Housing Demand is Up and Supply is Down

Although perhaps not imediately obvious, there are tremendous benefits my clients receive through my association with Altera Real Estate. As a seasoned South Orange County Real Estate Broker I need to be associated with a brokerage that provides technical, legal, marketing and administrative support. A top-tier brokerage benefits my clients by providing them with an educated, up-to-date agent with access to all the support I require to obtain superior results for them. Altera ensures that I have immediate availability to deep resources that cover a broad continuum of real estate subjects and opportunities that create value for my clients. Here is an example of an Altera Real Estate benefit.

The following report, written by our company's President, Steven Thomas, has been created by compiling relevant data from a variety of sources, analyzing the information, and publishing a report that communicates a lucid interpretation of our current residential real estate market . Please enjoy reading this report. There are links for supporting charts and graphs at the end of the report.

Orange County Housing Report
by Steven Thomas, President Altera Real Estate, August 8, 2009

As is typical for this time of year, demand increased a bit at the beginning of August; however, the continuous drop in the active listing inventory is far from ordinary. Inventories have been dropping across the nation and Orange County is no exception. Since March of this year, the active inventory has been steadily dropping. The inventory has shed 2,925 homes since then, a 25% drop. Currently at 8,681 homes, that is far fewer than the 14,348 last year or has shed 2,925 homes since then, a 25% drop. Currently at 8,681 homes, that is far fewer than the 14,348 last year or 17,611 two years ago. So, what’s going on? Prices are down, interest rates are down, affordability is up and demand is up. All of these forces together have been pulling the inventory down. Throw in the fact that discretionary homeowners are only placing their homes on the market if they have to and are motivated to do what it takes to compete in this market. Demand, the number o f new pending sales within the past month, is currently at 3,481, an increase of 165 pending sales within the last two weeks. Last year demand was at 2,940. So, with an increase in demand and a lower inventory, the market has heated up. The expected market time for all of Orange County is currently at 2.5 months, technically a seller’s market. The lower the range, the hotter the market. All ranges below $1 million are pretty hot, but homes priced below $500,000 are sizzling. The expected market time for homes priced between $250,000 and $500,000 is currently at 1.30 months. For detached homes within that range, the expected market time is only 1.02 months. When the expected market time drops to such low levels, sellers are busy sorting through multiple offers and buyers are writing offer after offer with no luck. I have been asked many times why the market is not appreciating given all of the activity. The devil is in the details. Even though the distressed inventory has been dropping and now represents 29.5% of the current active inventory, 50% of current demand is distressed properties. With so many short sales and foreclosures driving demand, these distressed sellers are keeping a lid on any price appreciation. But, don’t misinterpret me. There may be a lid on appreciation, but in the hotter areas and price ranges there is also a lid on price depreciation. Values have fallen significantly since the start of this downturn, fueled by a consistent supply of distressed properties. So, current values have reached affordable levels where it makes sense again to own versus rent. First time home buyer activity has returned with a vengeance as well. Throw in the return of investor activity and it is no wonder that demand has increased this year.

How do the distressed numbers look? First off, the “next wave” of foreclosures that we have been hearing about since the beginning of the year still has not materialized. I have been hearing from industry experts and agents alike that the next wave is still coming. I am certain that they are right to a degree, that the distressed numbers will increase, just not at the great numbers that they are anticipating. The agents on the streets are telling me that they all have pockets full of buyers waiting for the right property to come onto the market and they all would love a “foreclosure deal.” This is where pent up demand really does exist. Any surge in foreclosures would be met with buyers in waiting. We can expect a lot of competition and continued multiple offers for some time to come. There are currently only 2,559 distressed homes on the market, a drop of 57 in the past two weeks. This is the lowest drop in the distressed inventory since February of this year. Could we be reaching a plateau before the overly predicted wave to come? Only time will tell. There are only 299 foreclosures currently on the active market with demand at 590, representing an expected market time of .51 months. That’s correct, two weeks. Foreclosures are so incredibly hot that they can generate 20 plus offers. Yet, only one gets the property. Demand is plentiful, there just is not enough supply. There are 2,260 short sales on the active market with demand at 1,145 and an expected market time of 1.97 months.

