Orange County Short Sales

Grand Opening Open House- Sat., March 23, 12-5pm …………………Outback Steakhouse Luncheon at noon

$599,900-$625,000. Expansive 5-BED, 3-BATH home w/ Dual Master Suites is a part of Lake Forest’s highly desirable Beach & Tennis Club (down the street off Ridge Route). Located on a private culdesac street, this home is surrounded by greenbelts & has a rural, country feel. Upper master suite has large living/office/ sun room while Lower master has living area/retreat & adjacent bathroom – perfect for extended family living. Stained glass double door entry has hardwood flooring & step-down living room w/ soaring wood cathedral ceilings, fireplace & plush carpeting. Recent upgrades include newer roof, skylights, HVAC system, scraped ceilings, paint, baseboards, TV/Ethernet outlets. Kitchen, family room & lower master suite open to private backyard with newer covered patio & fire pit. Low taxes & no mello roos.

Beach & Tennis Club membership includes 2 swimming pools, swimming lagoon, wading pool, indoor spa, lighted 6 tennis courts, tennis pro, outdoor volleyball & basketball courts, fitness center (with Star Track Pro recumbent and Treadmills & elliptical machines), a billiards room and lake view lounge with bar and large screen TV. They also offer a preschool program on-site. This community is also surrounded by forests where you’ll find seasonal creeks & shady walking trails. Seller bought another. . If you do NOT have a Realtor you have committed to and want the best chance of getting your offer accepted, call lender, Tom Testerman at (949) 422-4497 on Friday to start working on your preapproval… then bring your financial paperwork to the open house to meet him in person. An offer will be accepted from one buyer who visits the open house on Saturday. Will it be you?

To see the amazing floor plan, click here: JeronimoFloorPlan003

Video Tour: http://www.youtube.com/watch?v=xi_7X1s1gdc

 

With very few homes for sale, the market is EXTREMELY challenging

Everybody is frustrated.  Buyers write offer after offer after multiple instances where they did not have the “winning bid.”  Many wonder if they will ever be able to secure a home.  Frustrating. REALTORS® representing buyers have to work ten times harder than a normal, balanced market, showing every home that appears on the market, analyzing the data and writing offers that are one of 20 submitted.  Frustrating. REALTORS representing sel- lers have to keep their clients from getting too far ahead of themselves and grossly overpricing their homes.  Frustrating.

What is going on?  Quite simply demand, the number of homes placed into escrow in the past month, is about equal to the number of homes on the market. The chart below illustrates the issue.  When supply, the housing inventory, is much larger than demand, it takes a lot longer to sell a home.  As they get further apart, it becomes much easier to purchase.  Take a look back in mid-2007 when there were close to 18,000 homes on the market with demand at about 1,200 homes.  Buyers had their choice of homes and it there was no competition.  Last year at this time, the active inventory sat at 7,597 homes and demand was at 3,569.  The lines were much closer, but the difference was still 4,028 homes.  Today, the active listing inventory sits at 3,272 homes and demand is at 2,887, that is a difference of only 385 homes. The last time this occurred in Orange County dates back to 2005.

Demand is much less today than back in 2005 when there were 4,549 pending sales in a month.  But, back then there were 5,146 homes on the market, a lot more than today.  Since demand is based upon the number of recent escrows, it is currently heavily muted because there are simply not enough homes that have entered the fray.  If there was a surge in the inventory tomorrow, there would be a surge in demand as well. There are throngs of buyers waiting in the wings for a fresh supply of homes.

This market will remain extremely frustrating until the supply of homes increases.  It appears as if that is not going to happen soon and the tight inventory will remain a major issue in 2013 and a stumbling block for many buyers to successfully purchase.  The tight inventory will also encourage homeowners to place their homes on the market and aggressively pursue the market by pricing their homes well above the last comparable pending or closed sale.  Unfortunately, many will drastically overprice their homes and they will sit on the market and procure no offers.  Buyers are willing to pay more for a home, but are not willing to absurdly overpay. 

