.

Call me if I can help!

Sales of single family homes in 2010 made up 56% of the sales (356) and ranged in price from $310,000 up to $910,000 with an average of $515,799 and $271 per square foot.  In 2009 the average price of single family homes was $484,738 at $265 per square foot.

Short sales made up almost one third (104) of the single family home sales and averaged $472,652 and $253 per square foot.

Bank owned (foreclosed) homes were only 16% of the total, but priced very close to the short sales at an average of $475,249 and $253 per square foot.

Sales of Condos & Townhomes in 2010 were 44% of the total and ranged in price from $90,000 up to $410,000 with an average sale price of $225,534 and $211 per square foot.    The average price in 2009 was $218,909 at $203 per square foot.

Short sales made up over 40% (117) of the total at an average price of $207,644 at $199 per square foot.

Bank owned condos made up 24% (69) of the sales and averaged $213,624 at $201 per square foot.

We ended the year with total inventory of 171 homes & condos.  At the current pace of closed sales, that is about 3.7 months of supply.  As we get through the winter doldrums, sometime around the time of Super Bowl, inventory and activity level should start to pick up.

I am currently working with some well qualified buyers who have not found the right home for them.  If you know of a nice house (3 bedrooms or more and up to about $550K) that needs a new owner, please give me a call!

Lake Forest Lake Front Homes

Real estate sales activity in Lake Forest for the first half of 2010 was dominated by first time buyers who were motivated to purchase before April 30th, and close by June 30th.

Congress and the President have now created one more extension that will allow buyers who were under contract before April 30th, to close by September 30th in order to qualify for their tax credit of either $8000 for first timers, or $6500 for the repeat buyers who had lived in their prior residence for at least 5 of the last 8 years.  The extension won’t help any new buyers today, but the historically low interest rates (under 5%) seem to be stimulating a fair amount of interest now.

What happens to the market over the next 6 months is just about anybody’s guess right now.  While I expect things to slow down due to normal seasonality as well as the end of the tax credit, I haven’t seen it yet.  The agents that I talk to regularly seem to be just as busy as they were in April.  Pricing is somewhat of a question, as the logical expectation for the first time buyer price ranges is that the prices would drop by the $8000 tax credit as soon as it expired.  I don’t think we will really be able to draw any strong conclusions until early August when we get the July closing numbers.  My gut feeling is that the low interest rates will hold up the low-priced end of the market because the smaller homes are now priced very close to rental parity.

Total properties sold through June 30, 2010 was 316, slightly less than the 330 sold during the same period last year.

• 110  (35%) were short sales.

• 62 ( 20%) were bank-owned, or flipped by investors.

• 144 (45%) were sold by individuals who did not need their lender’s permission to sell.

The single family homes ranged from $200,000 to $852,000 with an average of $268 per square foot over all.

The 2 lowest sales are so far under their list prices, that I seriously doubt the reported sale prices.  The $200,000 sale was listed for $349,000 and private financing was used.  Since it just closed on 6/29, I haven’t been able to verify yet it on the tax records.  The next lowest sale at $310,000 was listed for $430,000 and the MLS states that the buyer paid all cash in March, but there is no recording of this transfer in the public records.  The lowest sale that I can confirm was a short sale that closed on 4/29 at $340,000 after 105 days on the market.

The high sale at $852,000 was an upgraded home in the Montbury neighborhood with a pool, a view and a 12,000+ square foot lot that sold in 6 weeks.

Short sale single family homes averaged $452,900 at  $238 per square foot, and took 158 days from listing to closing.

The traditional sales, investor flips and bank-owned sales of single family homes averaged $535,000 at $280 per square foot and took 54 days from listing to close.

The condos and townhomes ranged from $90,000 to $407,000.

The low sale was a one-bedroom condo that was a short sale and took 161 days to sell.  The high sale was an investor-owned (flipped) townhome that was highly upgraded and sold in 6 weeks after 2 price reductions.

The 63 short sales averaged $200,661 at $180 per square foot and took 131 days on the market.

The 83 traditional sales of condos averaged $224,144 at $200 per square foot and took 44 days on the market.

*All data is from the Southern California MLS, and is as accurate as the agents who entered the info!

Today, there are a total of 11,577 homes for sale in Orange County.   Of those, 4783 (42%) are labeled as either bank owned or short sales.  Of the 4363 that are currently in escrow, 2925 (68%) are distressed.  In the last 30 days, 1018 (61%), of the 1653 closings were distressed.

