Orange County Real Estate Market Conditions by Mike Stankewich with ZipRealty

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Labels: Agents, homes, huntington beach, Orange County Real Estate, Realtors, realty

The public perceives that real estate agents make a lot of money. They evaluate the fancy cars, clothes, and electronic devices (such as Supra Keys, PDA’s and Laptops) and equate this with high incomes. Of course much of this is necessary for image reasons to show that we are successful agents, as well as to effectively conduct our business. However statistics from the National Association of Realtors and the state associations show that the median income levels of agents are about $30,000. Not a very high paying job compared to other professions.

If they are doing it part time to supplement a spouses income this may be fine, however if they are the primary bread winner, it could be a monetary problem which drives them out of the profession.

First there are considerable expenses to get started in this field. Before you get a license you need to take educational courses, which can be $300 to $500. Then you need to pay for the state exam and if you pass it the state license fees. Add to that the training fees the Broker charges, the open house and for sale sign costs, mortgage and/or financial calculators, and initial marketing materials and you could be well into a $1000 to $2000 investment just to start.

Then there are the charges to belong to the National Association of Realtors, the state and local associations, and the regional MLS. These are over $600 a year in California.

Although some real estate agents work out of their Brokers office, most work from home offices for convenience. This necessitates the purchase of a desktop computer, a laptop for the field, usually a color laser printer, a fax machine, office furniture, and file cabinets. Even if they work in the Broker’s office they are usually only provided a desk and have to buy the office machines they need.

Next depending on the Broker are desk fees, franchise fees, E&O insurance, legal fees, and computer assistance fees. E&O insurance can be from $1000 to $2000 a year and fees can range up to over a $1000 a month. A good digital camera is also a must if you expect to do listings.

All in all, an investment of about $10,000 is required just to get started right. On top of this is an automobile lease in order to have an automobile that shows the right image for the agent and is comfortable for clients to ride in. This is a long-term commitment to about $500 a month.

Considering commission splits between agent and Broker, which vary, it may take a new agent at least two sales to break even. Where do these sales come from? Different brokers have different ways to generate leads for their agents, whether print advertising, Internet capture, or other means. Usually agents invest a lot of time on Internet follow-ups, up-desk calls and cold calling (restricted now by the do not call list). These yield very few active buyers. Some agents actually pay for buyer leads from Internet directory sites.

To get listings an agent must farm a certain territory. This involves offering perks such as magnetic calendars and mailers, which cost a handsome price from the printer and the United States Postal Service. Listings also entail expenses such as lock boxes (which cost over $100 apiece), signs, printing expenses for flyers, advertising, and some other miscellaneous items. Open houses are time consuming and take away the agent’s time for prospecting for new clients and personal family activities. Then there is no assurance that the house will sell within the listing period. If it expires, the total investment is lost.

There are some Brokers that reduce an agents initial expense, but the commission split is low to the agent and requires you to do a volume business to make a good income.

It all comes down to leads. Sales is a numbers game. Established agents who have been in the business for many years have an established base of past clients who may again be in the market or can pass on referrals. Once a business is established it can feed on itself. However these agents usually account for a small fraction of the agent pool.

New agents and those with less than ten years in the business need to find leads and convert as many as possible into sales to make a living. In a booming market this may be less of a problem as those prospects in the market are ready and willing to buy. They will usually make a decision fast so as not to loose out on a good opportunity.

However in normal and slow markets buyers can afford to wait and explore more numerous opportunities. This obviously means that the agent will spend a considerable amount of time with the buyer before a sale occurs.

For an agent to make a satisfactory living they must sell at least one property a month. To make a good living they must sell two or more homes a month. This is not easy when leads need to be developed from scratch.

Another source of leads are referrals from networking and real estate associations. Many agents become members of the Women’s Council of Realtors, the Council of Residential Specialists, and or obtain designations such as ABR or e-PRO so that they may obtain referrals from out of the area agents listed in the association’s referral directory. Membership has its expense as dues in each association are usually about $150 a year and monthly meetings can cost about $25. The larger expense of designations is the educational requirements such as four to five courses for a CRS designation at $300 each. Thus an outlay of $1500 or more for a designation is not uncommon. Of course this additional training usually makes the agent more qualified to better serve the customer. There is also another time commitment as each course is usually two full days.

So what usually happens, is that the agent does not achieve the desired number of sales and/or invests the time and money in listings only to see them cancelled or expired. Thus the income flow does not materialize. Many take on other part time or even full time jobs to supplement their income. Frustration usually sets in and obviously the other job takes away time to practice real estate properly.

Desperation also sets in, causing some agents to offer very low commissions on their side to get listings and financial incentives to obtain buyers. This reduces income from each sale so that the agent hardly makes any money after expenses. This is also an injustice to the clients as the agent usually tries to cut expenses such as advertising and also does not have the time to properly work for the sellers and buyers because of other part-time work responsibilities.

To further make matters worse, an agent in these circumstances will seek other cost reductions such as dropping memberships in associations such as the Women’s Council of Realtors. Many also will not pay their annual dues to belong to the National Association of Realtors, their local and state associations, and the regional MLS. Without the MLS they further handicap themselves by not being able to fully service their clients in a professional manner, since they do not have access to the non-public information on the MLS, cannot input listings in their own name, and do not have valid key access to lockboxes.
After experiencing a few years of 2 to 3 sales and experiencing a couple of expired listings, many will essentially fade away from real estate and concentrate on their other job in order to support themselves and their family. They essentially give up on the considerable time and monetary investment they made to be in this profession.

Regrettably, resume padding is fairly common. People have made false claims about their achievements, experience, and credentials in order to enhance political careers, or to gain better jobs and/or promotions. Generally it is not illegal. Usually it is an issue between employer and employee, and generally the consequences are dismissal or loss of status.

However, in California, real estate resume padding constitutes a violation of real estate law and can result in suspension or loss of license. This is a result of Assembly Bill 790, which passed both houses last summer and was signed into law by the Governor September 5, 2006.
The resume padding referred to here has to do with the designations and certifications that an agent may falsely claim to have earned.

There are several designations such as GRI, CRS, ABR, and e-PRO. In addition there are associations such as the California Association of Realtors and the local MLS, such as Southern California Multiple Service. There are seventeen designations available under the umbrella of the National Association of Realtors® . Do not confuse membership in an association with a desiganation. An agent might belong to the Council of Residential Specialists and not have the CRS designation. The same is true with REBAC. An agent might be a member but may not have earned the ABR designation. This is due to the time necessary to take the courses and meet the experience levels required. So an agent may claim to be a member of the association. It is only a violation when the agent uses the designation, when he has not earned it.

It should be acknowledged that most real estate designations represent focused, specialized training, resulting in particular knowledge and skills that do add value to the services an agent may provide his or her clients. Since ther is greater public awareness of the value of various designations, some agents falsely claim to have earned them.

Thus the legislation referred to earlier. The author of AB 790 stated, "With the enormous number of real estate licensees in the state of California, customers often narrow the market by searching for a broker with a specific expertise or training. In a highly competitive market, some licensees are misrepresenting themselves to consumers by claiming a certified private designation or trade organization membership that they do not hold in order to increase their business."

Existing California law had already made it a violation to use the term Realtor® unless a person was actually a member of the National Association of Realtors. AB 790 has expanded that to include making false statementa or representationa concerning his or her designation or certification. Violation of this provision may result in suspension or loss of license.

How is the general public to know if they are dealing with an honest agent? The information is usually available on the associations websites.

To check on license status and years of experience in California go to the California Department of Real Estate site at http://www2.dre.ca.gov/PublicASP/pplinfo.asp

To check on membership with the California Association of Realtors and the right to use the term Realtor(R) go to http://www.car.org/index.php?id=MjgyOA==

To check on ABR designation go to http://www.rebac.net/MembershipDirectorySearch.aspx
To check on e-PRO status go to http://profile.epronar.com/index.php

These are just a few. A search on one of the major search engines should yield the associations website that you are looking for. A common problem are agents claiming to belong to the MLS when they do not in order to save the fees. Although the SoCalMLS does not have a roster that the public can access, members such as other Realtors or industry service providers can check the roster to see if an individual is a member.

Labels: false credentials, license, real estate, REALTOR(R)

9 days from today, all cell phone numbers are being released to telemarketing companies and you will start to receive sales calls.

.....YOU WILL BE CHARGED FOR THESE CALLS (available minutes will be consumed)

To prevent this, call the following number from your cell phone: 888-382-1222.

It is the National DO NOT CALL list. It will only take a minute of your time. It blocks your number for five (5) years. You must call from the cell phone number you want to have blocked. You cannot call from a different phone number.

