Are you looking to buy or sell a home in Orange County?

[Morrigoon]

Just thought I'd let folks know that I can help! In addition to being a micechatter, I'm also a real estate agent.

If you'd like to meet with me and learn more about what your home is worth, or if you would like to look at homes available for sale in the Orange County area, PM me.

[Morrigoon]

Since there seems to be so much interest here on what the real estate market is doing (and since I don't wanna derail those topics where it comes up with a long post), I'm going to start sharing the economic (housing sale) reports put out by my company every two weeks. These reports mainly focus on what is called "Market Time", or the average length of time houses are staying on the market (how long it's taking to sell).

This first one is somewhat doom-and-gloom, but spot on in what it says about pricing your home. Don't put it on the market unless you're serious about selling, and will do what it takes to get your home sold (eg: listen to your agent about pricing, staging, etc!!!) A year ago, when the market was still running at 150% of normal, people would put their homes on the market for more than they realistically expected to get in order to "test the waters". That strategy is only going to cost you precious time in the current market. Proper pricing is going to be key to getting the attention of buyers, who currently have a LOT of homes to choose from.

Market Time Report: OVER 7 MONTHS OF INVENTORY

July 13, 2006

Good Afternoon!

If you are not motivated to sell, DON’T place your home on the market! The Orange County inventory zoomed passed the seven month mark and has now grown to 7.2 months. There are 15,358 homes on the market and only 2,132 homes were placed into escrow within the prior 30 days (current demand). We are continuing to see more homes placed on the market than are placed into escrow. Demand (escrows within the prior 30 days) has consistently dropped since climbing to its highest level of the year in April, 2,900 homes. The number of homes on the market has continued to climb since the beginning of the year, growing from 7,243 homes to the 15,358 level today; that is an addition of 8,115 homes. Just one year ago the market time was at 1.73 months with 8,958 fewer homes on the market and 1,561 additional homes placed into escrow within the prior 30 days. The talk around the coffee pot is that there are a lot of sellers who are unwilling to budge on price and will just not be able to sell in today’s market. This is very perplexing because the market is not going to change in the short run. If a seller is not willing to align their price with the market, recent sales and all escrow activity, then why do they have their home on the market? They are just wasting their time, their agent’s time, and negatively impacting the inventory. But, there is good news around the coffee pot: sellers that are just now entering the market are much more realistic and are pricing their homes very carefully. They are acutely aware of our changed market through the media, “FOR SALE” signs in every neighborhood with only few “SOLD” signs and several open house directional arrows on every corner. Buyers, on the other hand, have a lot of choices and do not have to rush to purchase. At a 7.2 month inventory, the Orange County inventory is working its way deeper into a buyers market. Prices are NOT going to plunge. The inventory needs to be near or beyond the ten month mark to be indicative of a major buyers market where most sellers will not be successful and prices will start to drop. All ranges above $500,000 are within the definition of buyer’s market, beyond six months, and all homes below $500,000 are knocking on the door. The homes between $750,000 and $1.5 million are rapidly approaching the ten month mark. All ranges above $1.5 million are above 13 months. The year over year range comparisons are almost unbelievable. The most profound difference is the $500,000 to $750,000 range, an inventory of 6.34 months today compared to 1.27 months last year, a 500% difference. Today’s market is complex. Buyers and sellers really need to look to the experience of their real estate agent to navigate in this complicated market.

What can we expect for the rest of the year? As expected, demand has cooled since the Spring. We will probably realize a small increase in demand over the next few weeks. But, as we approach the Fall market and the beginning of school, demand will most likely drop. Relocations will help prop up the slower Fall market. The holiday market, Halloween through the first few weeks of the New Year, will be the slowest season of the year.

