Orange County CA Real Estate

We have been tracking the Months of Inventory in south Orange County, Ca. along with Active versus Pending sales, and Price per Square statistics, since July of 2002'.  As most everyone is aware, the real estate market here is southern California has slowed down substantially compared to 2 years ago.  Homes are setting on the market for sale much longer,  prices has decreased substantially, and mortgage loan delinquencies have resin dramatically. 

But in the midst of all of this bad press, we have noticed a very interesting trend... albeit a short term one.  For the past 7 weeks, the number of homes Pending in escrow has been steadily increasing for homes priced less then $450,000.  On October 8, 2007 there were 84 homes under contract in escrow in this price range in south Orange County, Ca.   That number has steadily increased and now stands at 150 homes pending in escrow.  That's an increase of  21% in the midst of all of the negative press, and the traditional seasonal holiday slow down in the local marketplace. 

What is this due to one may ask ?  Well it is certainly NOT due to "not ready for prime time" home buyers who are using zero down, stated income purchase money loans, for those loan programs essentially have been deleted from the marketplace.  What we do see is the drop in home prices by about 10% to 15% that has occurred in the past 10 months, has resulted in seasoned prospective home buyers and investors now seeing some true values in the marketplace who are increasingly making offers to purchase.  Will this continue throughout next year ?  Well it may be too soon to draw any type of long term conclusions, but I think that this is a good early indicator. 

Our charts of Price per Square foot for both detached SFR's and Condo's, has shown that the peak in home pricing occurred in May of last year at about the $407/SqFt level for detached homes.  Prices have been slowly decreasing since that time to a level of $356/SqFt today for detached single family homes.  This represents a decrease of 12.5%, and since closed sales prices are always a lagging indicator, and given the recent sales that I have seen in certain areas, I predict this number will show prices having already fallen to a level of 15% to 20% for certain areas and product types.

For more information about the local real estate market here in Orange County Ca., please feel to call us at:  949-388-3396 or drop us an email at:  Info@SearchOCHomes.com  or Text Message us at:  (949) 283-4679.   

A Gated entrance for single family home and Condo subdivisions offer a feeling of  prestige and safety to a residential community.  Although Mission Viejo is one of the lowest crime cities in the U.S., many people prefer gated communities for that extra sense of security. 

There are two forms of gated subdivisions.  One is he automatic gated entrance which is typically activated by the home owners using a remote controlled opener and security code that is changed periodically.  The other is a human 24 hour gate guard, or a combination of a human gate guard during certain hours, and an automated gated entrance during off hours.   

We identified each Condo and single family home subdivisions in Mission Viejo have gated entrances.  Below are three tables, one for each area of Mission Viejo, which shows each gated tract name and the name of the home builder:

Mission Viejo North Gated Tracts

Tract Name	Type of Home	Builder
Mallorca Condos	Condos	Mission Viejo Co
Finisterra On The Lake	Condos	Mission Viejo Co
Lake Aire	Condos	Signature Homes
Palmia - Courts 1	Condos	J.M. Peters
Palmia - Courts 2	Condos	J.M. Peters
Belcrest	Detached SFR	Signature Homes
Cliff Wood	Detached SFR	Taylor Woodrow
Concord	Detached SFR	Del Webb Coventry
Crystal Ridge	Detached SFR	Del Webb
Gallery Collection	Detached SFR	J.M. Peters
Hillhurst	Detached SFR	Standard Pacific Homes
Montclaire	Detached SFR	Standard Pacific Homes
Montage	Detached SFR	Bramelea
Palmia - Heights	Detached SFR	UDC Homes
Palmia - Terraces	Detached SFR	J.M. Peters
Palmia - Villas 1	Detached SFR	J.M. Peters
Palmia - Villas 2	Detached SFR	J.M. Peters
Palmia - Vistas	Detached SFR	Brock
Ridgegate Canyon Crest	Detached SFR	Brock
Stoneybrook	Detached SFR	Mission Viejo Co
Tres Vistas Custom	Detached SFR	Mission Viejo Co
West Cliff	Detached SFR	Mission Viejo Co

