New Home Builds Remain Quite Strong in Orange County going into 2017

Median Home Prices in Orange County are up (as the chart below shows)

That’s nice to know, but the million dollar question is:  Where are we headed?

Large Company New Home builders e.g. Shea, Pulte, KB Homes, William Lyon, Lennar, D.R. Horton and smaller companies e.g. MW Custom, Brandywine Homes, Olson Homes all have one thing in common – they do their homework.

Timing is everything in the real estate industry.  I remember seeing vacant lots with “Coming Soon” signs all over Orange County just 1-2 years ago.  How long did they sit vacant?  Some of them were for 5 years or more.  For example, the massive “La Floresta” master planned community in Brea at Imperial Hwy and Valencia Ave shows an electrical permit dating back to April 14, 2011!!!  Over 5 years later, we see a vast array of trendy restaurants, Whole Foods market, and more homes still being built…

Why the delay?   Van Daele Homes, Oakmont, and Del Webb all knew something…that the market would peak in 2016.  Several of the homes purchased this year are still being built.  These builders were willing to wait because the difference between $625,000 and $675,000 is considerable when you’re talking about hundreds of homes purchased.  That $50,000 adds up.  New Home buyers don’t seem to mind – after all, it’s exciting to buy something that smells so new, looks so fresh, and is walking distance to really cool amenities and shopping.

What this means for 2017 and beyond is that historically we see a drop off just after new home builds are bought out, the front yards are starting to look like front yards, the streets begin to resemble normal streets and the feel becomes more of a normal looking neighborhood without the mounds of dirt, construction trucks and lumber stacks.  The dust settles, and the prices begin to drop.  They know it, and they’re ok with it, because they made they’re money and moved on to other projects while the property management companies are left to deal with the problems.

This doesn’t mean these companies are bad – they’re just smart, and they invest too many millions of dollars to make a poor timing decision.

For resale homes (here defined as any home that is not newly built), there is a direct correlation with these new home builds.  Housing markets reach peaks and these peaks are as much psychological as they are physical.  We all know a huge interest rate hike would cause a drop off, but what about the common sense logic that 123 Main St., a small 3 Bedroom single family home in a nice neighborhood built in the 1960s is NOT REALLY WORTH $750,000???  Buyers begin to pull back on the horse’s reins and say “Whoa, Nelly” and more and more decide to wait for a pull back in the housing market.  I hear the words “I’m waiting for prices to come down” quite often from visitors to my Open Houses.  When this sentiment prevails, and more and more people are “on the fence,” the prices come down.

It takes a month, or two, or three…but there comes a time when people selling their homes begin to realize that they can’t get the prices their neighbor was getting in Spring of 2016.  They may try, but after 3 weeks on the market with no offers close to their neighbors’ asking price, the thought starts to sink in – “I need to lower my price if I really want to sell this home.”

This shift from a Sellers’ Market to a Buyers’ Market is not overnight, but gradual as even the nicest of homes that once garnered multiple offers over the first open house weekend see an offer trickle in, every so often.  Ultra careful buyers take their time, not as concerned they’ll “miss out” on this one.  And a new normal is established.  6 months later some Data Company will represent this in the form of a chart that shows a drop off in home prices. Like, for example, this chart shows from 2007 to 2008:

What the rest of this chart doesn’t show is that prices continued to go up in 2016…and then leveled off.  But what is interesting is that the NUMBER OF BUILDING PERMITS issued in Orange County, although significantly lower than last year, was still a huge number for 2016

Building permits are issued long before the actual construction takes place, so we will continue to see a healthy amount of new homes going up in Orange County in 2017.  This is a good sign for 2017 – I won’t stick my neck out and say we will maintain our 2016 median values, but I will say that there is a good chance that home prices won’t dip too much.  In some cases (e.g. the $400,000 to $500,000 homes) there may even be a slight increase.

 

Looking to Buy or Sell?   Call or Text the author of this article,

Nic Petrossi, TNG Real Estate Consultants (714) 272-3646

Email:  Npetrossi@yahoo.com

Your comments and views are welcome!

 

Fullerton Short Sale Realtors & Agents – What are my options???

There are 5 things you can do when you realize you can no longer make your mortgage payments:

1. Nothing
2. Deed in Lieu (Hand the Title, and keys, back to bank)
3. Short Sale
4. Bankruptcy
5. Loan Modification

All of these options will adversely affect your credit.  However, some options ARE better than others.