If you are a buyer, how should you respond to this market? First, please throw out the notion that there is no competition and that you can write an offer for thousands less than the asking price. The sales to list price ratio for homes priced below $500,000 is 100%. That means that, on average, homes are selling for their full asking price. For all homes in Orange County, the sales to list price ratio is 98%. Remember, homes have already dropped 30% or more in value. As a buyer, do NOT write an offer for 10% or more off of the asking price with a letter detailing that the housing market is currently in a declining market. These buyers feel that the ultimate sales price should reflect a future drop in values. That notion of purchasing is ludicrous. Industry experts and economists cannot accurately determine future prices and are constantly revising their estimates. The values are already highly discounted over the past few years. Arriving at the fair market value includes taking into consideration pending activity, recent sales (within the prior 90 days), property condition, seller motivation and circumstances, location, upgrades, lot size and amenities. To rely on Zillow.com or other online valuation tools is also absurd. These tools only take into consideration property size and sales price, ignoring all of the other factors that are used to arrive at price. There has been a lot of pressure on interest rates to move higher. Gone are the days of interest rates below 5%. As interest rates rise, affordability drops. In purchasing today, the monthly payment is approximately the same as a home purchased later with a drop of 10% in value and a 1% rise in interest rates. These historically low interest rates are not here to stay. How long they remain low is anybody’s guess. Last, buyers should only purchase in today’s market if and only if they plan on living in their home for years to come. In the long run, Orange County housing has proven to be an excellent long term investment. It is also a great place to call “home.”

Use these valuable links to see detailed, graphic information referred to in the foregoing Report:

View the Housing Report as an Excel spreadsheet, click on the following: www.OurAgentSpot.com/sthomas/MarketTime-Aug-6-09.xls

View the Ranges Report as an Excel spreadsheet, click on the following: www.OurAgentSpot.com/sthomas/MarketTimeRanges-Aug-6-09.xls

View the Orange County Foreclosure Report as an Excel spreadsheet, click on the following: www.OurAgentSpot.com/sthomas/MarketTimeForeclosures-Aug-6-09.xls

View the latest Market Charts, click on the following link: www.OurAgentSpot.com/sthomas/MarketCharts.pdf

A Real Estate Broker with a Ministry

Ten yours ago when our son Morgan was about 3 or 4 our family began attending San Clemente Presbyterian Church (http://www.scpres.org/ ). We weren't Presbyterians then. We were just searching for a church that met the needs of our family and one where we all felt comfortable. Maggie, my wife, had an idea of what she wanted the children's programs to offer for our son Morgan. SC Presbyterian Church has become what we hoped it would be for our family. There I was given the opportunity for me to become active in Stephen Ministry ( http://www.stephenministries.org/ ), a facet of the Caring Ministries offered at San Clemente Presbyterian Church.

I have always said I am confident and comfortable "working" large business gatherings like banquets, conventions and giving Power Point presentations to audiences but I am really more of a one-at-a-time kind of guy on a personal level. Sharing my faith--something personal--has always been more comfortable for me when asked by another as contrasted to the way my business life works where I am selling and marketing all the time. It is also true I am attracted to the underdog, the one who is hurt or down or overwhelmed or suffering or who is in a life crisis. My church and Stephen Ministry has given me an active community of faith in which to live and grow, offering care to those who need it and being cared for by my Stephen Ministry colleagues.

Stephen Ministry is not a Presbyterian ministry nor is it associated with any denomination. Here is what they say about themselves on their website,"The Stephen Series is a complete system for training and organizing lay people to provide one-to-one Christian care to hurting people in and around your congregation.

The Stephen Series provides congregations with the structure, training, and resources to set up and administer a complete system for lay caring ministry (called Stephen Ministry) in the congregation. In Stephen Ministry congregations, lay caregivers (called Stephen Ministers) provide one-to-one Christian care to the bereaved, hospitalized, terminally ill, separated, divorced, unemployed, relocated, and others facing a crisis or life challenge. Stephen Ministry helps pastors and congregations provide quality caring ministry for as long as people need it."