Tract Name	Type of Home	Builder
Casta Del Sol - Pud	Condos	Mission Viejo Co
Cypress Point	Condos	Mission Viejo Co
Casta Del Sol - Fiesta	Detached SFR	Mission Viejo Co
Casta Del Sol - Carmel	Detached SFR	Mission Viejo Co
Greystone Point	Detached SFR	Greystone
Highlands	Detached SFR	Shea Homes
Stoneridge Gallery	Detached SFR	Standard Pacific Homes

Tract Name	Type of Home	Builder
Bel Mira at Quail Run	Condos	Bramelea
Finisterra Green "Baja"	Condos	Mission Viejo Co
Alta Mira	Detached SFR	Bramelea
Quail Run - Centex	Detached SFR	Centex Homes

These fine residential communities are located throughout Mission Viejo in most all prices ranges. Mission Viejo is known for it's mater planned communities nestled in the rolling hills, with popular Lake Mission Viejo as the focal point.  Mission Viejo residential neighborhoods boast of excellent public schools, clean air, very low crime rate, and close proximity to the south Orange County beaches.

To view all residential properties listed for sale that are located in gated communities in Mission Viejo, please visit our OC Just Listed home finder service and add a note that you are looking for just gated home or condo subdivisions in Mission Viejo.  Or feel free to call us anytime at:  949-388-3396

As most everyone is aware, the residential real estate market here in Orange County is going through a significant correction.  Mortgage loan delinquencies and Foreclosures are at record breaking levels, with no relief in sight for the near term.  In August 9th of this year we evaluated  the number of distressed properties for sale per population for each city in south Orange County.  That report showed that the beach cities were experiencing a much lower percentage of distressed property sales, compared to the newer and lower priced inland cities of south Orange County.  On October 20th, we reported the ratio of distressed properties for sale compared to the overall number of homes for sale in south Orange County was 14%.

Here, we will examine the ratio of Distressed Properties for sale compared to ALL properties for sale for south Orange county and for each city.  A distressed property that is listed for sale is one in which the property is a Bank Owned REO, or homes still owned by a person that are in Foreclosure or are a Short Sale.  The table below  is a tabulation or our findings for this date of November 14, 2007'. 

Again the higher priced beach cities are holding up well and have a very low percentage of distressed properties for sale (less then 3%), while the inland cities have a much higher rate of 25% or more.  The overall south Orange County region has 18% of the listings which are distressed properties, compared to a ratio of 14%  in October 20th of this year.

The significantly higher distressed property listings in the inland cities is due to several factors.  Compared to the beach cities, the inland cities contain a much higher percentage of lower priced homes and condos that were purchased first time home buyers.  In order to afford the high cost of local housing, many of the first time buyers use highly leveraged financing, some of which with adjustable rate mortgages, and many of these homeowners are finding it now impossible to keep up with their mortgage payments after several interest rate reset increases.   

City	Distressed Properties for Sale	All Propeties for Sale	Ratio ( % )
Newport Coast	0	157	0.0%
Laguna Beach	4	280	1.4%
Corona Del Mar	3	142	2.1%
Newport Beach	12	536	2.2%
Dana Point	25	349	7.2%
Coto De Caza	17	162	10.5%
San Clemente	59	564	10.5%
Irvine	125	1069	11.7%
Laguna Niguel	100	520	19.2%
Ladera Ranch	73	340	21.5%
Tustin	108	479	22.5%
Mission Viejo	143	570	25.1%
San Juan Capistrano	78	310	25.2%
Aliso Viejo	110	434	25.3%
Laguna Hills	77	235	32.8%
Rancho Santa Marg.	163	496	32.9%
Lake Forest	208	567	36.7%
south Orange County	1305	7210	18.1%

On a more positive note, our statistical analysis has shown that the Inventory of homes Active for sale in south Orange County has been slowly decreasing in the past several months, while the number of homes sold In Escrow has increased slightly in the past month.  Also on a more grass roots level, we have seen numerous distressed properties priced well below market, sell within a week with multiple offers from buyers with very large cash down payments, which may be an indication that some of these bargain priced homes represent the bottom of the pricing cycle. For more information about Foreclosures and Short Sale properties, please email us at:  Info@OCShortSaleTeam.com or visit our website at:  www.OCShortSaleTeam.com

