Orange County – Page 2 – OC Neighborhoods

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.

Orange County Real Estate in the Next 2 Years: Up or Down?

The housing markets of Los Angeles, Orange County, San Diego, San Jose, San Francisco and Sacramento are bursting at the seams with an overall price growth rate of 10% annually since 2012.

The most recent forecasts for the Orange County housing market indicates that home prices will continue to rise in 2018 & 2019, attributable to low inventory and strong demand in both North and South County.

Orange County Housing Market During The Last Two Years
In 2016, the median home price for a single family home in Orange County went up by four percent from 2015. The same four-percent increase happened in 2017 too. In mid-2018, the median home value in Orange County is $761,700, based on data from multiple sources. In comparison to June 2007, Orange County’s median home selling price touched $645,000 — in that crazy period of high-risk lending and home buying frenzy.

Avg. Home Price 3/2018 MtM Yoy

Orange County $824,000 2.4 8.5

*MtM – Month to month percentage change
YoY – Year over year percent change

California housing market to Modestly Rise in 2018
Inventory is partially responsible for the increase in home values. There’s more than enough demand from prospective buyers, but there’s a lack of homes for sale to satisfy that demand. Home buyers are fiercely competing for low inventory, especially for homes priced at the lower end where multiple offers thrive.

A Two-Month Supply of Homes for Sale
From a home inventory perspective, Orange County has 2-month supply of homes for sale as of May 2018. That’s far lower than the 5- to 6-month inventory level that real estate economists deem a “balanced” housing market. However, the two-month supply is a 10 percent increase from a year ago.

Perhaps the NIMBY’s (Not in my back yard) are correct in that there is enough inventory. There’s no need to build in or near ecologically sensitive areas.

Home Affordability
Yes, it can be challenging for the average household to afford an Orange County home. According to data from the Orange County Register, it was worse in 2007. A comparison shows 21 percent of Orange County household are able to comfortably purchase a home this spring vs. just 12 percent in 2007.

Another statistic shows that 14 percent of homes were considered “affordable” in 2017 vs. 4.4 percent a decade ago. Keep in mind, interest rates are 2.8 percentage points less than 2007 and Orange County median household incomes are 12 percent higher!

As a home buyer in a market with strong demand, you’ll need to put forth your best possible effort when bidding in this market. Start the process of getting pre-approved for a mortgage, researching the neighborhood where you want to live, and hire a real estate agent to help you successfully buy a home in this tight, highly competitive market.

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.

Things That Can Go Wrong When Under Contract to Sell Your Home

During a hot real estate market, homeowners feel confident about their home’s appreciation and keep an eye out for a potential new place to buy. While it is true, a majority of homes sell routinely without problems, some sales do have problems that arise.

With that being said, the following are things that can go wrong during a home purchase transaction:

Making bad decisions based on advice from friends and family members who have no experience in the real estate industry.
Seller or buyer are not willing to negotiate.
The home inspection uncovered major issues that neither the buyer or seller are willing to pay to repair.
The appraisal report comes back substantially below the contract price.
The appraiser is unable to find comparable properties for the lender so the financing falls apart.
The buyer does not want to remove loan contingency because they have not satisfied the underwriting conditions.
The buyer’s letter was a pre-qualification, not a full pre-approval which verifies credit, income, assets and job.
The buyers are unable exit their current lease without paying a large lease cancellation fee.
The buyer didn’t lock the interest rate and does not qualify at the higher interest rate.
The closing date is pushed back due to buyer or lender errors or incomplete documents.
The title search shows liens, leased land, oil rights, etc that cause a delayed closing.
The pest and termite inspection finds the home is significantly infested.
Buyer or Seller has to abruptly go out of town and did not remember to obtain a Power of Attorney.
During escrow, the Buyer or Seller encounters a life changing event.
Someone fails to disclose pertinent information relevant to the transaction.
Buyer or Seller gets cold feet and wants to back out of the deal.
The home is not insurable due to a variety of reasons, newly designated fire zone, recent land movement, etc.
The buyer makes a major purchase on credit just before closing that exceeds the loan program’s maximum debt to income ratios.
Seller decides to not sell because the job transfer is cancelled, marriage reconciliation, and so on.
Seller is unable to locate an acceptable home they want to buy.
Seller does not let the appraiser or inspector see the home’s interior.
Seller does not have sole authority to sell property due to other owners.
Seller gives knowingly false pertinent information about the home and neighborhood to the buyer.
Seller does not sign final closing documents.

Picking the wrong real estate agent! Using an experienced, well-informed licensed agent can get you to the finish line. They understand the challenges and how to solve them. It’s important to get to good real estate agent.

Increasing Numbers of Homeowners Are Thinking of Selling

There are Encouraging Signs That More Homes May Be For Sale.

The era of low housing inventory could be shifting based on a recent home survey by the National Association of Realtors. The survey discovered that 80 percent of homeowners feel now is a great time to sell.

The days of tight housing inventory could be a blessing for many in Southern California where competition is fierce. Additional research can be found in Fannie Mae’s most recent Home Purchase Sentiment Index, increased by 1.2 points in August to a measurement of 88. The net result is a rise of 21 percentage points in 12 months of those homeowners who are seriously consider putting their home up for sale.

costa mesa street — Harbor Blvd Costa Mesa, source: Wikipedia

Invisible Inventory
The inventory for housing in Orange County has had low inventory and bidding has been super competitive for months. Home builders are trying to pick up the slack but another leading factor has been hesitant-to-sell homeowners.

As location and job growth continue to boost housing prices in Southern California, many owners just aren’t ready to put their homes on the Orange County MLS and then take their chances in the competitive bidding wars for their next home.

Local economic forecasters don’t anticipate a full housing recovery until the years 2019-2021. At that time, yearly sales volume should be close to 46,000 in Orange County supported by a strong local job market along with Baby Boomers retiring in large numbers, selling and typically purchasing smaller and low maintenance homes. Perhaps some will move out of state based on national surveys and more inventory in nearby states.

With approximately 80-percent of homeowners claiming now is a good time to sell their home, it can the optimal time to sell. It was only a year ago that 67 percent of homeowners felt that way. You don’t want to be selling when everyone is because that will drive down prices. So, listing your home for sale now actually could be a good time to sell.

First-time Home Buyers
A survey by NAR also discovered another positive sign: an increasing number of renters are confident about purchasing a home. As much as 62 percent of current renters believe now is a good time to be a homeowner. This is a 12 percent leap from the previous quarter. Locally in Orange County, the numbers may be less due to the higher home prices. However, condos and townhomes are great entry-level options for first time home buyers.

Many renters are motivated to buy due to having a more stable income and if their rent increases.