Labels: cell phones, do not call list, sales calls, telemarketing

The National Association of Realtors (NAR) and the California Department of Real Estate (CA DRE) have specific regulations and standards with regard to advertising listings and soliciting business. Every California real estate agent is governed by the California Department of Real Estate. Only members of the National Association of Realtors are REALTORS(R), and they must abide by the association's code of ethics or they will be suspended from membership and will not be allowed to use the title REALTOR(R). Not all real estate agents are REALTORS(R). A potential buyer or seller should check out the agents credentials to assure themselves that they are working with an agent who subscribes to the NAR Code of Ethics.

In this year of 2007, the California Department of Real Estate has new regulations that require that the agents license number be printed on real estate agent's business cards. This is an attempt to crack down on the number of people practicing real estate without licenses and the proper education requirements.

Advertising takes several forms. Most people are familiar with print advertising such as in magazines and newspapers. However websites, billboards, and other media are also governed by the advertising regulations of the NAR and CA DRE.

Due to cooperative agreements known as Internet Data Exchange (IDX) brokers and agents can advertise listings that are from other brokers, and not their own. This is sometimes confusing to the public, although it is good for the sellers as it maximizes their property's exposure on the Internet. Buyers are gradually becoming educated that if they see a property on an agent's website, that it may not be that agent's listing. Although this may be confusing to some, it is good for the buying and selling public. It allows buyers to search for all properties on one website, without having to surf a number of sites. For example you can go to http://www.MikeStankewich.com and search for properties that are listed on all the Multiple Listing Services (MLS) throughout California. It also provides for maximum exposure of a seller's listing, as it can be found on numerous internet sites if the listing agent takes the time to post it on the available sites.

There are two types of real estate licenses issued by the CA DRE. They are a brokers license and a salesperson license. A broker can practice real estate by himself or in conjunction with other licensed agents. A salesperson can only actively practice real estate if he or she is associated with a broker. Regulations require that if listings are advertised by an agent that they must indicate that they are being offered by an agent and that the brokerage name be stated. This applies to websites that offer property searches.

I have come across agent websites that do not identify the salesperson's brokerage. This violates CA DRE regulations and if that agent is a REALTOR, the NAR Code of Ethics. This could result in disciplinary action by the Department of Real Estate and expulsion from the NAR.

To be in compliance websites should identify the agent and the name of the brokerage firm that she or he is associated with according to the CA DRE records. Contact information should be provided such as a physical address where the business is being conducted, an email contact, and telephone and fax numbers including a cell phone number, if available. This also makes sense for prospecting and marketing, as the agent usually wants the public to be able to contact them. If you have a property listed with an agent, you need to make sure that the agent can be contacted in a reasonable time if a buyer is interested in your listing.

Since business cards will reguire license numbers it is a good idea to show the salesperson's license number and the brokerage license number on the website. The public should look for this to assure that they are dealing with a licensed agent who is affiliated with a licensed brokerage.

If the agent is a REALTOR(R), the REALTOR(R) should list his or her membership with the National Association of Realtors and in California, the California Association of Realtors and the local board, such as the Orange County Association of Realtors. The public can check on the agents status by going to http://www.realtor.org, http://www.car.org and http://www.ocar.org . To assure proper ethical service, the public should look to deal with a REALTOR(R) who subscribes to the REALTOR(R) Code of Ethics and not just a licensed agent.

It is also important that the agent belongs to the local Multiple Listing Service, such as Southern California Multiple Listing Service (SoCalMLS). In order to save money some agents choose not to belong or may have been removed for disciplinary violations. If they do not belong they cannot offer the full services that you need when buying or selling a home. The public should contact the local MLS to determine the agents status such as with http://www.socalmls.com .

Be wary of agents and websites that do not do proper real estate advertising and that do not comply with the CA DRE regulations and NAR standards. You can check on any California agents license status and discipline status by going to http://www2.dre.ca.gov/PublicASP/pplinfo.asp .

Labels: California, dre, license, mls, NAR, Orange County Real Estate, REALTOR(R)

Link

Recently I came across a part time Realtor who is doing catering work. I asked her whether she is primarily a caterer or a Realtor? She said she was a Realtor who was adding to her income by catering. However catering demands specific times when parties and weddings normally occur. Thus she is really a caterer, since catering takes priority and real estate fills in the gaps. Is this type of agent good for you, as a buyer or seller? The answer is NO! She is in really adding to her catering income by doing real estate in a less than dedicated professional manner.

Realtors who are semi-retired or housewifes working part time may be able to offer full services as a dedicated professional by adjusting their schedule and putting in full time activity when they have a listing or an active buyer. However those with other jobs cannot offer you the 24/7 service that you must have when you are listing your home or searching for a new home.

If you list a home for a client there are numerous tasks that must be attended to quickly to have an effective marketing program. Delays mean the home will stay on the market longer and usually sell at a lower price. Ask your potential agent whether he or she can handle these matters that day or the next day. Agents doing part time work with other part time jobs usually cannot.

The caterer usually is doing preparations for Friday and Saturday parties and weddings. How can she or he hold the Broker Open on Friday or an Public Open House on Saturday. After a late night catering on Saturday, how effective is this person for a Sunday open house.

If you are a buyer, when do you want to look at properties?. If you are like most people, you work Monday through Friday and want to look during the weekends. A caterer’s schedule is usually booked on weekends, so the service from this type of agent is compromized.
For your own interests and financial gains go with a dedicated full time Realtor who can adjust his or her schedule to meet your needs. To get the best service use a full time professional Realtor!

Labels: real estate, REALTOR

Here are the current top 10 real estate agents for Orange County, California according to Point2Homes.com

1. Namneet Dhaliwal

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Send Referral
Cell:
(714) 932-9409

2. Vickie Perez Fageol

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Phone:
619 337-1700 x236
Cell:
619 997-6291

3. John Guthrie

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Phone:
(520) 316-6773
Cell:
(480) 650-0585

4. Robert Little

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Phone:
909-355-3696
Cell:
909-561-1833

5. Liane Thomas

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Phone:
(951) 454-3805
Cell:
(951) 454-3805

6. Mark Taylor

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Phone:
(714) 368-8525
Cell:
(714) 206-9964

7. Mike Stankewich, Realtor, MBA, e-PRO

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Phone:
(800) 225-5947 x8660
Cell:
(714) 697-0038

8. Ann Downing

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Phone:
(951) 733-2486

9. James & Margret Hoppe

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Phone:
(949) 400-1072

10. Dino Alvarado

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Phone:
(951) 300-4660 x178
Cell:
(949) 922-2637

Labels: Agents, California, Orange County Real Estate, Realtors

These are currently the top 10 rated real estate agents for Huntington Beach, California according to Point2Homes.com

1. Liane Thomas

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Send Referral
Phone:
(951) 454-3805
Cell:
(951) 454-3805

2. Mike Stankewich, Realtor, MBA, e-PRO

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Send Referral
Phone:
(800) 225-5947 x8660
Cell:
(714) 697-0038

3. James & Margret Hoppe

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Send Referral
Phone:
(949) 400-1072

4. Christine Casados

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Phone:
(949) 307-7936
Cell:
(949) 307-7936

5. Brian Liberto

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Send Referral
Phone:
7149313287
Cell:
7149313287

6. Andre and Corinna Iturbide

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Phone:
714-719-2952
Cell:
(714)719-2952

7. Brian Bassaline

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Phone:
714-842-9601

8. Coldwell Banker Coastal Alliance

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9. Kathleen Wilson

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Phone:
714-968-1200 x110
Cell:
949-307-9551

10. Peter Babashoff

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Phone:
(562) 943-7266
Cell:
(562) 686-3933

These are currently the top websites in Huntington Beach, California according to Alexa.

1. Huntington Surf and Sport www.hsssurf.com
2. Huntington Beach Conference and Visitors Bureau www.surfcityusa.com
3. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
4. Electric Chair www.electricchair.com
5. Golden West College www.gwc.info
6. City of Huntington Beach www.ci.huntington-beach.ca.us
7. Premiere Bail Bonds www.premierebailbonds.com
8. Huntington Beach Public Library www.hbpl.org
9. Innovative Plastics, Inc. www.plasticfab.com
10. Holly Olson - RE/MAX Select One www.hollycampbell.com

These are currently the 10 top business and economy websites for Huntington Beach, California according to Alexa.

