Tuesday, November 5, 2019

NOVEMBER 2019 ORANGE COUNTY REAL ESTATE NEWS

Horton Team Real Estate Newsletter
November 2019

ARE HOUSING PRICES IN A NEW BUBBLE?

Last month, we spoke about the fed lowering interest rates, and how recent economic trends have made it more affordable to buy a home. Clients broach the subjects: Is there a house price bubble? Will there be a recession in 2020?

So we attended the 2020 Economic Forecast by the Newport Beach Chamber of Commerce, presented by the UCI Merage School of Business to find out more. It was a sold out event with positive predictions.

Christopher Schwarz, UCI Faculty Director, Center for Investment and Wealth Management spoke to the general economic trends and prediction of no recession in the coming year. The economic growth will be at a modest growth 1.5 percent in 2020.

Bill McBride, a Housing and Economic Analyst and creator of the Calculated Risk Blog, spoke specifically to the housing and economic trends. He coined himself as typically on the negative side, whereas for 2020 he is predicting positively, no recession.
He noted there are two characteristics of a bubble: 1. Prices have to be out of line. 2. Excessive speculation. He said there is very little evidence of speculation. During the last bubble, for loans they only checked credit. Now the three C's are checked: Credit, capacity and collateral. Over the past 10 years he termed there have been the best performing loans we have ever seen. Serious loan defaults are at historically low levels. The loan starts are also at a low for defaults. Current lending rules and regulations are giving way to a much healthier housing economy than was present during the previous recession. McBride commented that there isn't a frenzy in real estate activity like there was during the last bubble. During the bubble there were 7 million sales. Now there are an average of 5.3-5.4 million sales which is a healthy range. Housing starts and new homes sales are up, a trend historically during a healthy market. If housing starts and new home sales dip, then there could be a recession in the next year or two, McBride stated. He also commented on the millennials, who form a large population that are  moving from renting to owning. They will continue to drive up demand and the lack of homes currently for sale could make the coming year a busy one. A few notable slide images are provided here. If you would like McBride's full presentation, just message us we are happy to forward.












COMING SOON

in Laguna Beach

959 Quivera St, Laguna Beach
List Price: $1,289,000
3bd, 2.5ba, 1,648 sqft

RECENTLY SOLD

in Laguna Beach

12 N. Portola, Laguna Beach
Represented Seller

Sale Price: $3,300,000
3bd, 3ba, 2441 sqft
336 Canyon Acres, Laguna Beach
Represented Buyer

Sale Price: $765,000
2bd, 1ba, 725 sqft

IN ESCROW

Laguna Beach

895 La Mirada St, Laguna Beach
Representing Seller

List Price: $1,299,000
2bd, 1ba, 1,188 sqft

CURRENT LISTINGS

Laguna Beach

22191 Rico Road - $2,995,000
3 bd, 3.5 ba, 3460 sqft
www.22191Rico.com
31012 Aliso Circle - $2,499,000
3 bd, 2.5 ba, 2301 sqft
www.31012Aliso.com
885 La Mirada Lot - $599,000
25' x 100' buildable lot
www.LaMiradaLot.com
1576 Del Mar Ave - For Rent
3 bd, 2 ba, 1,476 sqft
$4,200 / mo

MARKET STATISTICS

Laguna Beach

Active - 249 (Down 5% vs. Oct.)
Pending -  39 (Down 14% vs. Oct.)
Sold in October - 42 (No change vs Sep.)

Under $1,000,000 - 5
$1,000,000 - $2,000,000 - 22
$2,000,000 - $3,000,000 - 3
$3,000,000 - $5,000,000 - 8
$5,000,000 - $7,500,000 - 2
$8,416,500 - 1
$10,000,000 - 1
Learn More

THE HORTON TEAM

AMANDA
HORTON

C 949.422.6122
EMAIL AMANDA
DRE#01357096

PAMELA
HORTON

C 949.633.6667
EMAIL PAMELA
DRE#01013024

JACE
HORTON

C 714.833.1730
EMAIL JACE
DRE#02050612

OCTOBER 2019 ORANGE COUNTY REAL ESTATE NEWS

Horton Team Real Estate Newsletter
October 2019

PAYMENT, NOT PRICE

Source: Steven Thomas Housing Report - October 7, 2019

In consideration for purchasing a home, buyers tend to focus a bit too much on their price budget, and not their monthly payment budget. After settling on a home and closing, the price no longer matters as much as the payment that is withdrawn from the checking account every single month for 30-years.