Orange County CA has been experiencing record breaking mortgage loan delinquencies and foreclosures this year. A large number of homeowners who purchased homes in the past 3 years using zero down 100% financing, now find themselves with mortgage debts more then their home is worth... sometimes called an "upside down mortgage".   Many of these homeowners who experienced a job lose, medical emergency or other financial hardship are unable to re-finance and are now finding themselves in Foreclosure. Foreclosure is a terrible experience that ruins ones credit for up to 7 years.  But to add insult to injury, if one purchased a home with zero down payment, and lost their home to Foreclosure, and the home sold at the Foreclosure sale for $50,000 less then the original sales price 2 years ago, the homeowner will possibly be subject to an additional $50,000 of taxable income...  Ouch ! 

But with the recent Mortgage Forgiveness Debt Relief Act of 2007' (HR 3648), the homeowner in the above example would not be subject to this extra income Tax. This bill was recently passed by Congress (House Bill 3648) by a wide margin on October 4th, 2007'.  It is now awaiting Senate approval and rumor has it it should pass easily and signed off by the President [UPDATE: Dec 17th - Senate passed this bill with some Amendments which will go back to Congress for approval before going to the President]  .  This Tax provision will only apply to taxpayers' principal residences and not investment property.  Once passed, this House Bill will be retroactive to apply to anyone who has had purchase money debt discharged or forgiven on or after January 1, 2007'.   This Debt Relief Act, if passed, will apply to Foreclosures as well as Short Sales. 

For those not familiar with the term Short Sale - a Short Sale is a pre-foreclosure sale in which the the mortgage lenders agree to accept less then what they are owed on the property, to a dollar figure which equals the sales price minus all cost of sales.  The homeowner does not receive any cash from the sale (just as in a Foreclosure).  Compared to Foreclosure, a Short Sale is becoming a preferred solution for "upside down properties" for both homeowners and mortgage bankers alike.  A Short Sale is less damaging to ones credit as compared to a Foreclosure.. a Short Sale does not stay on ones credit report as long as a Foreclosure, and a Short Sale is a more dignified resolution to a tough problem.

There are couple of items to note regarding Tax consequences that apply both equally to a Short Sale and Foreclosure. The Mortgage Cancellation Tax Relief if passed, will only apply to purchase money mortgages, and not re-finance cash out mortgages.  The other item to note, is according to many accountants, if one can prove financial insolvency, then the income Tax liability discussed above can be avoided. 

If you are a home owner who may be upside down in your mortgage, or if you are delinquent in your mortgage payments, there is free help available to you.  For details, visit:  OC Short Sale Team.  We are not Attorneys nor Accountants and this article is not to be construed as Legal nor Financial Tax advice.  Please seek Tax advice from an Tax accountant before making a decision in these matters.

If you own a home in Orange County, Ca and you find yourself unable to keep up with your mortgage payments, you may find yourself in Foreclosure in the near future.  The basic question you need to ask yourself is, "Do I try to keep my home, do I sell it, or do I declare Bankruptcy ?". 

If your monthly house payment (including property taxes and insurance) does not exceed 40% of your gross monthly income, it should be possible for you to keep the property.  If the payment is greater than 40% of gross monthly income, consider selling it or transferring the property to avoid negative impacts to your credit. 

Plan A -  Keeping the Property:  If you have a significant amount of equity left in your home (greater then 20%), and the cause of your delinquent payments was due to a temporary setback which you have, or can soon overcome (ie: Medical Emergency), then your first option may be to refinance your home and include the back payments (referred to as Arrears) in the new loan balance. If that does not apply to you, then you can try to negotiate a work out with your existing mortgage lender(s).  Lenders want the loan to be current - they don’t want to have to complete a foreclosure and own a vacant home. See if it is possible to make up the defaulted amount over a period of months.. or renegotiate the loan interest rate ... or re-write the note and include the defaulted amount.  If none of these options are possible or did not work, then it is time to consider Option 2. A side note - make sure you talk with a Short Sale expert even if you think you have some equity in your home, for property values have dropped substantially in the past 12 months, and many homeowners are not aware of the true value of their property.

