home buying – Page 5 – OC Neighborhoods

As Orange County Housing Sales Slow, Will Sellers Pay Buyer Closing Costs Again?

During recent months, there’s been various reports and data that indicate a slowing trend in the Orange County housing market. The reason is a larger supply of homes have been listed by agents and even for sale by owners. Sellers dropping their asking price is becoming more typical. The result is home prices are still increasing but at a slower rate than during the years of 2012 through 2016.

Another trend that tends to occur when this situation happens is that home sellers in Orange County are more willing to pay some or all of the buyer closing costs.

Will ‘Sellers Concessions’ Return in the Near Future?
In a real estate market where there are multiple offers or when properties are under contract quickly seller concessions or contributions are uncommon.

The housing market in Orange County has been a slow fractional decline in the last couple of years.

In a buyer’s market, eager homeowners are more amenable to cover the buyer’s closing costs for the simple fact that they want the home off their hands. Nowadays, they will consider all offers even the one with the weak financing and the contingencies included.

As the data suggests, housing demand has dropped off a bit. And while inventory is still a buzz word among agents in certain parts of Orange County, homes are remaining active (not under contract) longer today than the last couple of years (on average). Price reductions are commonplace in the Orange County housing market.

Lowering the list price is among the numerous strategies sellers utilize to improve the odds of selling their homes. Offering to put money in to help with the buyer’s closing costs is an additional solution.

The majority of mortgage programs offered to borrowers today allow sellers to contribute a specific amount of money to be applied to the buyer’s closing costs. In some cases, homeowners apply this method to bring in more offers, simply to sell their home faster.

Changes in the Orange County Housing Market
These type of seller contributions have been unheard of during the past few years, due to the fact that the market mostly favored sellers than buyers. However, there is apparently a gradual shift occurring in the Orange County housing market. It’s logical to think that a growing number of sellers will begin to contribute to the buyer’s closing costs to entice buyers, especially if the homes are not getting any offers.

A November 2018 press release from the Southern California Multiple Listing Service stated:
“A lot of sellers are sensing the change. Prolonged times to get under contract make sellers stressed about a quick sale,’ he explained. Additionally, it said, brokers are reporting some sellers’ pricing is still accommodative ‘despite a price decrease as buyers capitalize on the seller’s motivation to get their home sold.’”

Home-price appreciation is another sign that the Orange County housing market is at long last beginning to slow down. There was a period when the median home value in the area was going up by double digits annually each year. Nonetheless price growth has decreased somewhat.

As a matter of fact, a recent housing report forecasted that home values in the Orange County would rise somewhere between 1% and 2% during 2019. That’s a huge difference from the ten-percent plus price appreciation that homeowners and prospective buyers experienced through 2016 and 2017. The slowdown in price is probably due to several unique factors, such as the ability to afford for some potential home buyers.

The main takeaway is that the Orange County housing market in late 2018 is changing from two- to- three years ago. Sellers understand this aspect and are adjusting heir method of selling and marketing their home.

Prediction: Orange County Buyers May Have More Home Inventory in 2019

Some of the major issues on the minds of Orange County home buyers are what the real estate market in Orange County be in 2019, will the lack of homes improve, and will the competition still be fierce as the past few years?

Orange County Housing Market Could Have More Inventory in 2019
Recent forecasts suggest that home prices will keep climbing in Orange County throughout 2019, though at a slower pace than in previous years.

The prospect of rising prices is basically a continuation of the status quo. Home values in the area have been climbing steadily so for years. So it’s no surprise to see predictions calling for a continuation of that trend in 2019.

Strong housing demand has driven the entire California housing market in 2018 and into the future. A housing crash that many millenials and working poor are longing for is unlikely to happen. In fact, with the added economic activity created by housing construction and larger households, increasing price pressure remains.

But the biggest change happening within the Orange County housing market right now has to do with inventory. For the past few years, the city has experienced a severe shortage of homes for sale. That’s partly why prices have risen so fast. But a series of new reports point to significant inventory growth within the Orange County-area real estate market.

The California Association of Realtors (CAR) predicts a moderate decrease in existing single-family home sales of 3.3 percent next year to 396,800 units sold. CAR sees a slower market with homeowners hanging onto their homes. CAR believes that will subdue sales throughout 2019 along with the pressure of rising interest rates in the coming years.

Orange County’s homeownership rate peaked in 2007 at a rate of 62.7% and has decreased ever since. The most recent homeownership data reports a 56.7% homeownership rate in Orange County. (source: First Tuesday).

Real estate data provider CoreLogic reported that August home sales were down from year-ago levels in all six Southern California counties. Orange County, the region’s most expensive housing market, had the largest decrease. Home sales transactions in were down by 10.9 percent, while San Diego County had an 8.9 percent fall and L.A. County declined by 8.5 percent.