1. Huntington Surf and Sport www.hsssurf.com
2. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
3. Electric Chair www.electricchair.com
4. Premiere Bail Bonds www.premierebailbonds.com
5. Innovative Plastics, Inc. www.plasticfab.com
6. Holly Olson - RE/MAX Select One www.hollycampbell.com
7. Orangesites.com www.orangesites.com
8. That Fish Shop www.thatfishshop.com
9. Websight www.websight.org
10. DeLillo Chevrolet www.delillo.com

These are currently the 10 top real estate websites for Huntington Beach, California according to Alexa.

1. Mike Stankewich - ZipRealty, Inc. www.Real-Estate-for-Orange-County.com
2. Holly Olson - RE/MAX Select One www.hollycampbell.com
3. Cindy Lay - Century 21 Beachside www.orangecountycoast.com
4. Paul Murphy - Star Real Estate www.huntington-beach-realestate.com
5. Sean Stanfield - First Team www.seanstanfield.com
6. Lazarus & Company Property Management www.lazarusandcompanyinc.com
7. Sukie Fee - SeaCliff Realty www.seacliffrealtyinc.com
8. Bob Bolen - Huntington Beach Realty www.huntingtonbeachrealty.com
9. Stephanie St. Pierre - Century 21 Beachside www.huntington-harbour-homes-for-sale.com
10. Keith Nichols - SellsOrangeCounty.com www.SellsOrangeCounty.com

Labels: huntington beach, real estate, websites

Before I get into the specific data, I wish to share some personal observations. Buyers are once again actively getting into the market and homes are beginning to sell. I am working with more buyers and showing more property this month than I did in the months from June to December of 2006. In fact one Buyer wanted to make an offer on a property, which we found out sold the previous evening. The market is once again becoming more competitive. Listings are still slow to sell, because of the built-up inventory. Thus sellers still have to be patient since they will stay on the market for a greater time. As always the sale of listings depends on the homes location, condition, and how agressively they are priced, as well as how well they are marketed. More and more buyers are using the internet, so listing agents need to take advantage of the marketing exposure that many of the internet sites offer.

After bottoming in the fourth quarter of 2006, existing-home sales are forecast to gradually rise through 2007 and into 2008, according to the latest forecast by the National Association of Realtors®.

NAR's chief economist, said annual totals for existing-home sales will be fairly comparable between 2006 and 2007. "We have to keep in mind that we were still in boom conditions during the first quarter of 2006 with a high sales volume and double-digit price appreciation," he said. "We're starting 2007 from a relatively low point, so even with a gradual improvement in sales it'll be pretty much of a wash in terms of annual totals. The good news is that the steady improvement in sales will support price appreciation moving forward."

Existing-home sales for 2006 are expected to come in at 6.50 million, the third highest on record, with a total of 6.42 million seen in 2007.

The 30-year fixed-rate mortgage will probably rise to 6.7 percent by the fourth quarter of 2007. Last week, Freddie Mac reported the 30-year fixed rate at 6.18 percent which is far below earlier consensus forecasts. The current interest rate environment and housing inventory levels present a window of opportunity for potential buyers.

The median existing-home price for all of 2006 is expected to rise 1.1 percent, and then gain 1.5 percent this year.

With all the wild projections by academics, Wall Street analysts and others in the media, it appears that much of the housing sector is experiencing a soft landing, Despite the doomsayers, household wealth will not evaporate and the economy will not go into a recession. If you're in it for the long haul, housing is a sound investment.

The unemployment rate is likely to average 4.8 percent this year, following a rate of 4.6 percent in 2006. Inflation, as measured by the Consumer Price Index, is expected to be 2.2 percent 2007, down from 3.2 percent last year, while growth in the U.S. gross domestic product is seen at 2.5 percent in 2007, compared with 3.3 percent last year. Inflation-adjusted disposable personal income should grow 3.4 percent this year, following a rise of 2.7 percent in 2006.

The Orange County real estate market has recently experienced rising home inventories and stabilizing prices. In this market, home buyers have increased negotiating power, but may be unsure of how to structure the best deal – they need a professional to help guide them through the transaction.

As the real estate market in Orange County became more balanced between buyers and sellers, home prices have stabilized. However, most homeowners can still realize a very good return on their investment. Consumers who bought their homes six years ago have seen more than 50 percent appreciation in their home’s value during that time.

Every market's different, call a Realtor today!

These are my personal observations and views and do not represent the views of ZipRealty,Inc.

To discuss this further or for more information contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.Visit our blog at blog.MikeStankewich.comto see related articles, archives, and to post your comments to this market conditions report.

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ZipRealty is a national full service brokerage with offices in the major U.S. metro areas. ZipRealty offers sellers full services, enhanced Internet marketing, and below market commissions, while maintaining the highest customer satisfaction rating in the real estate industry.

Buyers who use ZipRealty for their purchase receive a rebate of 20% of ZipRealty's commission, while receiving personalized service and complete client representation throughout the buying process.

Contact Mike Stankewich for your real estate needs. Visit MikeStankewich.com to search for all the properties on the MLS, to get pre-approved with E-LOAN, and for other valuable real estate and community information.

Labels: market conditions, orange county, real estate

Another Fed hike considered a '50-50' chance

Thursday, August 17, 2006

From Inman News

Mortgage rates declined for the fourth straight week on news of disappointing home construction and a slowing economy, according to Freddie Mac's weekly mortgage survey.

In Freddie Mac's survey, the 30-year fixed-rate mortgage dipped to an average 6.52 percent this week, down from last week's average of 6.55 percent and down significantly from 6.8 percent four weeks ago.

The average for the 15-year fixed-rate mortgage this week remained at 6.2 percent.

Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.3 on the 30- and 15-year loans.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) fell to 6.18 percent this week, with an average 0.4 point, from last week's rate of 6.21 percent. The one-year Treasury-indexed ARM averaged 5.65 percent, with an average 0.5 point, down from last week when it averaged 5.69 percent.

"Long-term rates continue to relax as economic reports support a picture of a weakening housing sector and a slower-growing economy," said Frank Nothaft, Freddie Mac vice president and chief economist. "This week's news that July housing starts fell 2.5 percent added conviction to Fed Fund futures traders who are currently pricing contracts to suggest the chances of another rate increase from the central bank this year are about 50-50.

"As a result, 30-year fixed-rate mortgages are down for the fourth straight week and are the lowest they've been since mid-April. Meanwhile, ARM rates have gone down less. All of which could help persuade homeowners with ARMs on the verge of resetting to make the decision to lock into a fixed-rate mortgage now rather than take a chance of a higher rate on the adjustment date."

The following is a sampling of Bankrate.com's average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York - 6.43 percent with 0.24 point

Los Angeles - 6.58 percent with 0.53 point

Chicago - 6.68 percent with 0.06 point

San Francisco - 6.55 percent with 0.31 point

Philadelphia - 6.42 percent with 0.36 point

Detroit - 6.62 percent with 0.03 point

Boston - 6.57 percent with 0.14 point

Houston - 6.47 percent with 0.44 point

Dallas - 6.44 percent with 0.52 point

Washington, D.C. - 6.38 percent with 0.64 point

My sister in her early 50's died of cancer this morning. I will miss her.

I don't usally post personal messages on this real estate market conditions site. However I just received bad news that my sister in her early 50's is dying of cancer. It started as ovarian cancer and spread to her lungs and lower intestine. She has two weeks to two months to live. Ironically, she is a nurse for a cancer hospital, Roswell Park, in Buffalo, NY.

She is a good person who devoted her life to help others. I hope all of you who read this will pray for her. I know I will miss her soon.

My life has been hectic lately. I have hardly the time to do what must be done in my real estate career. I appreciate your patience. We just had our first grandchild, a beautful girl, which we visited this month. We also stopped over to visit Mary during this trip, which was from one hospital to another. My other daughter is getting married in August. A marriage and a funeral is just what I need. Was there not a movie about this, Three Weddings and a Funeral? i have not had time for anything else, especially golf, which I love to play.

I wish Mary Stankewich well and may she live in peace. She is a good woman. who really helped others. I will miss her. If you are religious, help me pray for her.

I am sorry if you were looking only for real estate information, but I had to post this important information about my family.

Housing prices have reached yet another record high in Orange County, with the median price rising to $646,000 in June, up $11,000 from May, according to data released by DataQuick Information Systems on July 19, 2006. This is an increase of 7% from a year ago. However sales were down 26.3% from a year ago, although they increased from May 2006.

Despite a cooling off and a reduction in the median home price in some US markets, there is no sign that the median price will fall in the Orange County's real estate market.
Be wary of those reporting declines of prices in some Orange County cities. The accuracy of statistics depends on the volume of data. For the county as a whole there is sufficicent data to support a trend. For individual cities the lack of sufficient data may result in abnomalities. The entry level market is stronger than the luxury home market, therefore if more entry homes sell in a particular city, the median price could be lower from a month ago. This is also true for Zip Codes within a city.

