homebuying – Page 2 – OC Neighborhoods

SoCal Real Estate: What to Look For in 2016

What can help sell a house in Orange County nowadays are homes with bonus rooms or flexible space that can be turned into a room. This aspect has become increasingly popular with buyers in recent years.

The reason may be attributed to lessen commute times to work from buying a quaint-sized home in Orange County vs. a larger spacious home in Corona or Murrieta/Temecula where employees have to deal with traffic on Ortega highway or use the 91 freeway.

Homebuyers want flexibility in how they can use their home during the last few years. Living space that can be transformed into an office, a guest room, for multiple purposes at any point in time. This has become especially important with the change in family living as aging baby boomers, retirees, and young single adults may choose to live with family members but only if there is a separate independent space.

A lack of square footage is not a deterrent if the home can be redesigned to accommodate areas which can be adjusted to the new homeowner’s objectives. For example, a house with a separate den or dining area can be made into a separate office or sleeping room and the owner can use the living room as a dining area. If the kitchen area is large enough, a den or dining area may not be needed at all.

Seasoned professionals and young adults may find a quicker commute to their jobs in Irvine, a mecca for those working in technology, finance and health industries, if they have a living space in Laguna Beach, Mission Viejo, and other south OC cities.

Buyers may be getting more creative when they view a home for sale. Orange County real estate transactions were at their highest level in a decade. In 2015, 30,337 houses, condos and townhomes were sold that were listed in the MLS. The average price of an Orange County residential transaction rose to $741,109, the highest dating back to the housing crisis in 2007.

New Home Buyers on the Sidelines?

For the last twenty-four months, sales of new-homes in Orange County shot up at a very healthy rate.

According to numbers from CoreLogic, a real estate data analysis company, new home sales have dropped in Orange County for 10 consecutive months, with sales volume off by 21 percent. It’s not all negative though as existing home sales grew by 10 percent in the same period.

What is special about the decrease in new-home sales is it is limited to just Orange and San Diego counties.

Builders were pleased with sale of new-homes in Riverside and San Bernardino counties, as they increased by 20 and 23 percent, respectively. On a national scale, sales of new-homes rose 17.5 percent which means desirable Orange County went in the opposite direction in terms of new home sales.

Some real estate experts believe the reason is that prices went up too fast. Additionally, foreign buyers such as those from China, who comprised a big chunk of new home buyers in the last few years, are starting to diminish.

In 2013, a couple of large projects were started; Pavilion Park at Great Park Neighborhoods in Irvine with 726 homes and Sendero project with 941 residences at Rancho Mission Viejo. They each had pretty much all of their homes sold by the start of 2015.

Sales prices out of reach for many

Corelogic’s data shows the median price of a brand new Orange County home reaching an all-time high of $909,000 in February 2015. As a whole, the median price is $835,000. Perhaps buyers are simply upgrading the home they buy at a lower cost.

The prices for land are backing builders in a corner with them having to construct a very large home on a relatively small lot at a high price, and that may also have turned some buyers towards existing homes with larger lots.

According to MarketPointe data numbers, sales contracts to buy condos and townhomes increased by 23 percent in 2015, whereas detached home purchase contracts fell 0.2 percent.

Nevertheless, many feel that there will be a recovery most likely towards the early part of 2016.

Will Lower Down Payments Spur More Buying in Orange County?

Once December 12th rolls around Fannie Mae will be loosening their lending parameters in a major way.

The major change helps borrowers come up with less money. I know. It’s just what you wanted, more competition in the already highly competitive Orange County housing market.

Home buyers will be able to purchase a primary residence home up to $625,500 in Orange County with as low as 5 percent down. For existing homeowners, they just need 5 percent equity to refinance to a fixed mortgage. Prior to this, any mortgage balance that exceeded $417,000 – referred to as agency high-balance or agency jumbo – needed to have 10 percent down.

Investors will be all smiles too.

The existing Fannie Mae guideline of 35-percent down for rental properties is also being put to rest. Investors will be able to make a purchase with just a 15-percent down payment up with a $625,500 loan amount. Would you rather pay $110,382 or $336,500 for a down payment? You’ll have $226,000 more to work with.

Due to strong economic resurgence in the the best Orange County job market in twelve years, a big demand for housing has grown for businesses and their growing staff demands. In Orange County, it is difficult to find big blocks of commercial real estate space or fairly priced housing.

Putting more pressure on the lack of real estate are the countless people and businesses that just don’t move, making real estate inventories low even more. And real estate investors are vigorously buying up the limited number of properties that are listed for sale or unlisted.

The end result are rising real estate prices. Most experts on regional housing don’t see this declining anytime soon.

While there is construction going on throughout the county, it won’t provide enough of a huge improvement to the low inventory.

The situation is so challenging for many who are seeking to buy real estate in desirable Southern California.

Some buyers lose out on a deal because it not making a good enough offer. Be prepared to pay close to the asking price because there’s just a lack of inventory.

One advantage for home buyers and investors are mortgage rates are low and lenders are willing to lend. In addition, with 95% financing up to $625,500 they may move into that home they wanted a lot sooner.

