In Escrow! 102 Plateau in Aliso Viejo

Barely had time to blink before we got this wonderful property into escrow.

This single family detached home located at the end of a cul-de-sac features three bedrooms, three baths and 1439sf of living space. Super floor plan that has great flow, spacious rooms bathed in light, and nicely updated and maintained throughout. Super private yard and garden, beautiful curb appeal and views from the serene master bedroom. Great home has so much to offer and at a great price! Listed at $722,000.

Call for more info or if you are ready to buy or sell 949-525-5905.

In escrow! 102 Plateau in Aliso Viejo

Orange County Real Estate – the Distressed Market

Foreclosures and short sales make up less than half a percent of the listing inventory and demand.

Parents worry about their kids all the time. Often, their minds jump to the worst-case scenario. As their newly licensed teenager drives down the street solo for the first time, mom and dad are concerned that their inexperience could result in a devastating accident. Hiking as a family on one of Southern California’s many hilly trails often leads to unexpected sheer cliffs just feet away. Many parents visualize the potential for one of their children to lose their footing and slip to their peril. Parenting is full of anguish. To keep their kids safe, they, unfortunately, must consider the most severe outcome that can reasonably be projected to occur in every situation. Similarly, due to the recession, everybody is jumping to the worst-case scenario for housing, the inevitable wave of foreclosures to come.

It is crucial to immediately point out the simple fact that just because the economy is in the midst of a recession does not mean that the housing market will tank, values must go down, and many homeowners will lose their homes due to foreclosures or short sales. In fact, in the past five recessions, only two have led to declines in real estate values, the recession that began in 1991 and the Great Recession that started in 2008. Both were fueled by asset bubbles in housing that eventually popped. The recession in 1991 was powered by the savings and loan crisis. The Great Recession was driven by subprime lending and risky investments in mortgage securities. Thus, a wave of foreclosures ensued.

Today, there are only 11 foreclosures and 7 short sales to purchase in all of Orange County, that is 18 total distressed listings, the lowest level since initially tracking distressed listings began back in 2007. It represents only 0.4% of the active listing inventory and 0.4% of demand. Compare that to January 2009 when there were 5,104 distressed listings, 44% of the active listing inventory, and demand (the last 30-days of pending sales) was at 1,428 pendings, 67% of total demand.

That meant that two-thirds of all escrows were distressed. Lenders were in control of the market, either through bank owned listings, foreclosures, or short sales where the lender (or lenders) needed to approve taking less than the outstanding loan balance.

Today, the supply of homes to purchase is low, demand is high, and home values are on the rise. Multiple offers are once again the norm. Homes are flying off the market and into escrow. And, tight lending qualifications continue to be the bedrock and strength of housing.

Even with the strength, many homeowners are worried that the housing market will tank again, and a wave of foreclosures will inevitably follow. This stems from remembering the burn from the Great Recession. Everybody was either burned or knew someone who was hurt by the collapse in housing prices. The economy ground to a halt and unemployment grew to levels last seen at the beginning of the 1980’s. With COVID-19, the economy stopped and unemployment spiked to levels not seen since the Great Depression. As a result, everyone is jumping to the worst-case scenario in their collective minds: housing must suffer.

The current recession is unprecedented. Recessions occur due to a weakness in one area of the economy that is preceded by an implosion of an asset bubble. However, the current COVID-19 recession was instigated by a forced stop of the economy, which allowed United States citizens the ability to hunker down and flatten the curve in the spread of the Coronavirus. It was the pandemic that caused the recession and not a single sector of the economy. This is precisely why the recovery has been distinctly different than a customary recovery. Housing has seen a “v-shaped” recovery, and so has manufacturing and retail sales.

A closer look at unemployment illustrates that it is affecting the lower wage earners. According to the Wall Street Journal, Bureau of Statistics, employment has only dropped 2% since December 2019 for those with bachelor’s degrees. For 16 to 24-year old’s, employment has dropped by 20.6%. Restaurants, movie theaters, amusement parks, and many retail stores have been hit hard. Younger workers have been hit the hardest. Younger, lower wage earners are not homeowners.

There are about 4 million homeowners in active forbearance, which is 7.5% of all active mortgage. Of all current forbearances which are past due on their mortgage payment, 77% have at least 20% equity in their homes, and 90% have at least 10% equity. Upon exiting forbearance, homeowners can negotiate a payment plan to pay back the missed mortgage payments or defer the payments to the back end of their loans. If they are continuing to experience a hardship and are forced to sell, most will have plenty of equity to tap into that will allow them to sell, avoiding the short sale or foreclosure route.

With about 10% of homeowners in forbearance with less than 10% equity, those owners are vulnerable to becoming a distressed sale if they experience a financial hardship. That amounts to approximately 400,000 homeowners. But not all 100% will suffer this fate. Also, with values on the rise, their equity positions will increase in time. Some will not be able to avoid becoming a foreclosure or short sale statistic, but that is a 2021 story. It will be more of ripple in the market than a wave.

The bottom line: do not count on a wave of foreclosures or short sales due to the economic fallout of the COVID-19 recession. While there may be a bit more distressed in 2021, a slight rise, it will pale in comparison to the Great Recession. Nobody should expect any type of a deal anytime soon, especially with mortgage rates that dipped below 3%, reaching yet another record low.

from Steven Thomas’ latest Orange County Housing Report

Orange County Real Estate Market July 2020

The active inventory has dropped to unprecedentedly low levels.