How should a Seller approach the market? A homeowner should NOT place their home on the market unless they are motivated to sell and price their home realistically. Sellers must ignore their neighbors, family and friends when it comes to any input on the real estate market. Instead, they should rely on their real estate agent for experienced, expert advice. Also a seller should NOT price their home based on what they need or would like to net from the sale of their home. Selling a home with the notion of buying it back for less next year is not a historically sound investment strategy. Most importantly, sellers need to carefully select their real estate agent and carefully price their home. Selecting an agent based upon the recommended list price is foolish and a recipe for disaster. Instead, look for the real estate agent who is very knowledgeable about the current market and can best explain and communicate an accurate price and all changes in the market as the listing progresses. There are 15,358 homes on the market and only 2,132 homes placed into escrow within the prior 30 days; 13,226 sellers will NOT sell their homes over the next month using last months figures. Only 13.9% will be successful. So, how should a seller carefully price their home? Sellers should scrutinize recent sales, the prior few months carrying the most weight, with even a higher degree of emphasis placed on homes in escrow. Sellers must NOT place any weight on active listings other than determining where they rank in price compared to the rest of the market. We have seen neighborhoods where every home is overpriced. To rely on what other sellers would like to get for their home is careless. It is important to watch active listings for signs of an aggressive seller willing to price their home slightly below the last comparable sale or current escrow, attempting to sell their home quickly. When these homes are placed in escrow, they establish a new market value. In pricing, sellers need to cautiously consider their amenities, location and condition in order to avoid the risks of overpricing a home and wasting market time. As the county’s market time continues to grow, look for more and more sellers who have to sell to drop their price to a point that will enable them to sell quickly. They are coming from the perspective that they are sitting on a lot of equity after years of appreciation, enabling them to shave their price to achieve their objective of selling their home swiftly.

How should a Buyer approach the market? This is an excellent market to be a buyer. There are a lot of choices. Buyers must be aware of the upward pressure on interest rates. Bernanke, the new Federal Reserve Board Chairman, and the rest of the board, may opt to increase the short term rate in August in order to curb the increasing risk of inflation. Home affordability drops as rates rise. Buyers could ultimately be priced out of the market. Renting while waiting for prices to drop is NOT sensible. Trying to determine the best time to enter the market and purchase is impossible. In the end, the market will most likely pass up the fence sitter and they will either pay even more or spend years renting. If we could really predict the “best” time to buy, then everybody should have bought as many homes as possible in 1995, the last “bottom” of the market, but, at the time, NOBODY knew. Thus, buyers should only wait for the home that best fits their wish list in a home AND not try to pinpoint a specific timeframe. After locating their preferred home, they should make an offer to purchase. A buyer risks losing a home to another interested buyer by sitting on the fence, especially a home that is priced extremely well. To arrive at the offer price, buyers need to carefully ascertain the market value of a home by analyzing the most recent sales and emphasizing all escrow activity. Remember, there are some sellers that simply are unrealistic and their homes are overpriced; they will not be willing to listen to the market and budge on price. Yet, many sellers will be flexible given the amount of local competition and the length of time that they have been exposed to the market. It is NOT advisable to bring a seller a “low ball” offer. This will inhibit a buyer’s ability to arrive at a realistic value and can turn off a seller completely. Sellers take pride in their homes and a Low ball offer is often perceived as a slap in the face.

The following areas have less than a six month inventory: Brea, Fountain Valley, Fullerton, Orange and Westminster.

The following areas have inventories between eight and ten months: Costa Mesa, Dove Canyon, Ladera Ranch, Laguna Niguel, Newport Beach, San Clemente and all ranges between $750,000 and $1.5 million.

The following areas have inventories greater than ten months: Canyon Areas, Coto de Caza, Corona Del Mar, Dana Point, Laguna Beach, Newport Coast, Portola Hills, Talega and all ranges above $1.5 million.

As always, if you would like more information about listing your home, or you would like to look at buying a home in the Orange County and surrounding areas, PM me.

[Morrigoon]

Forgot to update this!

Market Time Report: APPROACHING THE ACTIVE INVENTORY PEAK

July 27, 2006

Good Afternoon!

