For a different perspective on the current state of South OC real estate, we turn to Realty Times. In case you're not familiar with this site, it provides "a comprehensive analysis of the market, with over 10,000 reports from Realtors across North America." The usual caveat here: Some of the "reports" are misleading, while others are decidedly well-written, insightful and honest. Of course, there is always the perception (whether deserved or not) of bias, because if you don't buy or sell a house, the Realtor doesn't make money.
Side note: An interesting bit of commentary appears on the site in the form of an article called "When It's Not a Good Time to Buy." There are some sensible points made, and it's worth a read.
Here is a sampling of Realty Times reports on various South County cities, with my analysis afterwards. I've taken pieces of the complete report. To read the entire thing, click on the city name.
Disclaimer: This is not solely meant to be agent bashing time. Instead, it's meant to show that there are many ways of looking at the real estate market. What's important is to think for yourself, and learn to sort the facts and data from the fluff. Hopefully, posts like these - from this and other real estate blogs on the Internet - will inspire more buyers and sellers to better educate themselves and study the market from all angles before making any important decisions.
Aliso Viejo
9/6:"Aliso Viejo has increased to 15.47 months of Inventory with an average list price of $594,000 (down from last month) and an average Days on Market of 74 days. "Deman (sic) for Orange County has taken a hard hit because of the current financial market crisis dropping to its lowest level in years. he conforming or conventional loans, loans under $410,000 are doing fine and the interest rates have even dropped a little. However, non-conforming or jumbo loans, loans above $410,000 which is the majority of the Orange County marketplace, are at higher rates and most can only be accomplished by direct lenders such as Wells Fargo or Bank of America who have the ability to fund loans and hold them until the financial markets right themselves or the government steps in.
"FOR YOU BUYERS... This really is the ideal time to buy if you are a qualified buyer; rates are still historically low and there is no real competition. You are in the drivers seat. You have pleanty (sic) of inventory to choose from and can take your time to assess each home. Your negotiating power is strong and you might even be able to get the seller to PAY ALL OF YOUR CLOSING COSTS. However, if you find that "exceptional buy" that is right for you just remember that there will be other buyers that have been waiting for the same "deal" to come along. So do your homework, if it looks like a good deal and you like it, go for it! The market may soften a bit more, but at least you will be settled in when the boom hits again! Just sit tight, enjoy the comfort of your homeownership and remember the down markets are short lived and the market historically comes back with a vengeance!"
This Realtor's ratings:
Analysis
Pros: You have to respect the fact that she is not playing the ridiculous "it's a great time to sell or buy a house" paradox. Clearly, as she says, the buyers are "in the drivers seat." Tangible facts about inventory and average list price (list price says nothing - theoretically, a seller can ask for any price they want. What it sells for is another matter entirely) help back up her arguments a bit. Her honesty about the market is much appreciated.
Cons: Basic error in saying conforming loan limits are $410,000 (they're $417,000). Contradicting statements: "This really is the ideal time to buy if you are a qualified buyer" and "the market may soften a bit more." If she's admitting the market could "soften," then we're probably in for a more serious correction. By that logic, it is certainly a better time to buy later, after more of a correction takes place.
More on if you buy a house... "at least you will be settled in when the boom hits again." We've just left a boom of historic proportions behind. It would seem, then, that we're not due for another any time soon as we still have a long way to correct downward. Factor in fraud and loose lending standards that created the largest real estate bubble in modern American history, and it's reasonable to not expect to see another one of its magnitude for a long, long time (if ever).
"Just sit tight, enjoy the comfort of your homeownership..." Nothing comfortable about having your buying power be cut at least in half over the course of a few short years. It's also not comfortable to know you could be paying half as much each month to rent the same property.
"...remember the down markets are short lived and the market historically comes back with a vengeance!" If you completely buy into this, read some Robert Shiller and see this graph.
Mission Viejo
9/20: "Mission Viejo is in South Orange County and has been rated as one of the safest cities in the United States. With a wide assortment of housing, from condominiums to large custom homes, prices range from $350,000 to four million dollars. Development began in Mission Viejo in 1967, and has continued in phases until the present time. With unemployment at an all time low in Orange County, Mission Viejo and surrounding housing is in great demand. Lake Mission Viejo, an almost 200 acre fresh water lake, provides recreation unparalleled by other communities. "
This Realtor's ratings:
Analysis
Pros: Little unsubstantiated claims and fluff. Sticks to the basic facts. Ratings on the market are realistic.
Cons: Tries to connect low unemployment with high demand for housing. The truth is that inventory is way up, median price is down, the market "action index" is way down, and average days on the market is up. Here is where I got that data. To me, these facts suggest that just because people have jobs does not mean they can afford to make payments on overly inflated real estate.
San Juan Capistrano
9/24: "July 2007 prices here have dropped only 0.01 percent since July 2006, so you can see how well homes in San Juan Capistrano hold their value.
Homes here in San Juan Capistrano are median priced in mid summer (August 2007) at $741,000, but some condos are far less.
Total home sales here are down 46.1% in July 2007, compared to July 2006, but sellers are starting to become realistic and offer prices that only a buyer could love.
Be sure to be pre-approved for a loan to be taken seriously here. Homes here should be appreciating in 2007 between 5% and 7%, according to the California Association of Realtors experts.
In the outlying areas of San Juan Capistrano, going East, into the mountains, there are many homes with extensive land for horses or raising or enjoying other animals.
When you are in San Juan Capistrano, be absolutely certain to tour the Mission there. You get soooo much California history (from 1775 when the Mission was founded by Father Junipero Serra) just by walking through and reading the many signs and placards.
You can even hold a wedding or social function inside the Mission, with prior approval. San Juan today has plenty of tourist stores near the mission property, but also some very classy stores, jewelry firms, and nice restaurants like Sarducci's down by the railway station."
This Realtor's ratings:
Analysis
Pros: Interesting and often successful manipulation of data...prices have "dropped only 0.01 percent since July 2006." Also an interesting approach to really talk in depth about the city highlights, including the mission area, though I'm not sure why a potential resident would be interested in learning more about "tourist stores."
Cons: ..."so you can see how well homes in San Juan Capistrano hold their value." No context here, so we're not sure what we're supposed to compare this supposed "good" small drop in value to. And does the Realtor really expect us to buy that one year-over-year comparison of SJC real estate prices tells the whole story about how robust prices are there?
"Be sure to be pre-approved for a loan to be taken seriously here." Gives off a slightly elitist tone, don't you think? Especially considering, in the paragraph before, the report mentioned how "total home sales here are down 46.1% " That would lead me to believe that many sellers will be taking just about any potential buyer seriously. Anyway, buyers are commonly getting pre-approved before they get too serious, so this is probably unnecessary.
"...but sellers are starting to become realistic and offer prices that only a buyer could love." Haven't seen any data backing this up, and that's the problem - sellers are still, as a whole, largely unrealistic about their house's value, and that's part of the problem right now on a local and national scale.
"Homes here should be appreciating in 2007 between 5% and 7%, according to the California Association of Realtors experts." Anyone who is following real estate trends knows the NAR has revised its forecast downward so many times, and therefore its predictions have long since been rendered meaningless.
Steve Thomas of Re/Max thinks so, and mentioned point blank in his latest report that he believes "the market is improving." Here is some of his reasoning:
Now, here is Thomas' market time data, or the amount of months it would theoretically take for buyers to absorb all the MLS properties for sale given the current pace of pendings.