The issue is not demand but affordability. Demand is strong. In Anaheim the developer of the Platinum Triangle complex was intending to lease the 390 units of their first phase, however demand from buyers changed their mind. These will be sold as condos, starting at $300,000. There are 4000 people on the waiting list for the 390 units. I work with first time buyers on a regular basis and find that although they want to buy, often they can not qualify for the mortgage they would need to acquire a property that meets their needs, although lenders are working on inovative programs. For example CalHFA is offering a 40 year fixed rate loan at below market interest rates for first time buyers. Some lenders have introduced 50 year fixed loans. Several cities in Orange County offer incentives for first time buyers with moderate income levels. Huntington Beach is desirable for many reasons including the beaches, which means the prices will be higher. Thus sometimes I need to steer first time buyers to Buena Park, Cypress, or Stanton, so that they can afford what they are looking for.

The California affordability index is at an all time low, which means less than one person in six can afford the median priced home. This means that prices will stabilize near current levels, which is what we are beginning to experience. Appreciation increases will stay in the single digits, probably rising at the rate incomes rise. So the issue is not demand, but affordability. We have reached a plateau and this has created a stabilized real estate market in Orange County.

For the particular cities in my three market districts, the following are the new median home prices, based on June 2006 data. To compare these to May 2006 data see my previous report on Blog.MikeStankewich.com

HUNTINGTON BEACH DISTRICT
Huntington Beach
92646 - $700,000
92647 - $660,000
92648 - $896,500
92649 - $645,000
Sunset Beach – Insufficient Data
Surfside - Insufficient Data
Seal Beach - $909,500
Rossmoor – Insufficient Data
Fountain Valley - $732,000

NEWPORT BEACH DISTRICT
Costa Mesa
92626 - $725,000
92627 - $680,000
Newport Beach
92660 - $1,170,000
92661 - $3,500,000
92662 - Insufficient Data
92663 - $1,350,000
Newport Coast - $2,050,000
Corona del Mar - $1,729,500

GARDEN GROVE DISTRICT
Garden Grove
92840 - $590,000
92841 - $599,750
92843 - $544,500
92844 - $502,500
92845 - $606,000
Westminster - $620,000
Midway City - $582,500

The Orange County market has slowed down and normalized after three years of robust activity and double-digit appreciation. Housing sales, in terms of overall numbers, are down 26.3% from a year ago. This reflects that there are fewer buyers in the market, although I have found the ones in the market to be serious buyers. That means there are 74% of the buyers that were in the market last year. Many first time buyers are being priced out of the market. Housing inventory is up due to the lower sales volume, thus homes remain on the market longer before selling, mow about 50 days. Although a seller may have to wait longer to sell, the good news is that he can still get market value.

However a seller must be realistic in what the market value is. Many agents, in order to get a listing, will suggest a high price, and the property will sit in the market until the price is reduced. When price reductions start, the seller usually gets below market value in the end. These agents are usually those who offer discounted commissions and then offer selling agents below the market 2.5% to 3.0% rate. I am seeing listing agents offering 4% to the selling agent to induce a sale. While commissions are negotiable and buyer agents do not care what the listing agent makes, most buyer agents will shun showing properties at commissions below 2.5%. After all that is the way they make a living. With fewer showings the seller will usually have to accept a low-ball offer or wait a long time for a good offer. With double the available inventory and only 74% of the buyers from a year ago, only prime properties and those reasonably priced will sell in a reasonable time. Buyers have more choices. Buyers do have the ability to negotiate. This is especially true in higher value properties. Despite the trend to a buyer's market, we have a strong economy and real estate market that will support the value of existing properties.

Single-family homes stayed at a median price of about $700,000, according to data provided by DataQuick. Condominium median price was $456,500 for the same period.

There are numerous indicators that suggest a strong real estate market in Orange County. I will not go into all the details. Gary Watts, a noted real estate economist, provides a complete account of these factors. He predicts continued appreciation throughout 2006.

To see Gary Watts report visit http://Watts.MikeStankewich.com where you can download or print it.

The home buying season is here. If you are considering buying today is the best time. Inventory is good, so you have more choices to choose from. If you are considering selling now is the time to list your home to take advantage of the time most buyers are active from mid April through the end of summer.

To discuss this further or for more information contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.

Visit our blog at blog.MikeStankewich.com
to see related articles, archives, and to post your comments to this market conditions report.

---------------0---------------

ZipRealty is a national full service brokerage with offices in the major U.S. metro areas. ZipRealty offers sellers full services, enhanced Internet marketing, and below market commissions, while maintaining the highest customer satisfaction rating in the real estate industry.

Buyers who use ZipRealty for their purchase receive a rebate of 20% of ZipRealty's commission, while receiving personalized service and complete client representation throughout the buying process.

Contact Mike Stankewich for your real estate needs. Visit MikeStankewich.com to search for all the properties on the MLS, to get pre-approved with E-LOAN, and for other valuable real estate and community information.

Owning real estate for investment, especially residential and commercial real estate is inherently risky. Accidents happen. People can get hurt on the property. When people are injured or killed on property that does not belong to them, the injured victims and family members of deceased victims frequently sue the property owner for damages.

Insurance is the first line of defense to protect against claims arising from the property, but judgments can exceed the amount of insurance coverage and sometimes insurance coverage is denied. For example, if you have a $2,000,000 general liability policy and an injured tenant obtains a judgment against you for $3,000,000, you have a $1,000,000 problem that could have been avoided if your property were owned by an LLC rather than by you in your name.

When your LLC holds title to real estate and the worst case scenario occurs and the court awards the multi-million dollar judgment in favor of the plaintiff, the defendant will be the LLC instead of you and the creditor should only be able to collect the judgment from the LLC's assets. Your assets should be protected. You may lose your entire investment in the property owned by the LLC, but the rest of your assets should be safe. The cost to form an limited liability company to hold title to your real estate is insignificant compared to the money and time most people invest in their real estate.

You do not want to put your primary residence into an LLC - no Homestead protection available and you lose tax deduction for primary residence. However, there are several benefits to putting your investment property into an LLC. The two biggest reasons are for TAX shelter, and for asset protection. Heres an example: When I have the contract on a property, I quit claim the property into my LLC. Why? When I sell it, the capital gains taxes hit my LLC, not me personally. That means if I profited $50K on a deal for the year, but all my combined expenses for everything under the LLC came to $45K, I only pay taxes on $5K. You can deduct the mortgage interest as a business expense if the rental property is in the LLC.

Neat little trick. That’s why I have a good CPA. Find one who specializes in creative real estate investing. Don’t forget to tell your buyer’s mortgage broker that it is a corporate sale. He/she needs to know this.

If you have real estate that is rental property, placing the ownership of the real estate into an LLC protects you personally from any liability that may arise out of accidents on the property. If the property is in an LLC and there is some kind of judgment for damages sustained by someone on the property, the person could only look to the assets of the LLC to collect its judgment. By having all of your assets in another LLC, you try to maintain those free of any claims of creditors other than the mortgages which have to be on the real estate.

If you own investment real estate in your name, rather than through an entity such as an limited liability company, corporation or limited partnership, all of your assets and life savings are at risk and could be lost to a creditor if a problem occurs with the property. The LLC is the entity of choice today for holding title to real estate, the corporation and the limited partnership are infrequently used to hold title to real estate.



Two Primary Asset Protection Rules for Real Estate Investment

Asset Protection Rule Number 1. Buy as much insurance as you can afford to insure all of your LLC's real estate and business activity. Make sure you have written proof of insurance showing that the LLC is a named insured. If you transfer real property to your LLC, but do not obtain insurance naming the LLC as an insured, the insurance company will probably deny coverage.

Asset Protection Rule Number 2. Form an LLC to hold title to your real estate so that if a lawsuit occurs, the LLC will be the defendant rather than you. This is the key to real estate asset protection. If you own the real estate, all of your assets are at risk. You must transfer title to the real estate to your LLC to reduce the risk you will be named as a defendant in litigation arising from the real estate.

Corollary to Asset Protection Rule Number 2. You have to actually sign a deed conveying the real estate to the limited liability company and record the deed in the county in which the real property is located. It is a waste of time and money to form an LLC to hold title and never deed the property to the company because you continue to own it and will be the defendant in a lawsuit.

Caveat Number 1. Even if you form an LLC and transfer the real property to the LLC, you will remain liable for your conduct. For example, if your LLC owns a rental home, you install a new water heater in the home, the water heater blows up and a tenant is killed or injured, you will be sued because you are the person who caused the harm by improperly installing the water heater.