I received training over the course of six months in a classroom setting with seasoned Stephen MInister Leaders instructing us through books, reference materials, developmental exercises, and spiritual preparation. Ultimately I graduated and began my ministry. Respecting and preserving the confidentiality of those receiving care is a paramount tenet of Stephen Ministry. Care Receivers are associated with Stephen Ministers (Care Givers) through evaluation and assignment by one Stephen Minister in a leadership role. One Stepehn Minister protects their care receivers anonymity with all other Stephen Ministers and with all other people. The ministry is explicitly confidential. Bi-weekly the Stephen Ministers meet in what is termed "Supervison." There we find continuing education, shared expereince, and the opportunity to ask for guidance all while maintaining 100% confidentiality about the indivudals who are receing care through the ministry. From time to time to time we have retreats, social gatherings and pastoral instruction from the Pastors of San Clemente Presbyterian Church.

Just a little about my first care receiver--let's call him David. David had lost his job and the community of people that he had worked with for many years. As he described his losses his pain was intense. As he considered the idea of a "job search" he was unmotivated. He ebbed and flowed from belieivng God was sutaining him to wondering if God had abandoned him. He was emotionally, spiritually, and materially suffering and he was fearful. The process of my ministry with him was to come along side of him and just be there. David and I met every week or two. David would talk and I would listen. We talked on the phone and emailed each other. We drank coffee together, prayed together and we became connected by God's Grace. After about fifteen months it became clear it was time for us to end the formal relationship we had created through Stephen Ministry. David is working again. His life is different but he is OK. I was given the gift of caring for David while God delivered the cure David needed in his life--that has turned out to be more than just a new job for David. David and I still talk now and then.

If you or someone you are concerned about could benefit from the care of a Stephen Minister, don't hesitate to get help. Just call the church office. Caring and being cared for is lovely and loving.

The Reward of Children

The Book of Psalm in the Old Testament of the Bible says that children are a reward, our heritage. This is unquestionably true with our son Morgan. He was in his second year of little league here in San Clemente when our family first became aware of the All American Boys Chorus, headquartered in Costa Mesa, http://www.taabc.org/ . We went to an orientation evening at the Chorus rehearsal hall. Morgan was apprehensive at first but soon we faced a difficult decision. Would Morgan continue with his baseball interests or switch over to the Chorus? He chose the Chorus and we have never looked back.

Morgan attends rehearsals in Costa Mesa and frequently goes there three times a week. In addition he performs in concerts throughout Southern California but that is not all. In the four years he has been a member of the chorus he has progressed through the ranks from a "white shirt," pledge, to a "blue shirt" in the training division, to his present status of "red shirt" signifying his membership in the concert chorus. He has learned to read music as he successively passed through four levels of music reading training.

Last summer Morgan was selected to tour Asia with the Chorus. The Chorus performed in Malaysia, Singapore, Hong Kong, and China, including Shanghai. The tour took nearly four weeks, from start to finish, and Morgan was only 12 years old at the time. We were so proud of him and so glad when he was home safely once again.

This summer Morgan is going on a tour of Western Canada and the Western United States. He will be gone for three weeks. The summer camp he attended last week was a lot about preparing the Chorus for the summer tour. This year at camp Morgan began learning to play the hand bells. He really seemed to enjoy it. We are very proud of what he has accomplished with his life already and the young man he has become.

Blogs are Work ... Tweets are Fun :-)

With great enthusiasm I began blogging a couple of years ago. I felt so x-gen. It turned out to be like my diets. Enough said? Well, today is the day that I begin keeping my blog up to date. One of my clients told me the other day it was the first thing she looked at when she went to my website. I could tell she was disappointed with my last posting from 2007! The fact that she told me I should update it or take it off my website turned out to be motivational.

I have also started "tweeting" on Twitter. I guess I like tweeting better than blogging because tweets are limited to 140 characters or so. Tweets just have to convey what I am doing now. Blogging, I think, requires me to share something more coherent. That feels more like a job. But I want to get comfortable and more adept at blogging, so here I am.

In this blog, I will catch you up to what going on with me in a tweet-style. My son, Morgan, just finished 6th grade. My wife, the principal of his school, is also about done for the summer. Actually, they are closing her school for good--so she is REALLY done. She has been job searching and interviewing like so many others in this economy. Morgan, the 2nd Tenor, is going to Chorus Camp next week. In a few weeks he leaves with the Chorus for a tour in Canada. Meanwhile, I am selling, selling, selling.