Tuesday, January 22, 2013
2013 Looks Good For Property Buyers
Is it a good time to buy?
That's always a challenging real estate question because, well, you have to ask real estate people for the answer. And, well, they have a habit of being overly optimistic.
Nevertheless we decided to ask real estate pros around town what they'd tell the inquisitive relative or neighbor who asked the quintessential property question. And, yes, we heard "It's a good time" a lot.
Let's start with residential outlooks ...
Len Herman, 2013 president of the Orange County Association of Realtors and agent with Keller Williams Realty in Mission Viejo, says the timing is perfect to buy.
"It may be the best time ever to buy a home which you plan to keep. Home prices are down about 40 percent off their peak and interest rates remain at or near record lows. Additionally, prevailing market rents versus mortgage payments favor home ownership."
Gary Watts, broker for Impact Real Estate in Mission Viejo, says cheap loan rates are key for the house shopper.
"For a buyer, please get in as soon as possible because before long, interest rates will have to rise. With today¹s low interest rates, house payments can be less than renting, and if we are at or near the bottom of the house-price cycle, then add potential future appreciation to your acquisition."
Veronica Hicks, broker from CondosEtc., had similar thoughts for those with a long-run horizon.
"And you tell them ... It has been a good time to buy and invest for the last two to three years. Two years from now prices will be higher and rates will be higher."
Daren Blomquist, vice president at foreclosure tracker RealtyTrac from Irvine, says for the investor it's not easy -- but flipping a house for a quick profit still is possible.
"You've probably missed the absolute best time to buy or invest because you didn't buy in 2009 and 2010 when everyone else was running for the hills. Your best bet is to stay conservative and buy less than you can afford, leaving a margin for the unexpected. If you're investing in a property as a rental, simply leave an extra cushion between what you pay each month (principal, interest, taxes, insurance) and what the property generates in rental income each month. If you're flipping start with a property that is well below what you can afford and leave big margins in your budget to plan for the unexpected. In general, flipping would be a better strategy in Orange County while buying rentals is probably a better strategy in the Inland Empire."
Meanwhile, in commercial real estate ...
Rand Sperry, CEO of the Sperry Van Ness commercial real estate franchisor in Irvine, says investors of big properties, too, should keep cheap money in mind.
"In the last 35 years, I have never seen rates near the sub-4 percent level we are seeing today. I believe we are at or near the bottom and don¹t believe there is much more downside. We may have even pushed off the bottom. The availability of positive leverage, low interest rates, rental rates on commercial properties at five-year lows and improving market fundamentals lends itself to a unique investment environment."
Nick Lieberman, president of Bona Fide Mortgage of Irvine and treasurer of the Apartment Association of Orange County, says successful rental buyers will have reasonable expectations.
"Don¹t expect large returns in initial years. A 2 percent to 5 percent annual yield is probably all one can expect on a well-located, stabilized income-generating property. But compared with interest paid on savings -- typically less than 1 percent -- that may be a perfectly acceptable return. Depreciation benefits (for as long as they may remain a deduction) offer an addition boost to yield. The last five years of economic stress have put real estate values through the ringer, meaning reduced risk of decline in 2013 and greater likelihood of appreciation."
Alan Reay, president of the Atlas Hospitality Group tourism consultancy in Irvine, thinks hotels will be a hot property.
"With growing demand and limited new supply of hotel rooms, investors are going to enjoy robust cash on cash returns and value appreciation."
Trent Brooks, chief operating officer at Lyon Communities, says apartment investors will be rewarded by changing tastes in housing choices.
"I believe we are seeing a paradigm shift in how many Americans approach their housing decisions. The economic difficulties over the last few years have made homeownership less attractive and consequently boosted rental housing demand."
And, finally, Jeff Ingham, senior managing director at the Jones Lang LaSalle commercial real estate brokerage, says selectivity will be key.