Caveat Number 2. To avoid being sued after you form your LLC (see Caveat Number 1 above) eliminate or minimize action with respect to the LLC and its property that creates a risk that you will be sued. You have less risk of being sued when the water heater needs replacing if you hire a good plumbing company to do the job instead of doing it yourself.

One of the most common questions real estate investors ask is "if I own multiple investment properties, should I put all the properties in one LLC or should I put each property in a separate LLC?"

The answer to the question is that usually, every investment property should be owned by a separate limited liability company that owns only one property and that is not engaged in any other business activity. The reason is simple: to maximize asset protection.

Consider the fairy tale of the three little pigs. The three little piggies each owned three rental properties. The first pig owned his properties in his name. The second pig owned all three properties in a single LLC. The third pig formed three LLCs and each property was owned by a separate LLC. By sheer coincidence, the water heater in one of the properties owned by each pig blew up and killed a tenant.

The first pig got sued by the family of the deceased and lost all of his life savings when the judgment exceeded the insurance coverage. The second pig lost all of his equity in his three properties, but his other personal assets were protected. The third pig lost only his equity in the property owned by the one LLC and his personal assets and the equity in the other two properties were protected.

Asset Protection Rule Number 2 Hold title to investment real estate through a limited liability company. Most real estate investors known that the reason to form an LLC and to transfer investment real estate to the LLC is to reduce or eliminate the risk that the investor may lose his or her life savings because of a disaster with the property. If the water heater blows up at the rental property and you hold title in your name, you may be sued and a judgment that exceeds your insurance coverage could take your life savings. If your LLC owns the property, it will be the defendant in the lawsuit and you should not be liable personally unless you were the reason the water heater blew up.

Asset Protection Rule Number 3: Diversity your assets. The old adage "do not put all of your eggs in one basket" applies to real estate investment just like it does to any type of investment. If you satisfy Asset Protection Rule Number 2 and create a single LLC to hold title to your three investment properties and a disaster occurs on one of the properties, the creditor could reach all of the equity in all the assets owned by that limited liability company, i.e., all three properties.

Do Not Be Pennywise & Pound Foolish. If you buy three properties today for no money down, you will not lose much if you lose all three properties in the near future (but you might in the future when the properties appreciate in value). However, if you have $50,000 of equity in each property, you risk losing $100,000 that could easily be protected by having a separate LLC own each property. Consider the one time cost to form an LLC as an alternate form of insurance that you should not go without. The cost to form an LLC is peanuts compared to the amount you may invest in property coupled with the property's appreciation in value over time.

Housing prices have reached yet another record high, with the median price rising to $635,000 in May up $7000 from April, according to data released by DataQuick on June 21, 2006. This is an increase of 7.6% from a year ago. However sales fell to the lowest level since April of 1995, down 32% from last year.

Despite a cooling off and a reduction in the median home price in some US markets, there is no sign that the median price will fall in the Orange County's real estate market.

Be wary of those reporting declines of prices in some Orange County cities. The accuracy of statistics depends on the volume of data. For the county as a whole there is sufficicent data to support a trend. For individual cities the lack of sufficient data may result in abnomalities. The entry level market is stronger than the luxury home market, therefore if more entry homes sell in a particular city, the median price could be lower from a month ago. This is also true for Zip Codes within a city.

The issue is not demand but affordability. Demand is strong. In Anaheim the developer of the Platinum Triangle complex was intending to lease the 390 units of their first phase, however demand from buyers changed their mind. These will be sold as condos, starting at $300,000. There are 4000 people on the waiting list for the 390 units. I work with first time buyers on a regular basis and find that although they want to buy, often they can not qualify for the mortgage they would need to acquire a property that meets their needs, although lenders are working on inovative programs. For example CalHFA is offering a 40 year fixed rate loan at below market interest rates for first time buyers. Several cities in Orange County offer incentives for first time buyers with moderate income levels. Huntington Beach is desirable for many reasons including the beaches, which means the prices will be higher. Thus sometimes I need to steer first time buyers to Buena Park, Cypress, or Stanton, so that they can afford what they are looking for.

The California affordability index is at an all time low, which means less than one person in six can afford the median priced home. This means that prices will stabilize near current levels, which is what we are beginning to experience. Appreciation increases will stay in the single digits, probably rising at the rate incomes rise. So the issue is not demand, but affordability. We have reached a plateau and this has created a stabilized real estate market in Orange County.

For the particular cities in my three market districts, the following are the new median home prices, based on May 2006 data. To compare these to April 2006 date see my previous report on Blog.MikeStankewich.com

HUNTINGTON BEACH DISTRICT
Huntington Beach
92646 - $635,000
92647 - $668,000
92648 - $938,250
92649 - $695,000
Sunset Beach - Insufficient Data
Surfside - Insufficient Data
Seal Beach - $885,000
Rossmoor - Insufficient Data
Fountain Valley - $700,000

NEWPORT BEACH DISTRICT
Costa Mesa
92626 - $733,250
92627 - $687,500
Newport Beach
92660 - $1,349,000
92661 - $2,430,000
92662 - $2,312,500
92663 - $1,080,000
Newport Coast - $2186,000
Corona del Mar - $1,800,000

GARDEN GROVE DISTRICT
Garden Grove
92840 - $575,000
92841 - $594,000
92843 - $530,000
92844 - $502,500
92845 - $621,500
Westminster - $600,000
Midway City - $542,250

The Orange County market has normalized after three years of robust activity and double-digit appreciation. Housing sales, in terms of overall numbers, is down 32% from a year ago. This reflects that there are fewer buyers in the market, although I have found the ones in the market to be serious buyers. That means there are 68% of the buyers that were in the market last year. Many first time buyers are being priced out of the market. Housing inventory is up due to the lower sales volume, thus homes remain on the market longer before selling, usually over 60 days. Although a seller may have to wait longer to sell, the good news is that he can still get market value.

However a seller must be realistic in what the market value is. Many agents, in order to get a listing, will suggest a high price, and the property will sit in the market until the price is reduced. When price reductions start, the seller usually gets below market value in the end. These agents are usually those who offer discounted commissions and then offer selling agents below the market 2.5% to 3.0% rate. I am seeing listing agents offering 4% to the selling agent to induce a sale. While commissions are negotiable and buyer agents do not care what the listing agent makes, most buyer agents will shun showing properties at commissions below 2.5%. After all that is the way they make a living. With fewer showings the seller will usually have to accept a low-ball offer or wait a long time for a good offer. With double the available inventory and only 68% of the buyers from a year ago, only prime properties and those reasonably priced will sell in a reasonable time. Buyers have more choices. Buyers do have the ability to negotiate. This is especially true in higher value properties. Despite the trend to a buyer's market, we have a strong economy and real estate market that will support the value of existing properties.

Single-family homes stayed at a median price of $705,000, according to data provided by DataQuick. Condominium median price rosr to $468,000 for the same period.

There are numerous indicators that suggest a strong real estate market in Orange County. I will not go into all the details. Gary Watts, a noted real estate economist, provides a complete account of these factors. He predicts continued appreciation throughout 2006.

To see Gary Watts report visit http://Watts.MikeStankewich.com where you can download or print it.

The home buying season is here. If you are considering buying today is the best time. Inventory is good, so you have more choices to choose from. If you are considering selling now is the time to list your home to take advantage of the time most buyers are active from mid April through summer.

There is an interesting article titled "Home prices up, by any math" by Jonathan Lansher in the Orange County Register dated May 31, 2006. Go to MikeStankewich.BlogSpot.com and click on the link to see the article on OCRegister.com, as well as other related articles.

To discuss this further or for more information contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.

Visit our blog at blog.MikeStankewich.com
to see related articles, archives, and to post your comments to this market conditions report.

---------------0---------------

ZipRealty is a national full service brokerage with offices in the major U.S. metro areas. ZipRealty offers sellers full services, enhanced Internet marketing, and below market commissions, while maintaining the highest customer satisfaction rating in the real estate industry.

Buyers who use ZipRealty for their purchase receive a rebate of 20% of ZipRealty's commission, while receiving personalized service and complete client representation throughout the buying process.

Contact Mike Stankewich for your real estate needs. Visit MikeStankewich.com to search for all the properties on the MLS, to get pre-approved with E-LOAN, and for other valuable real estate and community information.

Thursday, June 15, 2006 - By Staff Writer, National Realty News

STUART, FL – Real Estate professionals everywhere have been wondering if interest rates will continue to rise and whether the Fed will hike short-term rates for the 17th consecutive time on June 29.