Pricing a home is a delicate balancing act that requires a homeowner to carefully analyze the local market and the rate of appreciation.  Remember, homes may increase in value by as much as 10% in a year, but not in a month.  Carefully selecting a REALTOR® is a must.  Finding one that knows the local data and market dynamics is essential to success.  Hiring somebody solely based upon a projected sales price is foolish.  Instead, look for somebody that understands the market the best and has a strong command of the data.

Active Inventory:  The inventory remained the same.

The inventory started the year at the lowest level since tracking the active listing inventory back in 2004.  Since then the inventory has only added an additional 111 homes.  In the past two weeks it actually dropped by 4 homes and now sits at 3,272 homes.  The inventory sits at an unprecedented anemic level.  For proper perspective, just ask any buyer who has seen the few available homes and written several offers to no avail.  They will tell you how they are watching the market like a hawk, ready to pounce on the next home that hits the market that closely matches their parameters.  The only problem, when there are this few homes, too many other buyers are doing the same thing. 
So far this year, there have been 17% fewer homes placed on the market compared to last year, which represents 918 homes.  The buyer masses waiting in the wings would appreciate an additional 900-plus homes on the market.  The anemic levels are here to stay for the foreseeable future.  Last year at this time there were 7,597 homes on the market, 4,325 more than today.

Demand:  Demand continued to rise.

In the past two weeks, despite very few homes entering the market, demand increased by 11%, or 291 pending sales, and now totals 2,887.  It has grown by 33% in the past month, or 715 pending sales.  Compared to last year at this time, there are 682 fewer pending sales today.  In 2012, the market was sizzling forward at a breathtaking speed, fueled by a much larger inventory.  Today’s demand is strongly dependent on the inventory.  As soon as the inventory increases, demand will increase.  Until then, you can expect continued, subdued, muted demand.

The Distressed Market: The distressed inventory dropped by 11 homes, a 3% drop.

The distressed inventory continues to drop, shedding an additional 11 homes, which amazingly represents 3% of all foreclosures and shorts sales on the market.  There are 339 distressed homes within the active listing inventory, just 10% of the total active listing inventory.  There have not been this few distressed listings since April 2007, nearly six years ago. 

In the past two weeks, the foreclosure inventory increased by 24 homes, totaling 117, and has an expected market time of 25 days. The short sale inventory decreased by 35 homes in the past two weeks, totaling 222, and has an expected market time of 11 days.  Short sales continue to be the hottest segment of the Orange County housing market today.

Good News for Short Sale Sellers… and How the Fiscall Cliff provisions affect you, your home and your taxes

On January 1 both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama. Below are a summary of real estate related provisions in the bill:

REAL ESTATE EXTENDERS:

  • Mortgage Cancellation Relief is extended for one year to January 1, 2014 (This is huge.  Many of you toward the end of the year did not consider “short sale”ing your home to reduce your financial burdons because you were concerned about income tax consequences.  Please talk to your tax advisor to have him firm that the coast is clear until the end of 2013.  With an abundance of buyers on the market, I can help you set up a quick and virtually seamless short sale transaction that retains privacy and peace of mind.)
  • Deduction for Mortgage Insurance Premiums for filers making below $110,000 is extended through 2013 and made retroactive to cover 2012
  • Leasehold Improvements: 15 year straight-line cost recovery for qualified leasehold improvements on commercial properties is extended through 2013 and made retroactive to cover 2012.
  • Energy Efficiency Tax Credit: The 10% tax credit (up to $500) for homeowners for energy improvements to existing homes is extended through 2013 and made retroactive to cover 2012.

Permanent Repeal of Pease Limitations for 99% of Taxpayers
Under the agreement so called “Pease Limitations” that reduce the value of itemized deductions are permanently repealed for most taxpayers but will be reinstituted for high income filers. These limitations will only apply to individuals earning more than $250,000 and joint filers earning above $300,000. These thresholds have been increased and are indexed for inflation and will rise over time. Under the formula, the amount of adjusted gross income above the threshold is multiplied by 3%. That amount is then used to reduce the total value of the filer’s itemized deductions. The total amount of reduction cannot exceed 80% of the filer’s itemized deductions.