"Since real estate is relatively custom and location-specific, there tends to be hidden opportunities in product type in most flat as well as improving market cycles. If you¹re considering investing in core Class A office product, prices have fully recovered and are currently trading at peak values. However, if you are looking for a long-term investment, the market has plenty of value-added Class A and B product to consider with higher, risk-adjusted returns. Class C product would be tough to invest in with any confidence in a return."
Written by
Jonathan Lansner and Jeff Collins / The Orange County Register
How To Make The Most Of Spring Curb Appeal
According to the National Association of REALTORS?, 63% of homebuyers will drop by after viewing a home they like online. If your home isn't alluring from the outside, potential buyers may never schedule a showing to see the desirable features within it. Here are some tips to create a first impression that may lead to a sale this spring.
- Under pressure. Pressure washing is budget-friendly way to dramatically improve a home's exterior. Dingy siding, mildewed decks, faded walkways and oil-stained driveways can be returned to pristine condition.
- Contain yourself. Consider investing in container plants. Arranging them around the yard and entryway is a quick way to brighten up a space and create a splash of color.
- Get rid of gutter clutter. Clean your gutters. Often leaves, branches and debris may be visible from the street.
- Open up. Homes with open your curtains often look brighter and more inviting.
- Enjoy the view. Clean windows speak for themselves.
- Lighten up. Outdoor lighting is aesthetically pleasing and provides visual aid in the dark.
- Quick fixes. Updated hardware, such as doorknobs, lighting and even the mailbox, can greatly enhance an entryway.
- Store more. Put away any tools, toys, bikes etc. out of sight so they do not detract from the home.
- Repair and renew. Improve the obvious by filling in sidewalk cracks, fixing screen doors, and touching up any paint that is chipped.
- Tidy up. Remember to rake the leaves and trim the hedges to give the yard a boost.
Tight Inventory, Low Rates Helped Give A Boost To Housing Market
The housing market has steadily improved this year, helped by stable job
gains and record-low mortgage rates. Here are five key things that
happened in real estate in 2012:
1. Mortgage rates plummeted to record lows. Thirty years ago, the rate for a 30-year fixed home loan was in the double digits, between 13 percent to almost 18 percent. Now, it’s fallen below 4 percent, based on numbers from mortgage giant Freddie Mac. In fact, both the 30-year and 15-year rates in November dropped to their lowest levels in 41 years. Since then, neither have strayed too far from their all-time lows of 3.31 percent for the 30-year and 2.63 percent for the 15-year. Rates have consistently fallen throughout the year but received an extra downward push after the Federal Reserve said in September it would buy mortgage-backed securities to give the U.S. economy a lift. The plan is meant to keep long-term interest rates and mortgage rates down so more folks can buy homes and refinance their mortgages.
2. A $25 billion mortgage settlement pushes banks to help consumers. California Attorney General Kamala Harris and housing advocates called the deal between 49 states and five major lenders a historic deal that finally holds accountable the companies accused of wrongfully foreclosing on homes and failing to help property owners. Opponents of the deal say the effort was too little, too late, and a raw deal for consumers because the relief amount, when broken down by harmed homeowner, was minor. Critics of the mortgage settlement also point out that many states, including California, used part of their money to fix their budgets. Not quite the intended use. Still, banks have provided help to homeowners through the settlement. On the flip side, about two-thirds of that aid has been in the form of short sales, which some housing advocates argue is less desirable than a loan modification or other means of keeping the borrower in the home.
3. Short sales make up a larger share of the housing market than foreclosure resales. This happened because fewer homeowners have been defaulting on their mortgages because of a slightly improving economy and other alternatives such as loan modifications and short sales, deals where homeowners can sell their homes for less than what they owe as long as the lender says OK. In November, mortgage defaults sank to a six-year low and foreclosures decreased 35 percent from the same time a year ago. Also, the mortgage settlement appears to have contributed to somewhat of a short sale frenzy. Almost 40,000 of them were completed in the state through the settlement, from February to November. Short sales not only can benefit consumers, they also benefit lenders because they tend to be less costly to complete compared to foreclosures, which are lengthier to process.