Looking at this week’s key economic briefings and results, all signs points to yes. The Fed will likely increase short-term rates by a quarter of a point. Anticipating this action, the bond market is apt to similarly push long-term mortgage rates higher.

The Core Consumer Price Index (Core CPI), the Core Producer Price Index (Core PPI), and Retail Sales numbers all came in higher than the Briefing Forecast and Market Expectation.

Core CPI is the government's main inflation barometer. Core CPI measures the prices consumers pay for goods other than food and energy and weighs that information against average hourly wages over the same period. The latest report shows that consumers' paychecks aren't keeping up with inflation.

The Core PPI measures the prices of goods at the wholesale level within three categories: crude, intermediate, and finished. Core PPI results also indicate greater inflation.

Retail Sales measures the total receipts of all retail stores. This week’s briefing indicates changes in consumer spending that are associated with a rise in inflation.
What does this mean to Real Estate professionals? It’s probably wise to prepare yourself and your clients for an increasing interest rate environment. The Fed has said it will take a reactionary approach and base future short-term interest rate increases on economic reports like the CPI and PPI. With results coming out above the Fed’s target and this being the last significant inflation criterion before the rate announcement on June 29, industry experts believe a short-term rate hike is on the way and that the bond market will react in advance by pushing long-term mortgage rates higher.

It’s all about inflation. The Fed has a difficult balancing act, and the bond market responds in an attempt to close the gap. It’s unlikely, but possible, that the Fed will raise rates drastically or worse take no action at all. In that case, there would be a sudden dramatic swing in long-term rates.

We won’t know for sure what will happen for another two weeks, but word on the street is that this week’s economic indicators should seal the deal for both short-term and long-term mortgage rate increases.

The Fed last increased short-term interest rates on May 10 of this year. If the Fed again raises short-term rates on June 29, it will be the 17th consecutive rate increase since June 30, 2004. Prior to that, the industry enjoyed a 4-year hiatus that fueled the refinance boom.

The boom is ending with a whimper

Prices are softening as inventories grow in towns like Miami, Las Vegas and Phoenix. But year over year, appreciation is still strong. See how your town fared.

By Marilyn Lewis

A new report released Thursday shows the once-torrid rise in housing prices continues to slow. Prices in the first quarter were up just 2.04%, the smallest increase in two years, according to the federal Office of Federal Housing Enterprise Oversight.

The OFHEO noted that some red-hot markets were off sharply -- but that didn't mean prices were falling. Over the last four quarters, prices nationwide have risen 12.5%. In places such as Las Vegas or Phoenix, prices have risen more than 30%.

But rising interest rates and building inventories of homes for sale aren't completely reflected in the report's numbers, which reflect data through March 31. In fact, the softest markets in the country right now are in Miami, Washington, D.C., Los Angeles, Las Vegas and Phoenix, said David Lereah, chief economist for the National Association of Realtors.

San Diego, too, is feeling the contraction -- but not to the extent of the other cities, said Chris Mayer, director of the Paul Milstein Center for Real Estate at the Columbia Business School in New York.

“Phoenix, Las Vegas and Florida are the markets with the most pullback,” Mayer said. “In those markets we have built up prices not sustainable by fundamentals. I think, in most of the rest of the country, prices are not far from where they should be.” Mayer said that inventory is building in Southern California, too, but he was less concerned about the prices there being unsustainable -- except perhaps for San Diego.

No bursting bubble is predicted, just a continued slowdown as rates keep rising. According to Bankrate.com, the national average rate for a 30-year, conventional, fixed-rate mortgage was 6.72 at the end of May, up from 5.65% a year earlier.

Public apprehension about the economy was evident, too, in the recent release of the Consumer Confidence Index. In April it hit a four-year high, yet retreated in May to levels last seen since the aftermath of Hurricane Katrina, said Lynn Franco, director of The Conference Board Consumer Research Center. Franco attributed the pullback to fears about the short-term economy, the labor market and consumers’ earning potential.

Those fears are reflected somewhat in a report released Thursday by the Office of Federal Housing Enterprise Oversight. It showed that growth in prices slowed to 2.04% in the first quarter of 2006, the slowest in two years. But it also reflects double-digit gains over the last four quarters: Prices rose an average of 12.54% over the first quarter of 2005.

The backup tells the story

Softening prices do not paint the picture of today’s real estate market as clearly as the backed-up inventory of homes for sale does. It is there that building pressure to drop prices can be seen. “Prices are a lagging indicator of where the market is,” said Mayer. “What you really see first is the change in sales.’

Prices tend to lag behind the pace of sales in slowdowns like this one, Lereah said. “Sellers get very stubborn. They are willing to keep their house on the market longer,” despite the lack of offers, unwilling to drop the price. That’s why an inventory backlog reveals market troubles first.

There was an interesting article by Jonathan Lansher in the Orange County Register today, May 31, 2006. Click on the link to see the article on OCRegister.com
Link

New Product Gives First-Time Homebuyers Three Mortgage Options at CalHFA

SACRAMENTO, California – The California Housing Finance Agency, a state agency that offers Californians special loan programs for first-time homebuyers, announced today the introduction of a 40-Year Fixed Mortgage product. This offering is part of a continuing effort to help more Californians buy their first home with a mortgage they can afford.

The new loan joins CalHFA’s successful 30-Year Fixed Mortgage and its 35-year interest only PLUSSM mortgage. All three products are offered at below market, fixed interest rates.

“The low fixed interest rate combined with a longer term on our new 40-Year Fixed Mortgage give comfort to first-time homebuyers,” said Theresa Parker, Executive Director of CalHFA. “Life is full of surprises, but this is one thing a homebuyer can count on with our 40-year product: a mortgage payment that stays exactly the same.”

Last year, CalHFA expanded its mortgage products by introducing interest only PLUSSM. Today, more than a third of CalHFA’s loans are fixed rate interest-only loans, which give borrowers five years of interest-only payments before principal payments begin, and all 35 years stay at the same fixed rate.

“The response to our expanded product offering has been tremendous,” Parker said. “While the 40-year mortgage may not be right for everyone, it does offer first-time homebuyers another way to help achieve their goal of homeownership.”

The fixed rate on the 40-year mortgage will initially be 5.75 percent, about one point below average market rates for 40-year mortgages.

CalHFA also offers a discounted rate on mortgage insurance, and now, most CalHFA-insured loans have the added benefit of HomeOpeners®, a Mortgage Protection Program. With HomeOpeners, if a borrower were to lose their job, they’ll have help paying their principal, interest, tax and insurance payments for up to six months – and for as much as $2,500 per month. Best of all, HomeOpeners comes at no additional charge for the borrower.

“Our loans with below market interest rates help people get into their first homes,” Parker said. “HomeOpeners helps keep them there in the event of job loss. It’s peace of mind for first-time homebuyers, relieving them of one worry.”

“Compared to the 30-Year Fixed Mortgage, the 40-Year Fixed Mortgage offers monthly loan payments that would be less than a 30-year mortgage on the same house,” Parker said. “Each first-time homebuyer comes to us with unique financial situations. The 40-Year Fixed Mortgage gives them one more option to consider as they try to determine the best way to finance their first home.”
“Californians face an incredibly difficult market to purchase a first home,” she said. "As the market changes and consumers look for alternative mortgages, we will continue to develop innovative loans and other products that meet those consumer needs.”
Loans from CalHFA are available to low and moderate income first-time homebuyers who meet CalHFA income limits and who are purchasing homes that fall at or below CalHFA sales price limits. In Los Angeles County, for example, homes with sales prices as high as $701,503 may be purchased using CalHFA loans if the household income of the first-time homebuyer falls below $91,700. The sales price and income limits vary by county.

CalHFA also offers down payment and closing cost assistance, which can be layered with a buyer’s first mortgage loan. These subordinate loans do not need to be repaid until the home is sold, refinanced, or paid in full. Borrowers can layer several CalHFA products to finance up to 106 percent of the home sales price.

Established in 1975, CalHFA has invested more than $14 billion in non-taxpayer funds to help 135,000 California families live in a home of their own with a mortgage they can afford. For more information on CalHFA’s first-time homebuyer programs and Mortgage Insurance products, please visit www.calhfa.ca.gov or call 877.9.CalHFA (877.922.5432).

by Peter G. Miller


The news that new home starts dropped 7.4 percent in April raises two interesting puzzles: Why the decline and what does it mean?

"The declines in starts and permits for April reflect a natural pay-back for the weather-related surge in production earlier in the year, as well as builder adjustments to eroding demand and rising inventories," said David Seiders, chief economist with the National Association of Home Builders. "We continue to believe that the evolving slowdown represents an orderly adjustment toward more sustainable levels of housing production, following the record surge in 2005 that was fueled by extraordinary demand for single-family homes and condo units by investors/speculators."