These limits were first enacted in 1990 (named for the Ohio Congressman Don Pease who came up with the idea) and continued throughout the Clinton years. They were gradually phased out as a result of the 2001 tax cuts and were completely eliminated in 2010-2012. Had we gone over the fiscal cliff, Pease limitations would have been reinstituted on all filers starting at $174,450 of adjusted gross income.

Capital Gains

Capital Gains rate stays at 15% for those the top rate of $400,000 individual and $450,000 joint return. After that, any gains above those amounts will be taxed at 20%. The 250/500k exclusion for sale of principle residence remains in place.  (Chances are you fall into the 15% category, so if you need to sell an investment property this year, the extra 5% capital gains tax won’t affect you.)

Estate Tax
The first $5 million dollars in individual estates and $10 million for family estates are now exempted from the estate tax. After that the rate will be 40 percent, up from 35 percent. The exemption amounts are indexed for inflation.

NEWS FLASH – We may be losing our Mortgage Interest Deduction – Please Help!

Call your member of congress today to protect the mortgage interest deduction
Congress, as part of negotiations on avoiding the “Fiscal Cliff,” has made direct references to “closing loopholes” and “limiting deductions” as a way to raise revenues. Clearly, the mortgage interest deduction is high on this list of revenue raisers.

Losing the mortgage interest deduction will disproportionately affect the middle class because a larger proportion of the middle class takes the deduction. In California 89% of those who took the mortgage interest deduction earned less than $200,000. Losing the deduction would cost the average California taxpayer over $3,900 (Way more than this in Orange County).

What you can do to help:

Call Congress. First and foremost, I am urging my friends and clients to call Congress @202-224-3121. The Capitol switchboard operator will help callers identify their member of Congress and connect them. The hours are Monday-Friday from 9 a.m. – 6 p.m., Eastern Time.

Get the word out. Many people seem to be blissfully unaware that their mortgage interest deduction is in danger. Please do the following to make sure that the message spreads.

  1. Forward this message to your family, friends, and clients.
  2. Post this information on your personal and office websites and blogs.
  1. Share this information on Facebook and urge others to share it as well.
  2. Tweet about it on Twitter and urge others to retweet. Use the hashtag: #keepthemid.
  3. Link to the following web page: www.KeepTheMID.com.  This site has information about contacting Congress, more information on the MID, and links to articles.
  4. As you see new information and articles, share these on all your social networking sites.

This affects all present and future homeowners.  Your call to your Congress member is invaluable.

Orange County Homes – 2 for the price of One!

It is not just the low interest rates that are bringing buyers to the market, it is that you can practically buy TWO homes for the price of ONE house payment compared to the hot market we had  a half a dozen years ago.  Let’s look back in time and do the math:

Below are two  3,000-ish  sq. ft. homes in the Lake Forest II/Sun and Sail Club community of  Parkwood Estates. 

SIX YEARS AGO: The house on the left sold in a market that was full of multiple offers at a sales price of $850,000 in an era of 6.60% interest rates.  A 20% down purchase would have required a $170,000 cash down payment.  Including property taxes of $708 per month, the monthly payment would have been $5,050 plus HOA and insurance.  (Actually it would have been higher because it was a non-conforming loan rate)

TODAY: The house on the right was offered at $575,000  and just entered escrow yesterday.  The market in this price range  is very hot as well.  If the buyer put 20% down that would only be $115,000 down.  With an  approximate interest rate of 3.47%, and property taxes of $479, the buyer’s (P,I&T) payment would be $2,536 per month.  The new buyer is paying HALF of what the 2006 buyer paid and they also have an extra $55,000 in their pocket.

