One third of the way into the year and we have an interesting real estate market that has developed in South Orange County – both for buyers, and sellers.  Of course you have heard about distressed houses being a good 50% of sales for the past 12 months or so.  So, has this market turned into a good time to buy, sell, or perhaps both?  The answer depends on your point of view.

Buying in today’s market.  As strange as it may sound, the higher the price, the better opportunity for buyers.  How can that be?  Well, the lower price range - where the majority of sales are happening - is extremely competitive.  It is not unusual for there to be 10 offers on houses priced under $450,000.  That is producing sales at higher than list price – and more than a reasonable share of frustrated potential buyers.

In higher price ranges - over $750,000 - there is usually more negotiability in the prices, as there are fewer buyers.  The higher the price, the fewer the buyers, and the most flexibility in prices – usually.  There is a small percentage of exceptions – mostly houses that are really special in one way or another.  A few of those are selling at higher ( Than neighboring distressed houses.) prices, but frankly, there are some pretty special houses that have been distressed properties, as well.  Most of those are priced 15-20% lower than their “equity” seller ( Non-distressed.) neighbors - definitely priced competitively.  That is where some exceptional buys have recently been struck.

Heard horror stories about buying a short sale, or an REO?  Some of these properties represent exceptional opportunities!  That’s where a little experience can go a long way.  Personally, with over 32 years of local experience, I have seen - and done - just about every type of transaction. 

Selling in today’s market.  This is a whole different ballgame.  It has been getting better, though, for a couple of good reasons.  One, potential sellers are coming to realize that if they really want to sell, they will have to price their house competitively – against the distressed houses, nearby. 

That might be a bitter pill for some people to swallow.  It goes against the philosophy we’ve always heard - that we should buy low, and sell high.  To some people, however, especially if they’re wanting to get into a bigger, more expensive house, it just might be a good time to sell low, and buy low.  This is a good time to be selling lower priced properties, even those priced near a million dollars.  You can competitively price similar to nearby distressed houses, and have a couple of advantages to offer to buyers. 

For one, yours is likely more of a turnkey house, where most distressed houses are in shabby condition.  Plus, you can make a decision in minutes, instead of days or even weeks, for some distressed houses.  With those two advantages, you might be able to charge a small premium to buyers, over and above the usual 15-20% discount that distressed houses are selling for – while still lower than “normal”, out of touch, wishful thinking, “equity sellers” that make up about 25-30% of existing listings available – and 100% of the expired, or cancelled listings.

So, why would you sell at a 10-15% discount from your “equity seller” neighbors?  How about this, for a logical reason?  To buy the bigger, more expensive house at an even bigger discount.  Many of the distressed houses, in the higher price ranges are selling for hundreds of thousands of dollars less than their neighbors next door!  This philosophy is working right now in most move-up scenarios.  It does take some deftness to coordinate, and frankly, some of the agents who have only known the “good times” real estate market of from 2000 to 2005, don’t have the experience to figure out how to do it.

The truth is, though, that it can be done, and it is being done.  Thinking of trying to make a move but not sure where to start?  Give me a call and let’s discuss the possibilities.  There is no obligation, nothing to lose – and there might be a lot to gain.

Are YOU in trouble with your mortgage?   This is another sign of these times.  Mortgage payments getting out of hand, for any one of a number of reasons – frequently more than one?  Job loss?  A reset of a loan - resulting in unexpectedly higher payments?

There ARE solutions out there, and I am familiar with pretty much all of them.  Have you been thinking of selling, to relieve the hardship?  Or, do you prefer to stay in your house, but need to modify the payments?  Or, are you already facing a potential foreclosure?

There are viable solutions for every scenario - just some confusion as to which course to pursue.  In most scenarios you might be contemplating, I have been there, and done that, with other clients.  I am experienced and adept in navigating the decision making process, and fully prepared to help you sort out the correct solution, for you.