Home selection is tight, particularly at price points that many would regard as slightly affordable. Five to seven years of staying the in same home has changed in OC which has resulted in low supply.

Buying Your Next Home Before You Sell Your Home

Usually the next house you want to buy is going to have a higher price tag than your current home.

Making an offer on that next home can prove to be tricky if all you can put down is 10% or less on a new house.

So before you buy your next home, should you sell your current house, rent for a while, or just buy the new house?

How about taking out a HELOC to make your down payment larger, then you’ll own two homes and have two payments?

What about using a “bridge loan”, to get by for 3-6 months?

If you have the income to easily pay the costs of two mortgages – but the only issue the lack of down payment for your next home, a bridge-loan scenario, then refinance and pay off the bridge loan when you eventually plan to sell the current home.

However, most homeowners don’t want to take on the debt obligation for two mortgage payments at the same time.

In some cases, you could end up “stuck” with two mortgages for 6-9 months.

The reason you want to do this is because many prospective home buyers put a contingency on the sale of their current home in their purchase offer. If you are in the process of doing this in Orange County, you may find your offer not accepted countless times. If the sale of your current home will provide you with more funds to put down to the tune of 25% or 50% , your offer is a lot stronger in the seller eyes.

Certainly, in a very hot seller’s market, the seller still might not be interested in your offer even if it doesn’t have the sale of your home contingency clause because there may be all cash-buyers.

It’s important to let your realtor understand your goals and price your existing home properly when your offer is not contingent on the sale of your home. If your realtor prices your home much higher than similar homes in your neighborhood, possibly to assure them of a higher commission, they may not be factoring as every month passes, you’re making two mortgage payments. This eats right into the expected profits. Don’t let them off the hook with their common response of “the house will sell when the right buyer comes along”.

Think about if you had your home for sale. If you receive offers with FHA financing, 3-5% down, contingent on sale of their property (which may be overpriced) or closing dates 3-4 months out are the least considered. When receiving multiple offers, the simplest and least complicated offer is chosen. The offer most sellers will accepted are those with a large down payment, such as 30-50%, and have a quick closing date.

The worst part about selling your home early is you have to move your personal belonging into a storage unit temporarily, and then find a short term rental. By doing so, you can submit a stronger offer with a large down payment like the one you accepted on your home.

Frustrating to Find a Home or Get An Accepted Offer in Orange County?

Orange County, CA is yet again in a seller’s market which is typical in a region of high demand. Home sellers tell their agent to ask the prospective buyers for their highest and best offer which results usually in a bidding war and of course the seller getting more than asking price.

Buyers sometimes become desperate from all the offers they put in on houses and just want to end the process once and for all.

To make matters worse, the inventory of homes for sale has dropped to much less than average numbers based on the past 15 years. There are 14,400 listed properties for sale in the Realtor operated MLS by Orange County homeowners in 2015. Fifteen years ago, there would be 3,500 additional homes for sale for the same period.

With home buyer demand at record levels, and home inventory very low, it means that buyers have a smaller selection of homes to choose.

Property values aren’t the problem either as they have recovered from the housing crisis levels. In a normal market, people would be listing,” said Chris Arco, Broker for 1^st Nationwide Real Estate.

With so few properties on the market by sellers, many home buyers searching in Orange County are limited to the number of offers to make and their moving plans are delayed for quite some time.

Prospective buyers wake up in the morning to check for listings that meet their criteria and they are disappointed. It is certainly frustrating but buyers need to start looking around six months before to understand how competitive the market is and not expect to find a home and get an accepted offer within 60 days of house searching.

Reasons Why Sellers Haven’t Sold

Below are some factors that have kept homeowners where they are. They include:

• No place to move to: Due to the uncertainty of finding a suitable home, less homeowners want to list their properties on the MLS.

• Locked in Best Rates Ever: Approximately 2 1/2 years ago homeowners took advantage of the lowest rates in 50 years and refinanced into 3 percent fixed interest rates.

• Proposition 13 tax rates: The low property tax rates assured by the 1978 property tax-control measure are wiped away if they sell their home. Prop. 13 limits any increase in property taxes to 2 percent every year up until the home is sold. Thereafter, rates adjust to market values.

• People are staying put longer: From 1980-2000, residents in California and nationally moved once every seven years on average. Nowadays, it’s estimated people move once every 20 years. They simply go to Home Depot or Lowes and do home improvement projects.

Gone in 55 days

The lower inventory is good for those who can sell their homes but bad for buyers.

The hottest market averages 34 days on the market and that price range is $250,000-to-$500,000.

The $500,000-to-$750,000 home price range takes just 5 days more at 39 days to fetch a buyer, while OC properties listed on the MLS for $4 million and above take over eight months to find a suitable buyer.

Making Aggressive Offers

For many buyers who search for multiple months, put in bids and the offer is not accepted, and hardly any new suitable listings come to market, they become more aggressive with their offers.
Home buyers in a seller’s market who finally get a home are the ones who are offering more than the asking price.