It looks as if 16,000 is going to be the top of the active listing mountain we have steadily climbed since January 1st of this year. The Orange County inventory dropped from 7.2 months two weeks ago to 7.04 months today. That’s the first drop since February 23rd. There are now 15,735 homes on the market and 2,235 homes placed into escrow within the prior 30 days (current demand). Homes are still coming on the market at a faster pace than they are going into escrow, which is why the active inventory has consistently climbed since day one of 2006. BUT, the rate has slowed considerably over the past month. The active inventory was climbing at a rate of 700 homes every two weeks. In the last four weeks, the inventory has increased by only 789 homes. Since the first of the year, the number of active homes on the market has increased by 8,492 homes. As we approach the Fall market, a cyclically slower time for real estate in Orange County, fewer sellers will enter the market. Also, many sellers that have been on the market since the beginning of the year with no success will opt to pull their homes off the market completely and wait for a better market with higher demand. This too will help erode the active inventory. Unless a seller is willing to align their asking price with the true market value, it is best to just pull their home off the market. The market is not going to suddenly switch gears. With the help of the media, “FOR SALE” signs on every street with very few “SOLD” signs, and “OPEN HOUSE” directional arrows on every corner, sellers that are just now entering the market are much more realistic and are pricing their homes very carefully. Demand (escrows within the prior 30 days) has climbed in the past two weeks, from 2,132 homes two weeks ago to 2,235 homes today, a 103 home increase. The normal cycle for the Orange County real estate market called for a dip in escrows in the beginning of July, followed by an increase in escrows from mid-July through mid-August. Thus far, we are right on course. Just one year ago the market time was at 1.73 months with 9,246 fewer homes on the market and 1,515 additional homes placed into escrow within the prior 30 days. At a 7.04 month inventory, Orange County is within the definition of a buyers market, a market greater than six months. BUT, prices are NOT going to plunge. We would need to be near or beyond the ten month mark where it takes a drop in price to get the attention of the few buyers looking to purchase. All ranges above $500,000 are within the definition of a buyer’s market. All ranges below $2 million had a decrease in their respective market times. All ranges above $1.5 million are above 10 months. Yet, there are not significant drops in value within those ranges. High end sellers typically are not in a rush to sell and are not as motivated to drop their price. They seem to march to the beat of their own drum and only represent 6% of all escrow activity. Today’s market is extremely complex. Buyers and sellers must turn to the expertise of their real estate agent to successfully navigate this intricate market.

What can we expect for the rest of the year? Expect demand, the number of homes placed into escrow, to continue to increase through mid-August. The Fall market, the rest of August through October, we can expect demand to drop. At the same time, fewer homeowners will place their homes on the market as more and more sellers, after unsuccessfully attempting to sell their homes, will decide to pull their home off the market completely with the common knowledge that it is not the best time of year to sell. The holiday market, from Halloween through the first couple weeks of the New Year, will be the slowest season of the year. For buyers, this is typically the best time to get a “deal.”

How should a seller approach the market? If a homeowner is not motivated to sell their home then they should NOT list their home for sale at this time. This is NOT the market to test the water. With 15,735 homes on the market and only 2,235 homes placed into escrow within the prior 30 days, given last month’s activity, 13,500 sellers will NOT achieve their objective of selling their homes. Sellers need to buckle their seatbelts and plan to market their homes for months and not days. If a seller must have quicker results, they need to price their home accordingly.With one out of every 50 adults in California holding a real estate license, sellers should choose their agent with extreme caution. DO NOT select an agent based upon their suggested list price; a seller will eventually find an agent willing to give them a price they want to hear. Instead, a seller should look for a market expert, an agent that is very knowledgeable about the local market and will do an excellent job in communicating all changes in the market and help decipher the true market value. Sellers must ignore their neighbors, family and friends when it comes to any input on the real estate market. As a seller sits on the market month after month, suddenly everybody has an opinion on how to achieve better results. With a diligent choice in a real estate agent, the seller should rely on their agent’s experience and knowledge. With so much competition, it takes time to sell a home. Sellers also must carefully price their homes from the very beginning. Remember, most activity comes within the first few weeks of placing a home on the market. A seller should not waste this time with an unrealistic price. To arrive at the appropriate market value, sellers should scrutinize recent sales, the prior few months carrying the most weight, with even a higher degree of emphasis placed on homes in escrow. Other than looking for an aggressive seller willing to price their home below the last comparable sale or current escrow, sellers must NOT place any weight on active listings other than determining where they rank in price compared to the rest of the market. Also, sellers need to cautiously consider their amenities, location and condition in order to avoid the risks of overpricing a home and wasting market time. If a seller receives an offer on their home and it is not quite what they are looking for, it is important to put into perspective the amount of appreciation that they have realized rather than focusing on a few thousand dollars.