If you are looking for help or answers, give me a call – (949) 643-2100 – or shoot me an email, at BobPhillipsRE@gmail.com and let’s put our heads together to solve your situation.  For buying, leasing, and/or selling real estate, or solving real estate problems, you should be getting in touch with me.  I have been assisting your neighbors in the same ways, for over 32 years.

For the second month in a row, the country's foreclosure activity was dominated by a small number of states.

As shown by the latest stats from RealtyTrac.com, more than half of the country's foreclosure actions from April were concentrated in just 3 states:

1. California
2. Florida
3. Nevada

Those 3 states are home to but 19 percent of the U.S. population.

No matter in which state you live, however, it's important to understand the far-reaching ramifications of foreclosures.

Although real estate is local, mortgage lending is not.  Fannie Mae and Freddie Mac insure loans in all 50 states and when those mortgages go into default, the government entities often take losses. 

This is the primary reason both Fannie and Freddie asked for government aid to the tune of $19 billion and $6 billion, respectively, last week.  It's also the reason why loan fees have increased over the last 12 months -- another way to shore up balance sheets is to raise consumer charges.

Furthermore, downpayment requirements are larger than before foreclosures proliferated and private mortgage insurance is more expensive, too. 

These are important changes to homeowners in all states -- not just the 3 named above.  In some cases, they can be the difference between a home loan approval and an underwriting turndown.

Search the complete April 2009 foreclosure report for yourself on RealtyTrac's website.

After a series of increases starting April 30, mortgage rates finally took a dip Monday.  It was a welcome surprise for home buyers that went under contract over the weekend. 

Same for homeowners looking to pull the refinance trigger.

Versus mortgage rates on Friday afternoon, many lenders were already showing lower rates Monday morning before a late-afternoon rate sheet reprice even lower.

The drop in rates lowered annual mortgage payments by roughly $180 per $100,000 borrowed.

Rate dips like this aren't expected, of course, bringing us to the one of the most important axioms of shopping for a mortgage rate: You can't shop for good luck. This is because mortgage rates are inherently unpredictable. 

• On some days, rates are higher
• On some days, rates are lower
• On some days, rates are unchanged

Occasionally, there are days when rates are all three.

Monday's rate dip, though -- while sharp -- may not last.  Early this morning, markets were pressuring mortgage rates to rise and lenders are often quick to pass rate hikes on to consumers.

With a little bit of luck, you'll get your rate locked in before changes for the worse.

The economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost.

And while the April data may look bad, it's actually 10% better than what was expected.

As a result, it's turning into a bad day to be shopping for mortgage rates.

After bottoming out early last week, conforming, 30-year fixed rate mortgages have risen in cost by as much as three-quarters of a percent. Today's good-for-the-economy report may push costs higher still.

Now, it may seem odd to categorize 539-thousand lost jobs as "good-for-the-economy", but it's important to remember that on Wall Street, expectations are everything. 

Investors are constantly buying and selling securities based on what they think will happen in the future.  And, up until this morning, there was an expectation that 600-thousand jobs had been lost in April.

As it turns out -- relative -- the actual job loss data wasn't so bad.

Now, markets are making adjustments and re-forming expectations of what's ahead for the economy.  They're preparing for things like higher levels of consumer spending in the months ahead, and fewer home foreclosures nationwide.  Both outcomes would help to spur the economy from recession. 

This helps explain the stock market's early rally, too.

For now, mortgage markets remain sensitive to whiffs of an economic recovery.  In general, if there's good news for the country, it going to be bad news for mortgage rates.

Mortgage rates are off slightly in advance of the weekend.

The retail price of gasoline is rising nationwide, now up 30 percent since the New Year.

It's a similar run-up to what we've seen for retail gas prices in each of the last 5 Spring Seasons.

For people trying to time the mortgage market's bottom, clues about the future of mortgage rates may be at the local gas station.