For example, the on the severity scale of how bad your credit will take a hit, on a scale of 1 to 10, an outright foreclosure or bankruptcy is like an 11.  The Deed in Lieu is probably the dumbest thing to do because the bank will let you stay in the home rent free for a while anyhow while you work this all out.

A Loan Modification is the best route to take, but you have to know what you’re doing.  There are only a handful of legitimate Loan Modification companies out there that know how to handle this for you (for a fee) but are well worth the money.  Making your monthly payment smaller could allow you to keep your home and sometimes the bank will reduce the AMOUNT owed (principal balance). 

A short sale is the best route to take, usually, if you…A) Can’t get a loan modification, B) The loan modification doesn’t help anyhow because you can’t afford even the new amount, C) The home you’re living in is your principal residence (i.e. it’s not an investment property), and D) you can work out discharge of indebtedness with the IRS.

We get the term “short sale” from the fact that the bank is taking less from the proceeds from the sale of your home than the current loan amount owed.  Ergo, the bank comes up “short.”  In other words, the bank takes the hit in the pocket and you take the hit to your credit.  When you short sale, the amount “forgiven” you by then bank for the difference owed and the final purchase price is actually considered a “gift” by the government, and the government will tax your income accordingly. 

Example:   You bought your home in 2006 for $750,000.  The home is now worth $600,000 and you’ve lost your job.  Your wife (or husband) can’t handle the payments with their income alone.  You try to call the bank and work out a loan modification but the bank says “no” even though the person on the phone is not authorized to tell you “no.”  So you call an expert who can negotiate with the bank for you.  THAT doesn’t even work so now you must short sale your home.  You find a real estate agent who lists the home you once bought at $750,000 for $575,000.  The agent tells you that you need to get together a “packet.”  The packet consists of two years taxes, 2 months bank statements, a hardship letter to the bank explaining why you can’t make your payments, and any other documentation of income.  The agent gets several offers and eventually (after several weeks) submits the highest and best offer (we’ll say $600,000 for the sake of this discussion) to the bank with the “packet.”  The packet with the offer reaches the bank’s loss mitigation department where it sits on a desk with several other offers and packets on several different properties.  If there are 2 or more lenders on your home, the packet and offer have to be sent to those banks as well.  When there is a Second on the property, it gets sticky because the First Lien Holder sometimes doesn’t care about the Second Lien Holder and the Second wants to get something out of the deal.  The negotiations between the 1st, 2nd (and sometimes) 3rd Lien Holders will often delay this process even longer.  Let’s say the bank settles on the $600,000…and you owe $700,000 since you originally put down $50,000 when you bought the place.  Now, you are taxed on that $100,000 as if you made that money since it is considered a gift by the IRS.

The good news is that there was a bill passed by Congress to relieve you of that “gift” taxation as long as you live in the property as primary residence and can prove insolvency (that your bills are more than your income).  You would then apply for this using IRS form 982 called “Reduction of Tax Attributes Due to Discharge of Indebtedness.”  You apply when you file your income taxes.  The word on the streets is that the IRS is so back-logged that they are not going after people for the difference on their home’s short sale, but I wouldn’t trust in that information but consult a CPA or lawyer to see how you’ll be affected.

Need help selling or buying a home in Orange County? 

Contact me, Nic Petrossi with Prudential at (714) 272-3646 or email me at npetrossi@yahoo.com

Click here to check out my website —–>    CLICK HERE

Nic Petrossi, Fullerton Realtor – Complete List of Bank Owned | REO | Foreclosures as of Nov. 4, 2008

Below is a list of all Bank Owned Properties in Fullerton from the MLS.  This list is taken from MLS and is up-to-date and more reliable than any website you have been using to search for Fullerton Homes.

Contact me through my website —-> WEBSITE to set up a time to see any of these homes or to search for homes on the MLS, view my featured properties, etc.  If you are in the process of looking for a home, I can set up a search for you directly from the MLS.  If you are getting ready to sell your home, go with a company that is rated #1 by J.D. Powers & Associates in Customer Satisfaction for 2008, Prudential Realty.  Go with an agent who will work hard to sell your home and has a track record of communication and performance, Nic Petrossi.