Plan B - Selling the Property:   If you have some equity left in your home (ie: 5% or more), then your best bet is to sell your home outright on the open market using a professional real estate broker.  If your equity is less then 5%, but greater then 0%, and the Arrears are a few Thousand or less, and your monthly payments are too much greater then the market rent for your home, you may want to consider a Lease with an Option to Sell.  You will most likely need a professional Realtor to handle this type of transaction as well for they are more complicated then a standard sale. If none of the above options work out, or if you have no equity left in your home, then your only option at this point may be a Short Sale.

A Short Sale is a situation in which the mortgage debts are more then the home is worth.  In this situation, the Mortgage Lenders need to be convinced to reduce your mortgage debts down to level equal to the net selling price of the home.  You will most certainly need real estate professional who are experienced in these types of transactions, for as you can imagine, trying to talk the mortgage lender(s) into writing off, let's say $40,000 in debt, is no easy chore. 

Plan C - Foreclosure and/or Bankruptcy:  Bankruptcy is a major step that will have long lasting negative impact on your credit rating. Also, when you file bankruptcy, your financial matters fall under the jurisdiction of the courts which could limit your options. For these reasons, we do not recommend filing Bankruptcy as simply a means to try to keep your home.  I've never seen that work, for the mortgage banker(s) can pierce the Bankruptcy so to speak, and still foreclose on the home for they have priority to any equity that may exist in the property. If you have other financial issues that may require a Bankruptcy that is a different story, so please seek appropriate legal advice.  

We also would never recommend letting your home go through to the end of the Foreclosure Sale.  A Short Sale can stop a Foreclosure and is a much better solution.  A Foreclosure will stay on your credit report for 7 years, plus many mortgage experts claim that a Foreclosure will damage your FICO score much worse then a Short Sale, in the range of 100 to 200 points lower.  A Foreclosure will usually be filed by the mortgage lenders after your loan payments have fallen 3 or 4 months behind.  The Foreclosure filing consists of a 3 month Notice of Default period, then a 3 week Notice of Trustee Sale period and then the house is sold at Auction to the highest bidder, if any.  If the Notice of Default has been, or is soon to be filed, you have sufficient time to explore your options, but time is of the essence.  There are some potential income Tax consequences of either a Foreclosure or a Short Sale, so consult with an expert in this regard.

Please don't make any hard decisions regarding Foreclosure, Bankruptcy, Short Sales or other options, based solely upon reading this article though.  Please seek appropriate legal and financial council first. If you would like to discuss your options regarding selling, leasing or conducting a Short Sale of your property here in Orange County, please feel free to call us anytime at:  949-388-3396 or drop us an email at:  Info@OCShortSaleTeam.com , or visit our website at:  www.OCShortSaleTeam.com 

Below is the National Economic Week in Review that may affect the Orange County real estate market.

Fed cuts short-term rates

As was widely expected, the Federal Reserve Board lowered short-term interest rates by 0.25% on Wednesday, to 4.50%. The rate cut was the centerpiece in a busy week of economic news. On the bright side, the U.S. economy expanded at a solid pace in the third quarter, the employment situation appeared healthy, and inflation was largely contained. Meanwhile, consumer confidence slipped, manufacturing growth slowed, and residential construction remained weak. Against this backdrop, crude oil prices touched record highs (near $95 per barrel) and the U.S. dollar hit record lows against the euro and the Canadian dollar. For the week, the S&P 500 Index fell 1.6% to 1,510 (for a year-to-date total return of 8.1%). The yield of the 10-year U.S. Treasury note fell 12 basis points, to 4.29%.

