Good Morning -

As is typical of the Orange County housing market at this time of year, our inventory is decreasing and so is our demand. As we enter the last half of November, and our holidays in earnest, many buyers and sellers will step back and regroup in order to take full advantage of 2011's selling season. Over the next two months, as the 2010 sales and associated data anomalies wane, many buyers and sellers will realign their expectations to be in harmony with today's realities rather the skewed vision of market realities that much of 2010's data appeared to support.

Over the last two weeks our active inventory has decreased by 274 homes to a total of 11,151 homes for sale. Demand has decreased by 2 pending sales to a total of 2,670. Our expected market time decreased from 4.28 months of inventory two weeks ago, to 4.18 months of inventory today. The inventory of distressed properties, as a segment of the overall inventory, has increased by 3 homes to a total of 4,064. The number of foreclosed homes for sale within the active distressed inventory increased by 31 homes, and now stands at 719 for all price ranges in all of Orange County.

For more in depth analysis of the Orange County housing market please see the Orange County Housing Report below.

Enjoy a wonderful rest of your week!

Sincerely,


Tony Dove, REALTOR®

Direct: (714) 283-1116
Office: (714) 282-4300
Toll Free: (800) 615-2707
Email: Tony@TonyDove.com
Website: www.TonyDoveOnline.com
Blog: www.LocalRealtyDigest.com

Many buyers and sellers alike have expectations that have become somewhat distorted by the volume of information available on a daily basis, much of which is based on national, state or regional averages or medians that do not adequately represent the Orange County housing market.

Many buyers expect HUGE discounts while a lot of sellers overvalue their homes.

This really IS a perfect time to buy: record low interest rates, prices down 30% off of their peaks, and less competition during the holidays. However, this does not translate to writing up an offer at 10% off of the asking price. It just ends up being a waste of time for everybody involved. Similarly, overpricing a property is a waste of time for all involved. Many homeowners, who heard about homes selling quickly in the lower ranges with multiple offers and year over year median price increases, translated that it was the perfect time to sell, not understanding the local dynamics of the time period the various measurements were taken. The reality remains the same as when the year started; realistically priced homes, based on local, recently sold comparable properties, will sell near their asking price. Let's take a closer look at the facts:

FACT: For all homes sold in October, the average sales price was 3% less than the asking price.

For a home listed at $500,000, that's a sales price of $485,000.

FACT: A home being sold as a short sale will ultimately sell for less than a home being sold by sellers who have equity.

Generally, it takes months to sell a property as a short sale. Often it takes two to four months for the seller to obtain approval of a buyer's short sale offer from their lender(s), and buyers want a discount for having to wait for the approval. As well, most short sale sellers have little cash on hand so there is typically deferred maintenance that needs to be performed by the buyer.

FACT: Foreclosed properties sell for less than a home being sold by sellers who have equity because most are in need of repair.

When buyers need to replace the carpet, paint, replace a dilapidated roof, repair the plumbing, replace missing fixtures or appliances, they are going to want to pay less for a home. Foreclosed homes are priced accordingly.

FACT: For all foreclosed homes sold in October, the average sales price was 2% less than the asking price.

For a foreclosure listed at $500,000, that's a sales price of $490,000.

FACT: For homes sold in October, the average seller had to reduce the asking price by 3% prior to procuring a successful offer.

Many sellers are overzealous with their initial asking price. This is usually a waste of market time. It is better for sellers to take the necessary time to arrive at a price based on most recent comparable sales and pending sale activity. Active listings carry little weight in an appraisal, and a supportive appraisal matters as much to the seller as to the buyer.

FACT: Homes in poor condition, or poor locations, sell for less than homes in good condition or a good location.

Successfully selling in any market is determined by a home's price, location and condition. Sellers cannot change their location, so they only have control over the asking price and the home's condition. Homes that back to busy streets or power lines sell for a lot less than a home that is in the center of a subdivision, and for even less if they are in poor condition, and/or show poorly.

The active listing inventory continues to decline, decreasing over the last two weeks by 274 homes, and now totals 11,151 homes for sale. After reaching a peak in mid-September, the inventory has decreased by 741 homes, or 6%. Last year at this time there were 3,432 fewer homes on the active inventory compared to today.

Demand, the number of pending sales over the prior month, decreased by only two pending sales, and now totals 2,670. Last year at this time demand was at 3,241 pending sales, fueled by a first time home buyer tax credit that was set to expire at the end of November 2009.

The active distressed inventory increased by 3 homes over the past two weeks and now totals 4,064 foreclosed homes and short sales. The distressed home market is not changing much, adding less than 1% in the past month. It is apparent that the distressed inventory has hit its peak for the year. The distressed inventory now represents 36% of the current active inventory. Last year at this time, there were 2,462 distressed homes on the market, 1,602 fewer than today. The number of foreclosed properties for sale within the active listing inventory increased by 31 homes in the past two weeks, and now total of 719. The expected market time for foreclosed homes is 1.68 months, an exceptionally HOT seller's market. Short sales, which occur when a homeowner attempts to sell their home for less than the total outstanding loans against a home, decreased by 28 homes over the past two weeks and now total 3,345. The expected market time for short sales is 3.47 months, not as hot as foreclosed properties, but better than the Orange County housing market as a whole.

Source: Steven Thomas, President, Altera Real Estate