Conclusions!

1. Asset Values have ballooned due to fed lowering of interest rates and inventory restriction.

2. The Rise in Interest Rates have brought affordability to abysmal levels not proportional to earnings.

3. Lower buyer demand has changed the market dramatically.  And prices are and will need to continue to adjust down for as long as rates remain high!

4. If you need to sell in the short time, Sooner is better. Don’t think that temporarily giving up or seasonal demand will change anything.  Price deterioration has begun and will continue through the current interest rate crisis!

5. Out waiting pricing pressure is likely to take as long as it takes for affordability to come back into line.  How long is that?  You tell me!  When will prices and interest rates get to an affordable payment again???

6. Are there Opportunities?  Yes. What is your need? Let’s talk on how to capitalize on market changes both for your comfort and long term financial health.

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Those that like to own, collect and manage real estate.

Those that don’t want to be bothered with it.

While each has a valid point of view, it really comes down to, two simple indisputable reasons why everybody needs to own at least 2 homes!

Reason #1

Everybody wants to make money. At the end of the day your primary residence is the only compounding capital gain that will be excluded from Taxation up to $500k as a married couple. For many that’s equivalent to making $750k to $1million in taxable income. Think about it!   There is no other asset class, that gets a decent interest rate and also compounds, that will give you this benefit.   How long would you need to save to have that kind of tax free money? 

There  are some areas of the country where the depreciation rate will match or out pace the appreciation rate. But for the most part, if you live in a desirable, demographically growing area, that is doing well, Your house will probably gain in value at an average of at least 5% annually.  Sure some years will be 3%, some will be 10% or more, the average in my area tends to be closer to 7% to 8% which by the way matches the stock market and beats it when you consider the tax benefits.

Reason #2

Your life is going to change, and your needs are going to change.  But one thing that will not change is that you are going to need to live somewhere!

So, why not buy a home that someone else will pay-off  for you?

Eventually when you take your tax free winnings from your large primary residence.  Just move to your second home that was paid off by a renter.  With a little remodel, it can be as good as new.

So this will now be the second property that you own, and you’re not paying taxes on the gain, right? 

How? Because you’re not going to sell it!  You’re going to live in it!   

Is that legal?  As far as I know, its yours, you can do with it what you want. 

No transaction, no tax.

But what if its not where I want it to be?  There are tax free strategies for moving house investment equities to new properties while deferring tax.  Call me to discuss!

Most families grow while they are young and middle aged.  So they need a bigger house. 

The  truth is,  its not a bad idea to have a larger appreciating asset.

They tend to make more money and sometimes your family could use the extra space.  The gain should overall be much larger due to the leverage on the larger loan/asset.   

Eventually your family size will probably shrink, and of course you’re going to age.  If it starts to become uncomfortable to go up and down stairs and you no longer want yard maintenance. And if you have a need to release some of the cash from the giant house you are sleeping in every night.  Then moving to your paid off single story property becomes an excellent life strategy!

So there  you have it.  Two indisputable reasons to own at least 2 homes.

  1. You could use tax free money. 

  2. You need the right house in the right location, and it wouldn’t be a bad idea to let someone

       else pay for for it.

In my next article, I will share how most of my real estate investors average 10% to 12% annual returns.  This could be important when the experts are talking about bonds that average between negative numbers to 1.5%.  And stocks that have no guarantees.

Real estate is very stable and practical in comparison.  Ask me how!

Did you know that we offer affordable property management for your second home or investment real estate?

The post A very Simple reason why EVERY American should own at least 2 homes. appeared first on Orange County Real Estate and Homes for Sale.

January 28, 2018  by Steven Thomas

• The active listing inventory increased by 67 homes in the past two weeks and now totals 3,774. Expect the inventory to increase from now through mid-Summer. Last year, there were 4,320 homes on the market, 546 more than today.
• There are 25% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 28%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
• Demand, the number of pending sales over the prior month, skyrocketed in the past two weeks by adding an additional 317 pending sells, up 22%. The average pending price is $902,385.
• The average list price for all of Orange County remained at $1.8 million over the past two weeks. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
• For homes priced below $750,000, the market is HOT with an expected market time of just 40 days. This range represents 37% of the active inventory and 59% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 55 days, a hot seller’s market (fewer than 60 days). This range represents 17% of the active inventory and 20% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is 68 days, a slight seller’s market (between 60 and 90 days).
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time dropped from 157 days to 112. For homes priced between $1.5 million and $2 million, the expected market time decreased from 188 to 145 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 285 days to 221 days. For luxury homes priced above $4 million, the expected market time fell from 695 to 355 days.
• The luxury end, all homes above $1.25 million, accounts for 37% of the inventory and only 13% of demand.
• The expected market time for all homes in Orange County dropped from 77 days to 64 in the past two weeks, a slight seller’s market (60 to 90 days). From here, we can expect the market time to drop dramatically through mid-February.
• Distressed homes, both short sales and foreclosures combined, make up only 1.2% of all listings and 2.2% of demand. There are only 15 foreclosures and 32 short sales available to purchase today in all of Orange County, that’s 47 total distressed homes on the active market, dropping by 3 in the past two weeks and reaching its lowest level since the very beginning of the Great Recession. Last year there were 91 total distressed sales, 74% more than today.
• There were 2,269 closed residential resales in December, down by 9% from December 2016’s 2,484 closed sales. December marked a 6.5% drop from November 2017. The sales to list price ratio was 97.3% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.9%. That means that 98.3% of all sales were good ol’ fashioned sellers with equity.