Rising gas prices are indicative of the rising cost of energy and, indeed, crude oil is closing in on its 2009 highpoint.  As these energy costs grow, so do inflationary pressures on the U.S. economy.

Inflation, of course, is awful for mortgage rates. When it's present, mortgage markets deteriorate and rates tend to rise -- often sharply and with little advance warning.

So, for today's homebuyers-in-process and would-be refinancers, prices at the pump may foreshadow bad news for the future of housing affordability.  Even a modest, quarter-percent increase would have a palpable effect on payments, adding $372 in annual costs to a $200,000 home loan.

Since last week, gas prices are already up by 10 cents per gallon.

Both mortgage guidelines and the economy have tightened since 2006, bringing more attention to "joint homeowners" -- non-spousal partners that buy and share a home as roommates.

The practice is not new, but, anecdotally, co-purchasing is becoming more common.

In the video above -- filmed two years ago but still on-target today -- real estate expert Barbara Corcoran provides good advice for co-purchasing partners.  Like any business relationship, it's important to plan ahead.

• Hire an attorney to draft contracts and agreements
• Have a plan for when one or both parties wants to move or sell
• Consider life insurance policies on each other

The over-riding theme for co-purchasing arrangements is to be prepared.  Done right, however, they can create two proud homeowners where there would have otherwise been none.

For the second consecutive month, the number of homes under contract to sell increased -- further evidence that housing markets may have already bottomed.

As reported by an industry trade association, the Pending Home Sales Index rose by 3-plus percent last month.

A "pending" home is one that's under contract but has yet to close.  This is one reason why the Pending Home Sales Index is an imperfect statistic.

Just because a home is under contract doesn't mean it will actually sell.  A lot can go wrong between the date of agreement and the date of closing.  Deals fall apart all the time.  But, when the number of pending contracts rises, we can infer that buy-side demand for homes is strong.

It's likely that the number of homes under contract is being influenced by a combination of low mortgage rates, relatively inexpensive homes, and various tax credits for certain homebuyers.  Overall, it's spurring demand and that's part of what's captured by the Pending Home Sales Index.

So long as the demand for homes outpaces its supply, home prices are expected to rise.

With the start of May comes warmer temperates. But just because the mercury's rising doesn't mean your energy bills have to. 

This quick Weather Channel video shows how a ceiling fan can cool a 78-degree room by up to 6 degrees and reduce the costs of running an HVAC unit.  The key is to have the fan's blades rotating in the right direction.

• When the heating system is on, blades should rotate clockwise
• When the air conditioning is on, blades should rotate counter-clockwise

By changing a ceiling fan's blade rotation, a homeowner can push heat back into circulation to warm a room, or create a downward draft to make a room feel cooler. 

The Case-Shiller Index is a popular reporting tool for the nation's home prices.  Each month, researchers measure home values in 20 large cities, compile their findings, and then publish them to the public.

The Case-Shiller Index is not a perfect measurement by any means.  It gives more weight to expensive homes than inexpensive ones, for example, and its sample set includes just 37 states.  But that doesn't diminish its importance to the housing sector. 

Because the Case-Shiller Index comes from the private sector, it's an excellent counter for the U.S. government's home value reporting tool -- the House Price Index.

In this current market, the Case-Shiller Index tends to report housing in a more negative light than does the government.  This doesn't make either method more accurate, it just provides a helpful point/counter-point. 

And that's why February's Case-Shiller Index is so important. 

Despite reporting falling values in each of its 20 tracked cities, the Case-Shiller Index showed values falling with a lesser speed and intensity than in months prior. 

It's a small victory, but if the Case-Shiller Index shows that home prices are starting to mend, you have to pay attention -- especially because the index is on a 2-month delay and doesn't account for Spring Buyers or the $8,000 first-time homebuyer tax credit.

One month doesn't make a trend, but if often-negative Case-Shiller Index turns in similar numbers for March, it could be the signal that housing has bottomed.