 

Tue, Nov 4, 2008 11:06 PM

RES	MLS #	Status	P	V	H	T	Q	Type	A/D	Address	City	Area	Zip	TGNO	Trct/M	Bd	B t/f	Sty	Gar	SqFt	Yr Blt	Price	DOM
1	P657555	A	12		H	T	Q	CONDO	A	400 N Acacia Ave D13	FUL	83	92831	739B6	OTHR/*	1	1/1	1	0	673	1965	$129,900	41	*
2	U8003750	A	2		H	T	Q	CONDO	A	1410 Peckham St E	FUL	83	92833	768C2	OTHR/%	2	1/1	1	1 D	884	1979	$139,000	77	*
3	R808325	A	9		H	T	Q	CONDO	A	400 N Acacia Ave D11	FUL	83	92831	739B6	OTHR/0	1	1/1	3	1	680	1965	$149,900	23
4	R807011	A	9		H	T	Q	CONDO	A	1610 S Pomona Ave C15	FUL	83	92832	768H2	OTHR/a	1	1/1	2	1 D	886	1963	$180,761	106	*
5	P655985	A	5		H	T	Q	CONDO	A	400 Acacia Ave B27	FUL	83	92831	739B6	OTHR/0	1	1/1	1	0	673	1965	$184,900	53	*
6	R808812	A	7		H	T	Q	CONDO	D	2252 Cheyenne Way 62	FUL	83	92833	738A3	FUCR/0	1	1/1	1	1	644	1983	$184,900	42	*
7	L27628	A	10		H	T	Q	CONDO	A	2245 Cheyenne Way 49	FUL	83	92833	738A3	OTHR/0	1	1/1	1	0	644	1983	$184,900	37	*
8	R809549	A	8		H	T	Q	CONDO	A	1601 S Pomona Ave D4	FUL	83	92832	768H2	OTHR/1	2	2/2	1	1	1,157	1963	$198,900	14
9	P646099	A	9		H	T	Q	CONDO	A	1500 S Pomona Ave B2	FUL	83	92832	768H2	OTHR/0	2	2/1	1	1 D	1,130	1963	$205,000	104	*
10	P655774	A	2		H	T	Q	CONDO	A	1620 S Pomona Ave C21	FUL	83	92832	768H2	OTHR/0	1	1/1	1	1	886	1963	$209,900	54
11	P636060	A	9		H	T	Q	CONDO	A	3151 Cochise Way 39	FUL	83	92833	738A3	OTHR/0	2	2/1	2	0	1,013	1984	$214,900	182	*
12	R805015	A	20		H	T	Q	CONDO	A	670 Bridgeport Cir 24	FUL	83	92833	738D6	FUCH/0	2	1/1	2	1	713	1984	$229,900	172	*
13	P638306	A	16		H	T	Q	CONDO	A	1737 N Brea Blvd 221	FUL	83	92835	738H4	OTHR/A	2	2/2	2	0	956	1974	$239,900	168	*
14	P655518	A	4		H	T	Q	CONDO	A	2006 Associated Rd 2	FUL	83	92831	739C4	OTHR/0	2	2/1	1	0	965	1968	$242,900	55	*
15	P662808	A	1		H	T	Q	CONDO	A	2959 Haddonfield Loop	FUL	83	92831	739D5	OTHR/O	2	2/1	S	2	1,055	1973	$244,900	5
16	P659506	A	7		H	T	Q	CONDO	A	4108 CAROL Dr A-2	FUL	83	92833	738A7	OTHR/0	3	2/1	1	2	1,066	1977	$252,000	28
17	P655439	A	1		H	T	Q	SFR	D	1907 W Carol Dr	FUL	83	92833	738C7	OTHR/*	3	2/1	1	0	1,219	1956	$259,900	48
18	S550056	A	1		H	T	Q	SFR	D	1113 WILLIAMSON Ave	FUL	83	92833	738F7	OTHR/0	2	1/1	1	1	819	1949	$260,000	29
19	F1779546	A	10		H	T	Q	SFR	D	112 W Ash Ave	FUL	83	92832	768H1	OTHR/1	2	1/1	1	1 D	943	1923	$265,000	68
20	M110190	A	1		H	T	Q	SFR	A	3221 Topaz Ln	FUL	83	92831	739E5	OTHR/0	2	2/2	1	2	1,369	1963	$269,900	15	*
21	P661668	A	2		H	T	Q	SFR	D	2340 Carol Dr	FUL	83	92833	738B7	OTHR/*	3	2/1	1	1 A	1,599	1951	$269,900	13
22	R808696	A	4		H	T	Q	SFR	D	400 Jensen Way	FUL	83	92833	768C1	OTHR/1	3	1/1	1	2	858	1953	$270,000	47
23	P648734	A	12		H	T	Q	CONDO	A	4109 Carol Dr C	FUL	83	92833	738A7	CUST/a	3	2/2	1	2 D	1,100	1991	$278,000	102	*
24	P662766	A	1		H	T	Q	SFR	D	1618 W Houston Ave	FUL	83	92833	768D2	OTHR/0	3	2/1	1	2 A	1,309	1955	$279,900	6
25	P657033	A	9		H	T	Q	SFR	D	2416 W Valencia Dr	FUL	83	92833	768B1	OTHR/0	3	2/1	1	2 D	1,094	1952	$285,000	12
26	S547308	A	7		H	T	Q	SFR	D	121 S Orchard Ave	FUL	83	92833	738E7	OTHR/0	3	2/1	1	0 D	1,002	1950	$289,900	53
27	P663308	A	1		H	T	Q	SFR	D	1714 W West Ave	FUL	83	92833	768D1	OTHR/O	3	2/2	1	2 A	1,489	1952	$289,900	1