Buyers are looking for the best values that they can find, and the best priced homes are usually bank owned.  Short sales are closing more often than in the past, but it is still frustrating for a buyer to make an offer, then have to wait weeks or months to get an answer from the lender.  It will be interesting to see what effect, if any, the President’s new stimulus plan will have.  

The latest foreclosure listings are now posted for selected cities or areas in South Orange County.  If you are looking in an area that I haven’t included, please let me know and I’ll run the list just for you!

Other posts like this:

2008 End of Year Report 
2008 Orange County Mid-Year Report
2007 Orange County Sales Report

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Single family homes :

20 homes closed escrow in January.  Foreclosures or short sales were 14 of the 20, so 70% of the sales were “distressed”.  The average price came to $498,512 ($270/square foot).  The *median was $473,500. 

The least expensive single family home in January was reported in the MLS as closed at $310,000 although when checking the title records, it shows a sales price of $330,000 with a $326,701 FHA loan.  (?)  I am only guessing, but the seller must have paid some closing costs and the buyer’s loan amount includes the upfront mortgage insurance premium along with some other closing costs.  The other possibility is that the listing agent made a typo when entering the closed price, and hasn’t corrected it.

The most expensive home sold in January closed at $795,000 ($245/square foot.)  It had been on the market since 4/07/08 and had been reduced 8 times from $919,900 down to $799,900 when it finally sold.  If the seller had priced it correctly to begin with, he would have saved 8 months of interest payments, taxes, insurance, and HOA dues, which I calculated to be worth a little over $30,000!

Condos & Townhomes:

19 condos or townhomes were closed in January.  Foreclosures and short sales made up all but one of them, so 95% of the January condo sales were “distressed”!  The average sales price was $209,350 ($194/square foot) and the median price was $210,000. 

The least expensive condo was a 2 bedroom with 944 square feet that sold for over list price ($124,900) at $133,000 ($141/square foot).  The buyer put down 20%, so I am guessing that he is an investor who will rent it out.  With total payments (PITI+HOA) of less than $950/month, that investor should have a positive cash flow of $150 – $200 each month.  

The most expensive condo sold also happened to be the only condo that was not distressed.  It had 3 bedrooms, 2 1/2 baths and a 2 car garage and sold for $345,000 ($252/square foot) after 75 days and a 10% price reduction.  I found it interesting that it only took 10 days at the corrected price to attract the final buyer!

 *The median is the price where 1/2 of the homes sold for more, and the other half sold for less.

Some things I got right :

The volume increased, (but not as much as I hoped.)  As of today, there have been 24,237 closings in the MLS since 1/1/2008 in Orange County.  It is about 20% above the 2007 volume of 20,000, but I had predicted it to come out between 25,000 and 30,000.  Since there may be some more closings tomorrow, and many of the recently closed sales won’t get reported until the listing agent remembers to update the MLS, it is still possible to hit my “25,000″ mark, but it won’t go much higher than that.  I’ll admit that I was  optimistic.

Prices decreased - even more and faster than I thought they would!  The median price for a single family resale home now stands at $430,000 (off 34.4% from November 2007) and the median for a condo is $260,500 (off 38%).  See the DQ News Chart

There were a lot of foreclosures, and there will be more to come.  The big bailout, and help for homeowners has been a bust.  Very few delinquent borrowers have been able to modify their loans and keep their homes.  The foreclosures have slowed, but that is probably only due to the new California law that lenders have to document that they have worked with the borrowers prior to foreclosing.  There will probably be a big flood of new foreclosures that will hit the market around March.

A lot of real estate agents have left the business.  Final numbers won’t be available until late January, but I know many agents who have found other jobs and will not be renewing their local Association of Realtor®s  memberships.

The Real Estate Industry has become more “transparent.”   Let’s face it – there are too many places for consumers to do their research and credibility means a lot!   If you aren’t honest and open with your advice and opinions, buyers and sellers  will find someone else who will be.  