Separately, Seiders also said the following a few days earlier:

"NAHB surveys of builders are documenting a fall off in investor purchases, rising sales cancellations by investors/speculators, and resales of units owned by investors/speculators as the prospects for price appreciation deteriorate. The cancellations and resales are adding supply to markets already experiencing an inventory run-up as demand by prospective owner-occupants cools in the face of deteriorating affordability conditions."

To me, there's a huge difference between a decline in sales because the weather is not as good as it had been earlier in the year and a decline in sales because weak and vulnerable investors are fleeing the market.

In an odd way -- eventually, at least -- those defecting investors are likely to be good for the marketplace.

One of the reasons for 2005's soaring home prices, especially with condos and new-homes, has been the large number of investors who entered the market. If you take natural demand and add hordes of excess investors you simply have more demand. That pushes up prices and those rising prices attract more investors who want to get in on the action. Unfortunately, swiftly rising prices can also freeze out those who "merely" wish to be homeowners.

As investments go, new homes and condos look awfully good because they require little maintenance and until recently the market for them has been largely excellent. You can buy 'em by the bunch and not spend a lot of time with repairs, mowing and such. For investors who see condos and new homes as commodities, something on which to bet instead of pork bellies or Enron futures, such properties are dandy investment vehicles.

They are also risky.

If you buy investment real estate the purpose of your purchase should be to gain value (a higher re-sale price or more equity), rent (positive cashflow) or both. That means such properties must either be rented or re-sold. Reduce the market for either tenants or buyers and suddenly investment properties can be vacant, unsold and very expensive to keep.

The recent decision by builders in many markets to sell homes at discount means that investors can no longer flip properties because buyers can get better deals from builders. Worse, such properties can be extremely difficult to rent at anything approaching a positive cashflow because many markets are brimming with look-alike new properties and condos. In such an environment, buyers and renters rule -- and fad investors with little cash will sell, sell at a loss, rent at a loss or will be foreclosed.

One local community I follow has about 35,000 people -- and now has more than 700 homes for sale. That's a huge volume of inventory at one time, and you can see a major reason for such numbers by looking at the property descriptions: such as new, never lived in, rent-to-own, price reduced, $5,000 to selling agent, seller will pay $10,000 in closing costs, $50,000 in incentives, former model, several available, etc.

The good news is that the marketplace is forever in the process of self-correction. When it tips too far in one direction it begins to tip the other way, always seeking a cosmic sense of balance. It will take time to clear out the inventory now held by weak investors -- and by investors who will weaken under the burden of ongoing monthly costs. This is simply a healthy culling of the investor herd. In some cases, there will be local price declines and price declines by property type, but hopefully the worst result in most areas will be a general slowing of appreciation to something just above the rate of inflation. This would be an ideal situation for both sellers and buyers, a market with reasonably rising prices -- and something largely unseen during the past few years.

Published: May 23, 2006

Housing prices have reached another record high, with the median price rising to $628,000 in April up $5000 from March, according to data released by DataQuick on May 17, 2006. This is an increase of 9% from a year ago. However sales fell to the lowest level since April of 1995, down 28% from last year.

Despite a cooling off and a reduction in the median home price in some US markets, there is no sign that the median price will fall in the Orange County's real estate market.

The issue is not demand but affordability. Demand is strong. In Anaheim the developer of the Platinum Triangle complex was intending to lease the 390 units of their first phase, however demand from buyers changed their mind. These will be sold as condos, starting at $300,000. There are 4000 people on the waiting list for the 390 units. I work with first time buyers on a regular basis and find that although they want to buy, often they can not qualify for the mortgage they would need to acquire a property that meets their needs. Huntington Beach is desirable for many reasons including the beaches, which means the prices will be higher. Thus sometimes I need to steer first time buyers to Buena Park, Cypress, or Stanton, so that they can afford what they are looking for.

The California affordability index is at an all time low, which means less than one person in six can afford the median priced home. This means that prices will stabilize near current levels. Appreciation increases will be in the single digits, probably rising at the rate incomes rise. So the issue is not demand, but affordability. We have reached a plateau and this has created a stabilized real estate market in Orange County.

For the particular cities in my three market districts, the following are the new median home prices, based on April 2006 data.

HUNTINGTON BEACH DISTRICT
Huntington Beach
Ø 92646 - $572,000
Ø 92647 - $647,000
Ø 92648 - $970,000
Ø 92649 - $672,500
Sunset Beach – Insufficient Data
Surfside - Insufficient Data
Seal Beach - $870,000
Rossmoor – Insufficient Data
Fountain Valley - $747,500

NEWPORT BEACH DISTRICT
Costa Mesa
Ø 92626 - $712,500
Ø 92627 - $725,000
Newport Beach
Ø 92660 - $1,445,000
Ø 92661 - $3,500,000
Ø 92662 - $2,475,000
Ø 92663 - $1,200,000
Newport Coast - $2,225,000
Corona del Mar - $1,545,000

GARDEN GROVE DISTRICT
Garden Grove
Ø 92840 - $585,000
Ø 92841 - $610,000
Ø 92843 - $505,000
Ø 92844 - $466,000
Ø 92845 - $645,000
Westminster - $630,000
Midway City - $482,500

The Orange County market has normalized after three years of robust activity and double-digit appreciation. Housing sales, in terms of overall numbers, is down 28% from a year ago. This reflects that there are fewer buyers in the market, although I have found the ones in the market to be serious buyers. That means there are 72% of the buyers that were in the market last year. Many first time buyers are being priced out of the market. Housing inventory is up due to the lower sales volume, thus homes remain on the market longer before selling, usually over 60 days. Although a seller may have to wait longer to sell, the good news is that he can still get market value.

However a seller must be realistic in what the market value is. Many agents, in order to get a listing, will suggest a high price, and the property will sit in the market until the price is reduced. When price reductions start, the seller usually gets below market value in the end. These agents are usually those who offer discounted commissions and then offer selling agents below the market 2.5% to 3.0% rate. While commissions are negotiable and buyer agents do not care what the listing agent makes, most buyer agents will shun showing properties at commissions below 2.5%. After all that is the way they make a living. With fewer showings the seller will usually have to accept a low-ball offer or wait a long time for a good offer. With double the available inventory and only 72% of the buyers from a year ago, only prime properties and those reasonably priced will sell in a reasonable time. Buyers have more choices. Buyers do have the ability to negotiate. This is especially true in higher value properties. Despite the trend to a buyer's market, we have a strong economy and real estate market that will support the value of existing properties.

Single-family homes rose to a median price of $705,000, according to data provided by DataQuick. Condominium median price was $460,000 for the same period.

There are numerous indicators that suggest a strong real estate market in Orange County. I will not go into all the details. Gary Watts, a noted real estate economist, provides a complete account of these factors. He predicts continued appreciation throughout 2006.

To see Gary Watts report visit http://Watts.MikeStankewich.com where you can download or print it.

The home buying season has begun. If you are considering buying today is the best time. Inventory is good, so you have more choices to choose from. If you are considering selling now is the time to list your home to take advantage of the time most buyers are active from mid April until summer.

To discuss this further contact Mike Stankewich at (714) 697-0038 or toll free at 1-800-225-5947 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.

Visit our blog at blog.MikeStankewich.com
to see related articles, archives, and to post your comments to this market conditions report.

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WASHINGTON, D.C. – The housing market is settling but should experience its third best year in 2006, with job creation and a growing economy offsetting some of the effects of rising interest rates, according to the National Association of Realtors®.

David Lereah, NAR’s chief economist, said the market is adjusting to higher mortgage interest rates. “Coming off a prolonged period of record sales, housing is taking something of a breather this year,” he said. “Even so, interest rates remain historically low, we’ve added about 2 million jobs over the last 12 months and the economy continues to grow – that will sustain healthy levels of home sales in 2006, but they’ll stay below the peaks experienced during the last two years.”

Lereah forecasts the 30-year fixed-rate mortgage to rise to 7.0 percent this summer and hold at that level during the second half of the year. The unemployment rate is expected to average 4.7 percent, compared with 5.1 percent in 2005, while growth in the U.S. gross domestic product is seen at 3.5 percent in 2006, the same as last year.

Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year’s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005.

NAR President Thomas M. Stevens from Vienna, Va., said home prices are returning to normal patterns. “Since the supply of homes on the market has improved to roughly balanced levels, overall home price appreciation has cooled to single-digit rates,” said Stevens, senior vice president of NRT Inc. “Most of the country is now entering a period of equilibrium in the housing market, which is good for the long-term health of the sector. Owners in most areas can now expect steadier and more normal rates of return on their housing investment.”