FOMC lowered interest rates by a quarter-point

The Federal Reserve Board's Open Market Committee (FOMC) voted Wednesday to lower the target for the federal funds rate by 0.25%, to 4.50%. The action followed a 0.50% rate cut in September. In the accompanying statement (which is carefully read by analysts), the FOMC suggested a more neutral stance regarding future rate cuts. Economic growth was solid in recent months and inflation has improved during the year, but the FOMC noted that growth will likely slow in the fourth quarter and energy prices could drive inflation higher. The committee said that after this rate cut, "the upside risks to inflation roughly balance the downside risks to growth." The next FOMC meeting is scheduled for December 11.

Unemployment rate unchanged

The unemployment rate for October held steady at 4.7% for the second straight month. Nonfarm payrolls increased by a surprising 166,000, led by gains in professional and business services, health care, and leisure and hospitality. The manufacturing and residential construction sectors posted job losses in October. Average hourly wages increased a modest 0.2% to $17.58, a pace that seems to pose limited inflationary threat.

Consumer confidence hit two-year low

Consumer confidence fell in October for the third consecutive month. The Conference Board's index of consumer confidence declined nearly 4 points to 95.6, the lowest level since October 2005. Consumers were concerned about their present situation, their expectations for the next six months, and the outlook for the job market.

Third-quarter economic growth exceeded expectations

Real gross domestic product (GDP) increased at an annual rate of 3.9% in the third quarter, far surpassing consensus expectations. Strong consumer spending and exports were leading contributors. Meanwhile, continuing weakness in the housing sector and an increase in imports restrained overall GDP growth.

Income held steady, spending growth slowed

Personal income increased 0.4% in September following a 0.4% rise in August. Personal spending increased 0.3% for the month, the slowest growth since June, suggesting that the slumping housing market has slowed—but not stalled—consumer spending. The personal savings rate edged slightly higher, to 0.9%.

There are currently 271 active for sale in Laguna Niguel.  These homes range in price from $549,000 for a 3 bedroom, 2 bath single story home on Turlock in the lake Park tract, on up to $7.9 Million for a 7 bedroom, 7.5 bath, 8,780 square foot estate on Asilomar in the Ocean Ranch subdivision.  The Median of these 271 homes in Laguna Niguel is $969,000, and the Average Price per Square foot is $417/SqFt.  The average days on market is 90 days. 

Today, there are 36 detached homes Pending in Escrow in Laguna Niguel today.  These homes range in price form $545,900 for a 3 bedroom, 2 bath, 1,303 square foot home on Casitas street in the  Lake park tract.  The highest priced home in Escrow, is priced at $7,295,000 for a 10 bedroom, 10 bath, 22,000 square foot, 14 garage estate on Morning Dove street in the Bear Brand Ranch neighborhood.  The median priced home that is currently in Escrow in Laguna Niguel is $949,900.

In the past 90 days,  there were 80 detached SFR homes that sold and closed in Laguna Niguel, CA.   The median price of these 80 homes was 860,000 and the average price of these homes was $1,079,756.  The average price per square foot was $401 and the average days on market was 85 days.  Comparing these figures to 1 year ago at this same time we find that there were 110 SFR homes that sold and closed.  1 year ago, these homes had a median price of  $945,000 and an average price of $1,106,849.  the average price per square foot was $418 and the average days on market was 73 days.  Comparing these numbers we find that the Median price dropped  9%, and the average price decreased by 2.5%.  The Price per Square foot dropped by 4%. 

For attached Condos, there are 254 attached condominiums currently listed for sale in Laguna Niguel.  The median price of these 254 condos is $469,000 for an average condo consisting of 2 bedrooms, 2 baths, and 1,285 square feet.   Today, there are 20 condos that have sold and are currently pending in escrow.  The median price of these condos was $400,000.

For the past 90 days, there were 54 condos that sold and closed escrow.  The Median priced condo sold was $480,000 and the average price of these condos was $509,872.  The average price per square foot was $388 and the average days on market was 77 days. 1 year ago, there were 101 condos that sold in this same 90 same period.  The median price was $482,000 and the average price was 532,401.  The average price per square foot was $422 and the avearge days on market was 72 days.  Compare these figures we find the the median price dropped by just a mere 0.5%.  The average price decreased by 4% and the average price per square foot dropped by 8%.