The post Orange County Real Estate Report – January 28, 2018 appeared first on Orange County Real Estate and Homes for Sale.

• The active listing inventory decreased by 16 homes in the past couple of weeks, and now totals 5,967, nearly the same. The inventory is having a real issue reaching 6,000 homes this year and may have already peaked a couple of weeks ago. Last year, there were 7,317 homes on the market, 1,350 more than today.
• There are 39% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 19%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
• Demand, the number of pending sales over the prior month, increased by five homes in the past couple of weeks, and now totals 2,835. The average pending price is $842,718.
• The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
• For homes priced below $750,000, the market is HOT with an expected market time of just 40 days. This range represents 39% of the active inventory and 62% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 59 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is at 94 days, a balanced market that does not favor a buyer or seller.
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 123 to 101 days. For homes priced between $1.5 million to $2 million, the expected market time decreased from 176 to 135 days. For luxury homes priced above $2 million, the expected market time increased from 269 to 280 days.
• The luxury end, all homes above $1.25 million, accounts for 35% of the inventory and only 13% of demand.
• The expected market time for all homes in Orange County remained the same over the past couple of weeks at 63 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
• Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2% of demand. There are only 32 foreclosures and 58 short sales available to purchase today in all of Orange County, that’s 88 total distressed homes on the active market, one more than two weeks ago. Last year there were 136 total distressed sales, 54% more than today.
• There were 3,229 closed sales in June, a 3% increase over May 2017 and a 3% increase over June 2016. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.99% of all closed sales and short sales accounted for 0.87%. That means that 98% of all sales were good ol’ fashioned equity sellers.

The post August 2017 – Orange County Housing Report by Steven Thomas appeared first on Orange County Real Estate and Homes for Sale.

• The active listing inventory increased by just 47 homes, or 1%, in the past couple of weeks, and now totals 5,983, knocking on the door of the 6,000 home level. Last year, there were 7,329 homes on the market, 1,346 more than today.
• There are 38% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 18%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
• Demand, the number of pending sales over the prior month, decreased by 2% in the past couple of weeks, dropping by 55 pending sales and now totals 2,830. The average pending price is $829,260.
• The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
• For homes priced below $750,000, the market is HOT with an expected market time of just 39 days. This range represents 39% of the active inventory and 63% of demand.
• For homes priced between $750,000 and $1 million, the expected market time is 57 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.
• For homes priced between $1 million to $1.25 million, the expected market time is at 93 days, a balanced market that does not favor a buyer or seller.
• For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 120 to 123 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 155 to 176 days. For luxury homes priced above $2 million, the expected market time increased from 266 to 269 days.
• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 11% of demand.
• The expected market time for all homes in Orange County increased from 62 days to 63 in the past couple of weeks, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
• Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 1.8% of demand. There are only 36 foreclosures and 51 short sales available to purchase today in all of Orange County, that’s 87 total distressed homes on the active market, 11 more than two weeks ago. Last year there were 128 total distressed sales, 47% more than today.
• There were 3,229 closed sales in June, a 3% increase over May 2017 and a 3% increase over June 2016. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.99% of all closed sales and short sales accounted for 0.87%. That means that 98% of all sales were good ol’ fashioned equity sellers.

The post July 2017 – Mid year Market review – Orange County Housing Forecast appeared first on Orange County Real Estate and Homes for Sale.

• • The active listing inventory increased by 148 homes, or 3%, in the past couple of weeks, and now totals 5,905, knocking on the door of the 6,000 home level. Last year, there were 6,868 homes on the market, 963 more than today.
• • There are 35% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 21%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.
• • Demand, the number of pending sales over the prior month, increased by 1% in the past couple of weeks, adding 33 pending sales and now totals 2,937. The average pending price is $845,004.
• • The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.
• • For homes priced below $750,000, the market is HOT with an expected market time of just 39 days. This range represents 39% of the active inventory and 61% of demand.
• • For homes priced between $750,000 and $1 million, the expected market time is 53 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.
• • For homes priced between $1 million to $1.25 million, the expected market time is at 84 days, a tepid seller’s market.
• • For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 108 to 96 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 144 to 148 days. For luxury homes priced above $2 million, the expected market time decreased from 256 to 253 days.
• • The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 13% of demand.
• • The expected market time for all homes in Orange County increased from 59 days to 60 in the past couple of weeks, changing from a hot seller’s market to a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.
• • Distressed homes, both short sales and foreclosures combined, make up only 1.2% of all listings and 2.1% of demand. There are only 25 foreclosures and 46 short sales available to purchase today in all of Orange County, that’s 71 total distressed homes on the active market, 5 fewer than two weeks ago. Last year there were 138 total distressed sales, 94% more than today.
• • There were 3,147 closed sales in May, an 18% increase over April 2017 and a 4% increase over May 2016. The sales to list price ratio was 97.8% for all of Orange County. Foreclosures accounted for just 1.1% of all closed sales and short sales accounted for 1.7%. That means that nearly 97.2% of all sales were good ol’ fashioned equity sellers.

The post June 2017 Orange County Housing Report Summary appeared first on Orange County Real Estate and Homes for Sale.

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New homes in Laguna Niguel priced from $775,000 to $1,000,000.

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