Inventory Showing Sign of Improvement?
The inventory of listed homes increased by 91 since October 15th. Listings are taking on average 45 more days to sell. Trulia reports that inventory in Orange County increased by 20.7 percent fromQ3 of 2017.

It’s been reported that many home buyers are on the sidelines simply waiting due to yearly price increases. With a decreasing pool of buyers, sellers are reducing their asking prices. Approximately 40 percent of California home sellers lowered their asking prices in August. The average price cut for sellers was 4.3 percent.

CAR reported that twenty-nine percent of home sellers this past spring moved out of California, an increase from 19 percent in 2013. Over a third of Southern California home buyers moved to more affordable counties which translates to relocating inland, to the Inland Empire, or they’re going to other Western states such as Arizona, Nevada, and Colorado.

In 2019, people looking to buy a home in Orange County should have a slightly higher inventory to choose from. That’s a positive sign towards the goal of a balanced market. However, overall the housing market will continue to have above average demand for the foreseeable future.

Home Prices Still Rising But Slower
Recent forecasts for home prices in Orange County for 2019 indicate that home prices will continue climbing over the coming months. The same goes for California as a whole.

Related: Orange County vs. Los Angeles home prices
Disclaimer: This article contains data and forecasts provided by third parties outside of our company. Housing and economic forecasts should be regarded as predictions, not a sure thing. Information provided is deemed reliable but not guaranteed.

How to Get a Home in Orange County for Less than Market Value

Buying a home under market value is not the same as purchasing a home at a discounted price. That just means that the seller choose for whatever reason to sell the home for less than the asking price. Just because the homeowner sells their home for less than the asking price does not mean that they are selling a home below market value.

Market value is the price that’s put on a home using the most recent sales data of comparable homes in the area by an appraiser or a real estate agent. This involves reviewing homes that have similar size in living square footage, and a similar amount of bedrooms and bathrooms. However, you need to filter out properties in bad condition or that were distressed sales or were sold through foreclosure.

A lot of homeowners who use a real estate agent will list their homes close to market value. This is due to the fact that the real estate agent has completed the necessary research to determine what the accepted value is for similar properties in the neighborhood.

Real estate agents use comparable home sales that have occurred in the past 60 to 90 days as well as active listings, ideally within the same neighborhood to establish how much your property should list for. Additional considerations is given to when the area is a buyers or seller’s market.

There can be plenty of reasons why someone would list their home below market value. Every so often homeowners, may not be aware what the actual market value of their home is, and simply underestimate it when they place it up for sale. This can happen in more cases with “For Sale By Owners”.

Additional reasons why a home is listed below its true market value is because it’s being sold through an estate sale. In normal cases, it’s the sale of property whose owner has deceased. The home typically needs to be updated and renovated.

Usually the family or heirs want to sell the possessions from the inheritance at a price that will attract a quick sale. They simply don’t have the time to wait months for a sale as they are looking to move on and will list their home under market value.

Another popular means to find homes to be purchased below market value are those that have been foreclosed on.

These properties are owned by the lender or bank. They are also known as REO’s (real estate owned homes), and often have asking prices below market value so the bank can get rid of the property as soon as possible. Many times, the price reflects the condition these properties are in as they tend to require a great deal of work.

Traditionally, for those who bought an REO, they end up with a home that needed some work but it paid off at a 2:1 ratio or better in terms of equity appreciation.
For example, this means the renovation or repair costs were maybe $30,000 but the gained value was $60,000. Speak with a licensed contractor or professional who can help you determine what costs you will probably have to bring the home up to satisfactory condition.

The government also offers foreclosed homes for sale at an attractive price. They are known as HUD Homes and are on the government’s books because the previous homeowner defaulted on their loan had an FHA mortgage. These homes are sold by a licensed agent through an online bidding system.

Bids are sealed so that other buyers cannot see how much you are bidding. It is illegal to buy a HUD home stating you will be an owner occupant but in actuality it will be used as an investment property.

HUD allows homebuyers who want to live in the home to bid on properties that qualify for FHA loans during the first 15 days. This time period is restricted for only bids by owner-occupants. If the home is not in acceptable condition per FHA guidelines, the time period is reduced to just five days for owner-occupied bids. it’s worth noting that during the inspection phase, prospective buyers are required to pay for all utilities charged.

Should I Use a Buyer’s Agent or a Lawyer?

Home buyers must keep several things in mind. A top-notch buyer’s agent represents your best interests. A buyer’s agent has a fiduciary relationship with the buyer, and divulges information to the buyer that materially affects a buyer’s best interests, even if that information is unfavorable to the seller.

The best buyer’s agent places your needs above their own. When you go out to purchase your home without an agent, you give up all of these things.

The biggest problems occur when a buyer tries to purchase a for sale by owner home without a Realtor.

One of the biggest advantages of a Realtor is that he or she is an expert on the neighborhoods in the area you are buying. They are familiar with the school districts, zoning, HOA, property taxes, mello-roos, property values, commute times, etc.