4. Housing inventory is super tight. If you’re a buyer, especially someone who’s not an investor, you may be facing slim pickings out there. It’s not just in your head. There are about 5,300 active listings in San Diego County, half of what we saw just a year ago and the lowest level in at least three years, according to the local Realtors’ group. Inventory has consistently fallen for the last 15 months and may keep dropping if consumer demand remains strong and would-be sellers stay on the sidelines. Why aren’t folks listing their homes? Many are underwater on their mortgages and are waiting for prices to rise more.
5. Home prices and sales have stayed hot through the fall and winter. The median price for a home sold in November was $358,000, almost 14 percent higher than a year ago and the number of transactions reached a seven-year high for a November. Keep in mind, that happened during a fall month, when homebuying typically cools down. Homebuying demand remains strong especially among the investor crowd. That, coupled with limited inventory, has pushed prices up. This is not-so-great news for potential buyers. And possibly good news for potential sellers.
Written by
Lily Leung
1. Mortgage rates plummeted to record lows. Thirty years ago, the rate for a 30-year fixed home loan was in the double digits, between 13 percent to almost 18 percent. Now, it’s fallen below 4 percent, based on numbers from mortgage giant Freddie Mac. In fact, both the 30-year and 15-year rates in November dropped to their lowest levels in 41 years. Since then, neither have strayed too far from their all-time lows of 3.31 percent for the 30-year and 2.63 percent for the 15-year. Rates have consistently fallen throughout the year but received an extra downward push after the Federal Reserve said in September it would buy mortgage-backed securities to give the U.S. economy a lift. The plan is meant to keep long-term interest rates and mortgage rates down so more folks can buy homes and refinance their mortgages.
2. A $25 billion mortgage settlement pushes banks to help consumers. California Attorney General Kamala Harris and housing advocates called the deal between 49 states and five major lenders a historic deal that finally holds accountable the companies accused of wrongfully foreclosing on homes and failing to help property owners. Opponents of the deal say the effort was too little, too late, and a raw deal for consumers because the relief amount, when broken down by harmed homeowner, was minor. Critics of the mortgage settlement also point out that many states, including California, used part of their money to fix their budgets. Not quite the intended use. Still, banks have provided help to homeowners through the settlement. On the flip side, about two-thirds of that aid has been in the form of short sales, which some housing advocates argue is less desirable than a loan modification or other means of keeping the borrower in the home.
3. Short sales make up a larger share of the housing market than foreclosure resales. This happened because fewer homeowners have been defaulting on their mortgages because of a slightly improving economy and other alternatives such as loan modifications and short sales, deals where homeowners can sell their homes for less than what they owe as long as the lender says OK. In November, mortgage defaults sank to a six-year low and foreclosures decreased 35 percent from the same time a year ago. Also, the mortgage settlement appears to have contributed to somewhat of a short sale frenzy. Almost 40,000 of them were completed in the state through the settlement, from February to November. Short sales not only can benefit consumers, they also benefit lenders because they tend to be less costly to complete compared to foreclosures, which are lengthier to process.
4. Housing inventory is super tight. If you’re a buyer, especially someone who’s not an investor, you may be facing slim pickings out there. It’s not just in your head. There are about 5,300 active listings in San Diego County, half of what we saw just a year ago and the lowest level in at least three years, according to the local Realtors’ group. Inventory has consistently fallen for the last 15 months and may keep dropping if consumer demand remains strong and would-be sellers stay on the sidelines. Why aren’t folks listing their homes? Many are underwater on their mortgages and are waiting for prices to rise more.
5. Home prices and sales have stayed hot through the fall and winter. The median price for a home sold in November was $358,000, almost 14 percent higher than a year ago and the number of transactions reached a seven-year high for a November. Keep in mind, that happened during a fall month, when homebuying typically cools down. Homebuying demand remains strong especially among the investor crowd. That, coupled with limited inventory, has pushed prices up. This is not-so-great news for potential buyers. And possibly good news for potential sellers.
Written by
Lily Leung
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