How should a Buyer approach the market? I will say it until I am blue in the face - this is an excellent market to be a buyer. There are so many choices, choices that were simply not there just one year ago. There is still upward pressure on interest rates. Remember, home affordability drops as rates climb. It looks as if Bernanke, the new Federal Reserve Board Chairman, and the rest of the board, may opt to increase the short term rate in August one last time in order to curb the increasing risk of inflation. Also, renting while waiting for prices to drop is NOT sensible. Trying to determine the best time to enter the market and purchase is impossible. Economists, real estate agents and investors did not know that 1995 was the bottom of the market in the 1990’s. If they did, they would have found a way to purchase every home they could get their hands on and would be retired today. Thus, buyers should only wait for the home that best fits their wish list and not the perfect time to buy. Then, after locating their preferred home, they should make an offer to purchase. It is common to have a home sit on the market for several months and receive more than one offer to purchase at the same time. Why? Because a buyer opted to sit on the sidelines and wait for whatever reason only to finally make a move to purchase the property when another interested party enters the picture and writes an offer on their “dream home.” The fence sitter risks losing the home outright or paying more than if they wrote an offer to purchase on the first day they saw the home. To arrive at an offer price, buyers need to carefully ascertain the market value of a home by analyzing the most recent sales and emphasizing all escrow activity. Remember, there will always be sellers that simply are unrealistic and their homes are overpriced. These sellers typically are not willing to listen to the market and budge on price. Yet, many sellers will be flexible given the amount of local competition and the length of time that they have been exposed to the market.

The following areas have less than a six month inventory: Brea, Cypress, Foothill Ranch, Fullerton, Garden Grove, Rancho Santa Margarita and the range of homes between $0 and $500,000.

The following areas have inventories between eight and ten months: Costa Mesa, Dana Point, Ladera Ranch, Laguna Hills, Newport Beach, Placentia, San Clemente and the range of homes between $750,000 and $1.5 million.

The following areas have inventories greater than ten months: Canyon Areas, Corona Del Mar, Coto de Caza, Laguna Beach, Newport Coast, Talega and all ranges above $1.5 million.

Have a fantastic weekend.

By the way, this is cool just had to share: I was doing a search for something for some folks, and happened to discover that there are units similar to the one I live in, but they're in Anaheim! (and cheaper!). So if anyone's looking for 2/2, 1200 sf 2-story condos in Anaheim for around $350,000... I just found em!

[Morrigoon]

Good news.... my website's back up!

I'm still working with IT to figure out why the MLS Search isn't the greatest, but at least it's back up. If you want to see specific homes in a specific area, just use the "Contact Me" form or PM me and I can do a thorough MLS search and email you more complete listings with photos and everything. (And my apologies for the grammatical error on the response... working on making IT fix that too)

[neuhickman79]

Awww Cindy....I WISH we were moving to OC. But, we're moving to Chicago!...works for me...now, if only you were an agent out there!

[Morrigoon]

Darling, if I knew an agent in the area, I'd be happy to refer you to a good one!

I'm so excited for you guys moving to Chi-town though!

[Morrigoon]

Hey, check it out, I found a company that produces a monthly newsletter for agents like me to be able to send out. I think I'll post these here too when they're issued. (Just the links to them)

[Morrigoon]

I've got next month's newsletter put together. It has a nice, easy article on improving the "curb appeal" of your home to help it sell (or to just plain look better)

September newsletter