Thinking of getting a break on the commission.
The seller’s agent and your agent traditionally split the commission. Lots of buyers shun using an agent in the hopes of discounting the commission because one agent is not in the picture anymore which seems logical.

However, the seller’s agent (listing agent) usually has a listing agreement that the seller will pay 5-6% of the sales price regardless of a buyer’s agent being present or not. So, it’s unwise to believe that the listing agent will cut their commission. Yet, some agents do just to get the sale through, especially the large companies.

Negotiating
Are your negotiating skills well developed? The majority of homebuyers are not used to writing offers and have mastered the art of negotiation. Your week is probably consumed by 40+ hours a week for your job, then your kids, and then your outside activities.

Real estate agents on the other hand negotiate for multiple clients each week or month, so this is this job and the good ones know how to negotiate on price. They understand what can affect home values just like the listing agent does. Don’t expect to come out on top of the negotiation side simply because you are a CEO or did six or more years of college.

Added Proof
The difference between a buyers and sellers agent is huge. When a buyer goes straight to the listing agent you lose out on having an agent represent your best interest. The listing agent owes a fiduciary duty to the seller, first and foremost. Their job is to get the highest and best price for the seller period.

You may still want to save some money by using a real estate lawyer. According to the California Bureau of Real Estate. A lawyer can become a real estate broker right away. They can bypass the sale agent license s their educational requirements surpass that of a mere sales agent.

Disadvantages of Hiring a Real Estate Lawyer
A real estate lawyer may not have the negotiating experience or experience of a sales agent. In this case, education does not make you an expert or the preferred choice.

Another drawback of using a lawyer is they are not usually available to talk to you after 6pm on weeknights. And you want to go under contract with on a large transaction with this limited availability?

Real estate lawyers mostly handle litigation or legal aspects of real estate transactions such as a deal that went sour and buyers want their earnest money deposit returned.

They don’t have access to real-time active homes available on the market? Zillow is notoriously lists property’s late. I cannot count the number of times that I personal called about a home that showed it was listed in one day is already under contract.

A buyer’s agent is a great choice when looking to buy a home, especially if you are a first-time home buyer in Orange County.

5 Things to Know When Buying a Home in California in 2018

The following are five things you need to know when purchasing a home in California in 2018.

1. Orange County, California home prices are slowing down, but still rising
Home price appreciation throughout Southern California has increased annually for almost six straight years, with houses changing ownership in a short time span, generally at or above the list price. Orange County’s median home prices have surpassed the record highs established during the housing bubble of 2007.

In fact, the Bay area counties of San Francisco, Marin, San Mateo and Santa Clara in Silicon Valley have similar stories. What has helped offset high home prices tremendously are low mortgage interest rates, which have averaged under 4 percent on a 30-year fixed.

Industry experts are predicting home prices will continue to increase by 4 percent to 5 percent in 2018. Some real estate analysts have forecasted that with the exception of surprising events, home prices may continue climbing for several more years. Prior to the last housing crash, prices constantly went up for 10 years.

2. Loan limits have risen
The conforming loan limits for a large majority of counties in California were increased for 2018. In 2018, the conforming loan limit will go up to $453,100 for most counties in California and for high-cost counties like Orange, Los Angeles and coastal counties the limit will be as high as $679,650. FHA loan limits will range from $294,515 to $679,650, based on the county where the property is located.

Keep in mind that home buyers with adequate income can get larger loan amounts than these count limits. When that is the case, the buyer will be applying for a jumbo loan.

3. Mortgage rates are also likely to go up
Economists are forecasting a progressive rise in mortgage rates in 2018, yet the average 30-year fixed home loan rate is not predicted to go above 5% for quite a while.

The government service enterprise Freddie Mac adjusted its long-term prediction for the U.S. housing market. They expect 30-year mortgage rates to finish at 4.4% through 2018 and to average 4.7% in 2019. Many other industry professionals and economists share this same view too.

4. The down payment can be less than 20-percent
The notion that a home buyer needs to put down a minimum of 20% when buying a home is a myth. In 2017, real estate industry groups conducted a survey that shows many home buyers believe the opposite.

In today’s housing market and even since the early 2000s, there are home conventional loan programs which allow for down payments of only 3%. FHA requires 3.5% and the VA loan offers a zero down program for eligible borrowers.

5. Housing inventory is remains low in most cities
The supply-and-demand dilemma in California’s housing markets has been disproportionate since 2010. The demand from buyers is robust, but there simply is not enough inventory to choose from which has helped raise home prices. This has triggered bidding wars among buyers which results in paying over the asking price and/or paying for the portion of closing costs the seller normally pays.

And these trends will probably remain in 2018, to some degree. New home construction in Southern California has increased over the last few years, but that has not stabilized home prices or demand for real estate.