The national median existing-home price for all housing types is expected to rise 5.7 percent this year to $232,200, while the median new-home price is forecast to increase 2.2 percent to $242,500.

Inflation as measured by the Consumer Price Index is projected at 3.4 percent in 2006. Inflation-adjusted disposable personal income is likely to grow 3.4 percent this year.

A clear downtrend in FSBOs has been seen since that market share experienced a cyclical peak of 18 percent in 1997. Only 13 percent of sellers conducted transactions without the assistance of a real estate professional in 2005, and 39 percent of those FSBO transactions were “closely held” between parties who knew each other in advance, up from 32 percent in 2004. The FSBO market share was at 14 percent in both 2003 and 2004. NAR began tracking the FSBO market in 1981; the record was 20 percent in 1987.

“In reality, the term ‘FSBO’ is a misnomer when used to broadly describe homes sold directly by owners. Since two out of five of these transactions are between related parties, and those properties are not placed on the open market, we believe that ‘unrepresented sellers’ would be a much more accurate term to describe this segment,” Stevens said.

The median home price for sellers who use an agent is 16.0 percent higher than a home sold directly by an owner; $230,000 vs. $198,200; there were no significant differences between the types of homes sold. “While many unrepresented sellers are motivated to save on paying a commission, we think the price difference speaks for itself,” Stevens said. “Owners without professional assistance also have problems in understanding and completing paperwork, prepping the home for sale, getting the right price and selling within the time planned.”

Survey data don’t explain the price difference, but Stevens offered some context. “Agents know best how to prepare a home and maximize value, agents provide broader exposure to the market and are more likely to generate multiple bids, and the portion of sales that are between private parties are likely to be at a lower price than those on the open market.”

“The housing market today contrasts sharply with predictions a decade ago that the Internet would ‘disintermediate’ real estate agents, including speculation that NAR membership would fall in half. In reality, it’s grown dramatically – selling real estate is not like selling a book or buying an airline ticket,” he said.

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30-Year Mortgage Rates Continue to Climb

From the Associated Press April 28, 2006

Rates on 30-year fixed-rate mortgages averaged 6.58% this week, up from 6.53% last week and the highest since the week of June 20, 2002, mortgage company Freddie Mac said.

Rates on 15-year fixed-rate mortgages, a popular choice for refinancing, climbed to 6.21%, up from 6.17% last week.

One-year adjustable-rate mortgages rose to 5.68%, up from 5.63%.

Rates on five-year hybrid adjustable-rate mortgages averaged 6.21%, up from 6.16%.

The rates do not include add-on fees known as points. Thirty-year and 15-year mortgages carried an average fee of 0.5 point. Five-year mortgages had a fee of 0.6 point, and one-year ARMs carried a fee of 0.7 point.

The Housing Bubble is Bogus!

I want to share some exciting news with you regarding the housing market here in Southern California!

I recently attended Gary Watts' "2006 Real Estate Outlook Seminar." Gary Watts is a real estate economist, who has predicted the Southern California housing market for over 25 years, and guess what, every year his predictions have been never been wrong!!

I wanted to share with you some of the highlights, the biggest one being "The Housing Bubble is Bogus!" Housing prices in Orange County are predicted to go up 15% this year! The last nationwide bust of home prices occurred in the late 1930's! In the past 5 years, California residential equity has gone up by $1 Trillion! In that time, Orange County residential property prices have gone up 118%! Last year we sold 33,107 million dollar homes. This year it is expected to exceed 40,000. Sellers received a net of $220,240 from the sale of their home - an all time high! What if interest rates go up? (Especially for those of you looking for foreclosures) 35% own their home outright - so no interest rate problem there, 50% have fixed rate loans - many are refinancing to lower rates with fewer years, 15% have adjustable rate/interest - 8% of those being high wealth income earners. Therefore, only 7% of all mortgages are rate sensitive!There were only 93 foreclosures last year in Southern California! That is not very many.

Demand vs. SupplyDemand for existing homes has grown 114% - while supply has fallen 4% New home demand is up 143% - with only a 23% increase in supply In the next 10-15 years, 3.5 million MORE people will reside in Southern California. The only risk to housing is a BIG decline in employment! Federal deficits are only 3.6% of the GDP! In the past 12 months, the U.S. has employed 2.1 million new people - that doesn't include another 1 million for self-employed and incorporated individuals, who do not show up on the employment rolls. Orange County would rank as the 34th most powerful country in the world (out of 184) with a gross county income of $160.7 Billion! As you can see the bottom line is that the "OC" is full of rich people, and housing prices are not declining, but rather increasing!

If you would like a copy of Gary Watts' seminar report, please contact me. I can either e-mail you a copy as an attachment or mail one to you. If you prefer, go to http://Forecast.MikeStankewich.com to see the report. To discuss this further contact Mike Stankewich at (714) 697-0038 or toll free at 800-225-5967 ext. 8660 or e-mail me at Mike.Stankewich@ZipRealty.com.

April 23, 2006 "Home Prices Rise to New Record in Orange County, Sales are Down"

Despite a cooling off and a reduction in the median home price nationally. Orange County's real estate market remains strong with an increase in the median price to a record $623,000. This is an increase of 10.1% from a year earlier and 1.0% from last month.

For the particular cities in my three market districts, the following are the new median home prices, based on March 2006 data.

HUNTINGTON BEACH DISTRICT

Huntington Beach - $710,000
Sunset Beach - $781,800
Surfside - Insufficient Data
Seal Beach - $871,500
Rossmoor - 871,900
Fountain Valley - $699,500

NEWPORT BEACH DISTRICT

Costa Mesa - $710,000
Newport Beach - $1,597,250
Newport Coast - $1,622,600
Corona del Mar - $1,249,300

GARDEN GROVE DISTRICT

Garden Grove - $560,000
Westminster - $600,000
Midway City - $572,500

Nationally, the median price dropped to $230,400, a decrease of 1.6% below the January 2006 level. There has been a continued drop in prices nationally since October 2005, when it was an all time high of $243,900.

However this is not true in the country's hottest sales markets in California, Nevada, and Arizona.

The Orange County market has normalized after three years of robust activity and double-digit appreciation. Housing sales, in terms of overall numbers, is down 22% from a year ago. This reflects that there are fewer buyers in the market, although I have found the ones in the market to be serious buyers. That means there are 78% of the buyers that were in the market last year. Many first time buyers are being priced out of the market. Housing inventory is up due to the lower sales volume, thus homes remain on the market longer before selling, on the average of 53 days. Although a seller may have to wait longer to sell, the good news is that he can still get market value.

However a seller must be realistic in what the market value is. Many agents, in order to get a listing, will suggest a high price, and the property will sit in the market until the price is reduced. When price reductions start, the seller usually gets below market value in the end. These agents are usually those who offer discounted commissions and then offer selling agents below the market 2.5% to 3.0% rate. While commissions are negotiable and we do not care what the listing agent makes, most agents will shun showing properties at commissions below 2.5%. After all that is the way they make a living. With fewer showings the seller will usually have to accept a low-ball offer or wait a long time for a good offer. With double the available inventory and only 78% of the buyers from a year ago, only prime properties and those reasonably priced will sell in a reasonable time.

Buyers have more choices. In our metropolitan area 30.2% of the listings have had price reductions, according to data from our local MLS. Currently homes are selling on the average for 96% of the asking price, again per MLS data. Buyers do have the ability to negotiate. This is especially true in higher value properties. Despite the trend to a buyer's market, we have a strong real estate market which will support the value of existing properties.

There was a market median price dip in Orange County in January, however this is a traditional seasonal occurrence, which was enhanced by more sales of lower price units due to increased condo conversion activity. However median prices came back up in February and are now at a record in April.

Single-family homes rose to a median price of $695,500, according to data provided by DataQuick. Condominium prices rose to median price of $469,750 in the same period.

There are numerous indicators that suggest a strong real estate market in Orange County. I will not go into all the details. Gary Watts, a noted real estate economist, provides a complete account of these factors. He predicts continued appreciation throughout 2006.
To see Gary Watts report visit http://watts.mikestankewich.com/ where you can download or print it.

The home buying season has begun. If you are considering buying today is the best time. Inventory is good, so you have more choices to choose from. You will also buy when prices are best, before the appreciation rises in the coming months. If you are considering selling now is the time to list your home to take advantage of the time most buyers are active from mid February until summer. Prices are expected to continue to rise about 1% per month until fall, when they should level off.