Nobody is going to buy a house simply because they see an ad that says “Now is a good time to buy or sell!”  DUH!   Actually, I have gritted my teeth recently when I saw a full page newspaper ad that declared “Work with a Realtor® because they know your market!”  The truth is, some do and many don’t!  To become a Realtor®, you need to have a license and pay dues of $115 per year.  You also agree to abide by the Code of Ethics, but there is no required education or additional testing to maintain your membership.  I am a dues paying member of the National Association of Realtors, and I abide by the Code of Ethics and enjoy some benefits like access to research reports, and publications, but membership alone does not give me any knowledge or authority, and I hate that they waste my dues paying for ads like that!  ( End of rant.)

The parts I got wrong: 

The mortgage market has still not settled down completely.  The FHA loans have made a big come-back, after being close-to-obsolete in California for the last few years, but they have also tightened up on their qualifications for many borrowers, and won’t approve a loan for a property that has changed ownership in the last 90 days.  This puts investors in a riskier position if they want to buy a foreclosure, fix it and put it right back on the market.  Loans of over $417,000 are difficult to approve, and the interest rates are substantially higher.  This is causing problems for buyers (with good credit and documented income)  to buy homes in the higher price ranges.

The lenders are pricing their inventory to get rid of it.  I never would have guessed that they would take this agressive approach.  I’ve been seeing REO properties come on the market at 10% below the most recent comps.  This has created a frenzy for buyers who can’t resist what appears to be a real bargain.  Multiple offers have become the norm for many of the REOs, and buyers have been bidding them up to an average of 102% above original list price.  The REOs and short sales, especially at the lower end of the price ranges, have made up 42% of all sales for 2008.

Overall, my predictions weren’t too far off, so I’ll give myself a B+ for getting close.   In the next few days, I will make my new predictions for 2009 and this time I will be more specific and try to get closer to actuals.

First time buyers were the driving force behind the improved sales volume, since they didn’t have to unload a previous property in order to buy.  FHA loans with 3.5% down payment were the favorite financing method used in the majority of these sales.  Condos accounted for 61% of the sales.

The “average” condo sold for $231,587, after 59 days on the market with the range running from $110,000 up to $385,000.  Of the 38 condos sold, 12 went for more than the list price.  Most of those were bank-owned and were aggressively  priced well below average @ $185/sqft versus the overall average of $206/sqft. 

Single family homes ranged from a low of $335,000 up to $724,900, and averaged $268/sqft after 61 days on the market.   Of the 7 homes that sold for over list price, 5 of them were bank-owned and sold quickly for an average of $272/sqft and spent only 28 days on the market!

There are currently 218 properties in the “active” status on the MLS, split exactly down the middle with 109 condos starting at $114,000 and 109 single family homes ranging from $335,000 up to $1.650 million.   With single family pricing starting at $335,000, it’s very difficult to get any attention for the townhomes above the $390,000 mark, no matter how large or nice they are! 

The good news at this time is that gas prices are affordable again, interest rates are approaching historic lows, and pricing is getting much closer to “fundamentals” where the cost of owning is only slightly higher than the cost of renting a similar property.  I expect after the first of the year, and particularly after the new administration takes office, that volume will pick up substantially in the lower end of the price range and a lot of renters will become buyers!

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The current active inventory, is 251 properties.  Of those, 124 are coded as short sales, and 44 are lender owned.  The remaining 79 “non-distressed” properties range in price from $179,000 for a one-bedroom condo, to $1,695,000 for a custom lake front home.

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The total number of bank-owned homes in Lake Forest today is 45, and they have an average price of $326,000 at $232/square foot.   

Total active homes on the MLS in Lake Forest is currently 287, with only 97 of them available as traditional “non-distressed” sales with a seller who can answer an offer without having to wait for a bank to approve the price.  Of those, there are 30 condos and 67 single family homes.  Prices of the single family homes begin at $459,000 and go up to $1,695,000.  

For buyers who are hoping to pick up a “deal” on a foreclosure property, it is critical to be fully pre-approved in advance and to be educated about the values.  Many of the foreclosure listings are coming on the market priced very low compared to other properties.  They may be in almost any condition, ranging from totally dirty and damaged to pretty nice “move-in” condition.  Alert agents and buyers are finding them and making offers almost immediately.  I have had several experiences where my buyer submitted an offer the first day on the market, then, after waiting for 3 or more days, the bank’s agent asked all the buyers to re-write their offers at their “highest and best” price.  This strategy has created an “auction-fever” environment that leads to the home selling for substantially more than the original list price.  If you plan to make an offer on one of these undervalued properties, you need to carefully review the comps, and make your best offer based on your perception of what it will really cost you to make the home comfortable for you!