Even at the start of the year, there were not that many homes on the market. Anything that did come on the market quickly opened escrow. Even prior to the shutdown, the inventory had only increased from 3,901 at the beginning of January to 4,159 by March 5th, an increase of only 7%.  In March, it was at low levels last experienced in 2013. During the lockdown, COVID-19 suppressed the number of homeowners coming on the market. In April, there were 54% fewer homes that came on the market compared to the 5-year average. Today, there are only 6% fewer homes entering the fray. COVID-19’s grip on preventing homeowners from listing their homes is disappearing. Yet, the lack of new homeowners coming on the market over the last several months has substantially contributed to the current ultra-low active listing inventory, its lowest end of July level since tracking began in 2004 with only 4,590 homes today. The inventory peak typically occurs anywhere between July and August, but this year it occurred at the end of May with 5,044 homes. It has dropped by 9% since. For the rest of the year, expect the inventory to slowly drop as housing transitions to the Autumn Market in August with kids returning to another school year. Families find it less advantageous to make a move during the school year. It will drop further when housing evolves into the Holiday/Winter Market, one week prior to Thanksgiving.

Here are a few FACTS about the current Real Estate Market in Orange County
  • The active listing inventory decreased by 55 homes in the past two-weeks, down 1%, and now totals 4,590, its lowest level for July since tracking began in 2004. In the past four-weeks, 6% fewer homes were placed on the market compared to the prior 5-year average. It was a 54% difference at the end of April; thus, COVID-19’s grip on suppressing the inventory is diminishing. Last year, there were 7,601 homes on the market, 3,011 additional homes, or 66% more.
  • Demand, the number of pending sales over the prior month, increased by 150 pending sales in the past two-weeks, up 5%, and now totals 3,200, its highest level since October 2012. COVID-19 currently has no effect on demand. Last year, there were 2,505 pending sales, 22% fewer than today.
  • The Expected Market Time for all of Orange County decreased from 46 days to 43, a Hot Seller’s Market (less than 60 days). It was at 91 days last year, much slower than today
  • For homes priced below $750,000, the market is a hot Seller’s Market (less than 60 days) with an expected market time of 31 days. This range represents 34% of the active inventory and 47% of demand.
  • For homes priced between $750,000 and $1 million, the expected market time is 29 days, a hot Seller’s Market. This range represents 17% of the active inventory and 26% of demand.
  • For homes priced between $1 million to $1.25 million, the expected market time is 48 days, a hot Seller’s Market.
  • For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 60 to 53 days. For homes priced between $1.5 million and $2 million, the Expected Market Time increased from 71 to 81 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time decreased from 113 to 109 days. For luxury homes priced above $4 million, the Expected Market Time increased from 249 to 274 days.
  • The luxury end, all homes above $1.25 million, accounts for 38% of the inventory and only 17% of demand.
  • Distressed homes, both short sales and foreclosures combined, made up only 0.5% of all listings and 0.6% of demand. There are only 12 foreclosures and 13 short sales available to purchase today in all of Orange County, 25 total distressed homes on the active market, down 2 from two-weeks ago. Last year there were 56 total distressed homes on the market, slightly more than today.
  • There were 2,169 closed residential resales in June, 20% fewer than June 2019’s 2,715 closed sales. The sold data is beginning to reflect the recent surge in demand. June marked a 56% increase compared to May 2020. The sales to list price ratio was 97.6% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.2%. That means that 99.4% of all sales were good ol’ fashioned sellers with equity.
The Expected Market Time is at its hottest level since June 2013.

The story is not only a “V-Shaped” recovery, its that the market has not been this hot in seven years. The Expected Market Time (the amount of time between hammering in the FOR-SALE sign to opening escrow) is currently at its lowest point of the year, 43 days, and has not been this low in July since 2005. Anything below 60-days is considered a Hot Seller’s Market, where homes are appreciating, and multiple offers is the norm. On March 5th, prior to the lockdown, it was at 48 days, the lowest start to a March since 2013. So, Orange County housing was already pumping on all cylinders. But, by mid-April, the Expected Market Time climbed all the way to 121 days, a slight Buyer’s Market. It quickly reversed course, dropping to 90 days, a Slight Seller’s Market, by mid-May. It dipped below 60 days at the start of June and has never looked back. The Expected Market Time is a statistic that is derived from both supply (the active listing inventory) and demand (recent pending sales). With an ultra-low supply combined with piping hot demand, the Expected Market Time has dropped to unprecedented levels for the middle of summer. As the market transitions into the Autumn Market next month, and both the active inventory and demand slowly drop, the Expected Market Time will gradually rise. It will remain a Seller’s Market for the balance of 2020.

Do not expect a flood of new inventory due to the first period of Forbearance coming to an end in September. Many will extend the benefit to March 2021. It is also important to note that 90% of all homes in Forbearance have more than 10% equity, and 77% have more than 20% equity. That means that if any of these homeowners are forced to sell due to a financial hardship, they can tap into their equity in order to sell.

Also, many wonder where the high level of buyer demand is coming from given the fact that there are 16.2 million continuing claims for unemployment insurance. It is important to highlight the fact that there are over 120 million people who are employed and able to make a home purchase. Additionally, a majority of the unemployed fall within the lower income levels, which could have an impact on rentals and not the residential resale market.

The Rest of 2020 Summary: expect the active listing inventory to remain at low levels, demand to remain strong, mortgage rates to remain low, and the Expected Market Time to remain at its lowest level in years.

Talk About Color

As an artist, I have been working with and playing with color all of my life. I have really gotten to know each color, and I love them all! They each have their own personality and unique voice, too. You can use color to express yourself or to create a space that makes you happy just to be in it. You just need to choose the right colors.

In my latest podcast, I go into what I think colors have to say and also describe some of their personalities! Yes, I think colors have personalities or MOODS that you can use to your advantage to express exactly what you want to say in your home decor. Colors are your friends!