28	P655287	A	3		H	T	Q	SFR	D	713 S Pine Dr	FUL	83	92833	768C1	OTHR/0	3	2/2	1	1 A	1,187	1951	$299,900	56	*
29	P656277	A	1		H	T	Q	SFR	D	1316 W Woodcrest Ave	FUL	83	92833	768E2	OTHR/0	4	2/1	1	2 A	1,290	1954	$299,900	23	*
30	S538086	A	3		H	T	Q	SFR	D	605 W Ash Ave	FUL	83	92832	768G1	OTHR/0	4	2/2	1	2	1,300	1955	$300,000	28
31	P663358	A	8		H	T	Q	SFR	D	424 W Houston Ave	FUL	83	92832	768G2	OTHR/A	3	2/1	1	2	1,523	1958	$309,000	1
32	U8004774	A	1		H	T	Q	SFR	D	2118 W Porter Ave	FUL	83	92833	768C1	OTHR/%	3	2/2	1	2 D	1,190	1954	$309,900	10
33	R808020	A	9		H	T	Q	CONDO	A	1347 Cameo Ln	FUL	83	92831	739E5	OTHR/0	4	3/2	2	2 A	1,774	1964	$319,900	71	*
34	P662032	A	4		H	T	Q	SFR	D	2024 W Hill Ave	FUL	83	92833	768C1	OTHR/0	3	2/2	1	2 A	1,575	1958	$319,900	11
35	R809383	A	14		H	T	Q	CONDO	A	2335 Coventry Cir 139	FUL	83	92833	738C3	OTHR/0	3	2/2	2	2	1,176	1980	$324,900	21
36	P651273	A	11		H	T	Q	SFR	D	731 W Houston Ave	FUL	83	92832	768F2	OTHR/0	3	2/1	1	2 A	1,246	1954	$335,000	66	*
37	U8001501	A	1		H	T	Q	SFR	D	743 W Rosslynn Ave	FUL	83	92832	768F1	OTHR/%	3	2/2	1	2 A	1,471	1956	$345,000	145
38	P655855	A	4		H	T	Q	SFR	D	2515 E Santa Fe Ave	FUL	83	92831	739C7	OTHR/0	3	2/2	1	2 A	1,252	1956	$364,000	53	*
39	P660829	A	4		H	T	Q	SFR	A	132 E Ash Ave	FUL	83	92832	768H1	OTHR/0	2	1/1	1	0	1,288	1930	$369,000	19
40	S541419	A	6		H	T	Q	SFR	D	1466 W Valencia Dr	FUL	83	92833	768D1	OTHR/z	4	2/1	1	2	1,400	1955	$369,900	42
41	R809796	A	1		H	T	Q	SFR	D	2032 E Santa Fe Ave	FUL	83	92831	739B7	OTHR/-	3	2/2	1	2 A	1,370	1958	$369,900	5
42	P663491	A	13		H	T	Q	SFR	D	1658 Gregory Ave	FUL	83	92833	738D7	OTHR/*	4	2/1	1	2 D	1,745	1948	$374,900	0
43	F1781434	A	2		H	T	Q	SFR	D	2514 Santa Clara Ave	FUL	83	92831	739C7	OTHR/1	3	2/2	1	2	1,273	1956	$375,000	63
44	P654385	A	8		H	T	Q	CONDO	A	1360 Mc Fadden Dr	FUL	83	92833	738c5	GALW/A	2	2/2	2	2	1,220	2003	$384,900	62	*
45	P639277	A	1		H	T	Q	CONDO	A	2762 Via Segovia 86	FUL	83	92835	739A3	OTHR/*	3	3/2	2	2 A	1,386	1973	$389,900	161	*
46	P662350	A	7		H	T	Q	SFR	A	2245 Chaffee St	FUL	83	92833	738C5	OTHR/0	3	3/3	2	2 A	1,600	2004	$399,900	8
47	P651760	A	1		H	T	Q	SFR	D	1347 W Maxzim Ave	FUL	83	92833	768E2	OTHR/1	3	2/2	1	2	1,549	1957	$400,000	82
48	P662961	A	14		H	T	Q	CONDO	A	1011 Loma Vista Pl	FUL	83	92833	738B6	OTHR/*	3	4/1	2	2 A	1,718	1979	$414,900	5
49	R809813	A	20		H	T	Q	CONDO	A	1295 Noutary Dr	FUL	83	92833	738C5	GALW/4	3	3/2	2	2 A	1,463	2003	$415,000	3
50	P662970	A	12		H	T	Q	CONDO	A	1252 McFadden Dr	FUL	83	92833	738C5	GALW/D	3	3/2	2	2	1,463	2003	$449,900	4
51	Y807074	A	20		H	T	Q	SFR	A	4086 Castaway Cv	FUL	83	92833	738A3	OTHR/0	4	3/2	2	2	2,003	1999	$499,900	7
52	M110222	A	6		H	T	Q	SFR	D	1331 El Mirador Dr	FUL	83	92835	739A2	OTHR/0	5	2/2	1	2	1,848	1963	$540,000	6
53	P661884	A	11		H	T	Q	CONDO	A	2107 Owens Dr	FUL	83	92833	738D6	RADC/0	3	3/2	3	2 A	1,650	2006	$544,900	12
54	P663000	A	1		H	T	Q	SFR	D	1531 Victoria Dr	FUL	83	92831	739A6	OTHR/0	5	2/2	1	1	2,167	1955	$577,900	4
55	P654114	A	5		H	T	Q	SFR	D	2277 El Rancho Vis	FUL	83	92833	738c4	OTHR/0	5	3/3	2	2	2,766	1964	$619,900	64	*
56	R807414	A	1		H	T	Q	SFR	D	1251 Coach House Ct	FUL	83	92831	739A3	3WOOD/-	4	3/2	S	2 A	2,200	2000	$669,900	93	*