You can see that right now we have a perfect storm.  Prices are great and interest rates are at an all time low – about half of what they were in the mid 2000’s.  Have you been longing to move out of your crowded surroundings and buy the home you dreamed of?  What if I told you you could select your new home first?  Through my “Select-then-Sell System”, First Team’s teamwork, and Sneak Preview system, I can help you identify your move up home prior to placing your home on the market….and then when we do put it on the market your Grand Opening Open House will look like this: http://youtu.be/39KFlc7Sz8Y

Alternatively if you love the home you’re in, but want to reduce your monthly payments, give me a call and I will help you determine your home’s value estimate and refer you to my mortgage partner to give you white glove service in lowering your interest rate and keeping more money in your pocket.  It’s a win/win! 🙂

The hottest segment of the Orange County housing market is also plagued by ridiculous pricing

Short Sale PricingThe expected market time for short sales is down to 13 days.

Buyers are still climbing into the cars of REALTORS® for the first time with high hopes of getting a “deal.”  As they experience the caravan of cars touring the few homes that pop onto the market in a given week and have to wait at the door of a home to allow the buyer in front of them to finish looking around, buyers are quickly brought up to speed: they are NOT in charge.  It is no longer a buyer’s market, quite the opposite.  Unbelievable competition, multiple offers, offers at or above the asking price, this is the new Orange County housing market reality, a seller’s market. 

Only 6% of all home sales in September were foreclosures, lows not seen since the beginning of the onslaught of foreclosed homes back in 2007.  The number of foreclosures coming on the market is dwindling.  Currently there are only 138 on the active market today.  There just are not enough foreclosures to go around.  For September, the average foreclosure sold for 2% above the asking price.  Below $500,000, the average sold 3% above the list price.  This segment of the housing market is as hot as molten lava.

It is no wonder that buyers looking for a “deal” have veered their attention to short sales.  Even though the short sale process still can take months before closing, there is no other segment of the housing market to find a deal, given the anemic inventory level and pent up buyer demand. There are only 425 short sales on the active market today.  The short sale inventory has been dropping like a rock, faster than any other segment of the OC housing market.  It has dropped 43% since July compared to 23% for the market as a whole and 25% for foreclosures.

For September, short sales, on average, sold 2% below their asking price for all price ranges and at a 1% reduction for homes priced below $500,000.  Incredibly, the expected market time for short sales is a mere 13 days.  Comparatively, the foreclosure inventory is at 21 days and the entire market is at 39 days.  Short sales are the hottest segment of the Orange County housing market.

Given that there are barely 425 on the market and 969 new pending sales within the last month, buyers are tripping over each other in lining up to buy them.  When supply is low and demand is high, these homes should be selling for very close to their market value and should not be subject to major discounting.  It does not matter that short sales take an unknown lengthy amount of time to close due to lender approval requirements and the complexity in closing them.  There simply are not enough short sales to satiate the ferocious appetite of buyers eager to be the winning bidder of a home.

If short sales are the hottest segment, then why are they selling below their asking price?  Short sales are selling for less than their asking prices because sellers are not emotionally tied to the price.  A seller with equity cares about every dollar that they walk away with; whereas, the short sale seller is attempting to market their home for less than what is owed.  They are not going to hold out for an additional $5,000 when they are still going to walk away with nothing.  On the other hand, an additional $5,000 to the homeowner with equity is an extra $5,000 in their bank account.  The short sale seller is not motivated by the amount of money they will net; they are motivated to get out from under their upside down home.

Memo to all short sale sellers:  do the housing market a big favor in helping it heal faster, price your home according to the fair market value.  In the end, you will still achieve your objective in selling, but you will also help your neighbors in strengthening the value of their homes as well.

 Many REALTORS® used to price a short sale listing below the market value, knowing that the chance of the initial buyer sticking with the long process was slim.  It would then require a new buyer to enter the fray several months down the road.  When values were dropping, if they submitted too high of a value initially, inserting a new buyer at that higher value months later proved to be impossible.  The banks expected a similarly priced offer to be resubmitted, an impossible fete given that values had dropped during the lengthy process.  To circumvent not being able to sell down the road, short sales were often sold well below their market value to insure successfully closing even with a replacement buyer.

As values are now rising and demand is scorching hot, it is time to sell short sales very close to their fair market value and be a part of the housing market recovery.  Neighborhoods are counting on short sale homes to do the right thing.