Much of today's market talk focuses on how high values are today. For detached homes they are up 60% in Orange County since bottoming in 2011. Homes have appreciated significantly from that 2011 bottom point through 2017. In June of 2017, values eclipsed the record peak reached prior to the recession in June 2007. Since breaking the record, values have only increased slightly, homes are just not appreciating much at all in 2019.

Many buyers are sitting on the sidelines and waiting… and waiting. Economists and housing experts make looming predictions about the possibility of a coming recession due to a variety of global influencing factors. These buyers are using this information to try to time the market to their advantage. Yet, those same economists and housing experts will attest that timing markets is next to impossible. As a result, many capable buyers have been permanently sitting on the sidelines rather than cashing in on an excellent opportunity.

Housing is in a very good spot right now and it has everything to do with interest rates. In November of last year, the 30- year mortgage climbed all the way to 5%. Consequently, housing slowed to a crawl. But, since then rates have plummeted to 3.5%, that is down 30%. That translates in into serious savings: For a $700,000 loan, that difference in interest rate is a $614 per month savings, or $7,373 per year. The difference is quite dramatic, and should instill a greater sense of affordability among today's buyers.

To the buyers who are waiting, now may be a better time than ever if you are looking for a home in the near future. In Orange County, demand is up 13% year over year and the active inventory is down 8%. And, unlike last year, the inventory is dropping right now. It will continue to drop through the end of the year and 2020 will start with a lot fewer homes than the start to 2019. With lower rates, demand will be stronger at the beginning of 2020. As a result, the market will be a lot hotter than what everybody has become accustomed to. Now is the time to cash in on these great rates before demand continues to rise along with prices.

RECENTLY SOLD

in Laguna Beach

12 N. Portola, Laguna Beach
Represented Seller

Sale Price: $3,300,000
3bd, 3ba, 2441 sqft
3143 Bonn Drive, Laguna Beach
Represented Seller

Sale Price: $1,750,000
4bd, 3ba, 2057 sqft
336 Canyon Acres, Laguna Beach
Represented Buyer

Sale Price: $765,000
2bd, 1ba, 725 sqft

IN ESCROW

Laguna Beach

895 La Mirada St, Laguna Beach
Representing Seller

List Price: $1,299,000
2bd, 1ba, 1,188 sqft

CURRENT LISTINGS

Laguna Beach

22191 Rico Road - $2,995,000
3 bd, 3.5 ba, 3460 sqft
www.22191Rico.com
31012 Aliso Circle - $2,499,000
3 bd, 2.5 ba, 2301 sqft
www.31012Aliso.com
885 La Mirada Lot - $599,000
25' x 100' buildable lot
www.LaMiradaLot.com
1576 Del Mar Ave - For Rent
3 bd, 2 ba, 1,476 sqft
$4,200 / mo

MARKET STATISTICS

Laguna Beach

Active - 261 (Down 12% vs. Aug)
Pending -  45 (Down 35% vs. Aug)
Sold in September - 42 (Up 55% vs Aug.)

Under $1,000,000 - 5
$1,000,000 - $2,000,000 - 21
$2,000,000 - $3,000,000 - 8
$3,000,000 - $5,000,000 - 4
$5,000,000 - $6,000,000 - 3
$7,370,000 - 1*
*Sold by the Horton Team
Learn More

THE HORTON TEAM

AMANDA
HORTON

C 949.422.6122
EMAIL AMANDA
DRE#01357096

PAMELA
HORTON

C 949.633.6667
EMAIL PAMELA
DRE#01013024

JACE
HORTON

C 714.833.1730
EMAIL JACE
DRE#02050612