 

NIC PETROSSI, Orange County Homes Specialist — Where are We Headed?

According to the Orange County Register (who uses Data Quick for their home sales data), we are 56% better off than this time a year ago.  (If we didn’t count new home sales we’d be looking at more like 77%).  Here is how things will go down for the end of 2008 and the beginning of 2009:

End of 2008

   Typically the Holiday season is slow for real estate.  People are thinking of a head count for Thanksgiving and when to pull out the Christmas decorations from the boxes in the garage.  However, this year will be different.  There is a force in the real estate market called “pent up demand.”  This is when there are buyes who were “fence sitting” waiting for the market to hit bottom who are now coming out of the woodwork to buy a home.  This influx of buyers will mean increased demand and decreased supply.  Expect November and December of 2008 to be better than the November and December of 2006 or 2007. 

 

Beginning of 2009

   Although we will still see foreclosures and short sales popping up all over Orange County, we won’t see AS MANY as we have at the end of 2007 and beginning of 2008.  Orange County is faring much better than the Inland Empire (IE) where it seems like 2 out of 3 homes for sale are short sales or bank owned REO’s.  The balance between buyer and seller will be almost restored as we head into summer of 2009.  We won’t see as many “low ball” offers and the pendulum will swing back in favor of sellers.

 

Contact me through my website (phone # on website) if you’re looking to buy or sell a home in North Orange County ———->  NIC’S WEBSITE.