FREE $500 Gift Certificate Toward Escrow or Moving Costs

By now if you live in the City of Lake Forest, you should have received a Shop and Dine Passport with coupons for deals all across the city.  I have a Real Estate coupon in the book for a $500 certificate toward escrow or moving costs.  

If you would like the certificate (and a valuable stamp in your  “passport”) this is all you have to do:

1) View one of these four short videos and comment on what you like best about my real estate methods.

Selling SFRS for Top Dollar in One Day

Selling Condos for Top Dollar in One Day

Client Testimonial

Lake Forest Community Video

 

2) Email me at Jenean@JeneanHill.com and give me your name, address and phone number so I can get you your $500 certificate (which will be good for the next year).

3) For an added bonus, “like” me on my Facebook business page, Jenean Hill’s “Live in Lake Forest” and you will receive a Starbucks gift card, and if you share me with your friends, I will put you in this month’s drawing for 2 SeaWorld Tickets.

Thanks, and I look forward to serving you in the future.

Jenean Hill  – (949) 583-1331
Broker Associate, First Team Real Estate
Director, Orange County Association of Realtors, 2006-2011, 2013-2015
Lic# 01312003

NOT ON MLS: Laguna Niguel SFR w/ wrap-around grassy yard and ocean view DEAL!

Stunning, 3-bedroom, 3-bathroom, end-of-cul-de-sac hilltop home on a large grassy wrap-around 6,300SF+ lot in the heart of Laguna Niguel. Beautiful peak-a-boo ocean and surrounding hills views. Walking distance to award-winning elementary school, shops, theaters and restaurants. Formal living dining room with vaulted ceilings. Eat-in kitchen/great room has marble fireplace. Inside laundry. Master has walk-in closet and oval tub with separate shower. Upgrades include NEW… appliances, custom 2″ white wood window blinds, two-tone decorator paint, neutral carpeting & travertine-like tile. Even the garage is squeaky clean! This home and location are to die for and may even sell before it hits the MLS. This is a standard Equity Sale. The estate wants it sold NOW.

The plan is for it to come on the market in late August after residents have moved out. The price has not been set yet, but it is safe to say that it will be in the mid to upper 500K’s. If you don’t have an agent working hard for you and would like to talk to me about what we can do now to put you in a good position to beat the competition on this home, call me at (949) 583-1331

For more photos, click here

The American Dream – For Sale in Foothill Ranch

Georgian_Doll_HouseIt looks like my next Grand Opening Open house may be right after the 4th of July.  Watch for more details on this Lake Forest/Foothill Ranch Listing.   Just imagine coming home to an adorable house on a very quiet culdesac street with a white picket fence surrounding it.  Inside this customized home, you will find 5 bedrooms and 5 baths.  One bedroom/bath is downstairs and can also be used as a home office has a separate entrance to the home.  The other 4 bedrooms are upstairs and all have adjoining bath access. This 5-bedroom ‘doll house’ has berber carpet, laminate floors, white builtins, kitchen with beadboard center island, grassy backyard with rose bushes & flowers surrounding it and a bubbling spa. …and did I mention, an almost 5,000 square foot lot.  The price will be somewhere around $550,000.  Exterior photos to come next week.  If you are interested in a deal like this, you’ll won’t want to wait!

What kind of homeowners choose to default?

Underwater homeownersI know this sounds a lot like my last post, but it is different enough that it is worth reading.  More and more homeowners who are borderline hardship cases are opting to put their homes on the market so that the bank will consider the offer they receive and negotiate a short sale with them.  Here is what Kenneth Harney has to say about this:

People who walk away from their mortgages are not as calculating as you’d think, says Brent T. White. Memo to the bank: Take this underwater, money-gulping house and go ahead and wreck my credit for years to come. I’m walking away no matter what.  Why? That’s the provocative question posed by Brent T. White, a University of Arizona law professor whose academic paper on the fast-spreading “strategic default” phenomenon last year drew sharp criticism from lenders and Wall Street, who viewed him as the Pied Piper of the walk-away movement.  Read more:

http://www.latimes.com/business/la-fi-harney-20100523,0,2614547,print.story