Our average car count over the last couple of years has been around 250 through each event.   At last month’s pickup we had 408!  Sign of the times?

This is a great opportunity to get rid of your old TVs, computers, printers, batteries and shred your paper files..and to have them recycled. It is free and easy.

Surterre has expanded with offices in Dana Point and San Clemente. We were the ‘king of the hill’ in Laguna this last year. Check out the numbers below.

The Highlights of 2011:

Interest rates: Ranged last year between 4.96% near the beginning of the year to 3.99% at year-end according to the weekly Survey by Freddie Mac of a sample of lenders. The average for 2011 was 4.45% with 0.7 points. These rates are a national average of 30-year fixed rates offered by a sample of lenders for loan amounts of $417,000 or less.

Lenders: The winners and losers have been decided. Many lenders exited the business or merged with others, and others have re-entered the market. In general, the big banks failed at providing customer service levels to satisfy their customers. At the same time, mortgage brokers, once given up for dead, have survived and their market share grew in volume by 33% from the loan point of a few years ago. The market also saw an increase in the number of jumbo lenders where there once was none. Jumbo loans are readily available up to $4 million or more to those that qualify.

Loan Programs: FHA loans gained in popularity due to their minimal required down payment of only 3.5% on loan amounts up to $729,750. Adjustable rate programs are more available and many with interest-only options.

Underwriting: Guidelines have stabilized and the seemingly daily changes have ceased. Loan originators should know what to expect and be better able to advise their clients.

What to Expect in 2012:

Interest Rates: We begin the year with rates at an all-time low of 3.91% + 0.8 points according to Freddie Mac’s survey. The mortgage industry’s largest trade organization, The Mortgage Bankers Association of America (MBA) expects rates to average 4.3% this year (you can see the entire MBA forecast on my website: www.rtcmortgage.com ). The Fed vows to keep the Federal Funds rate low through 2013 unless the economy heats up too much. On a negative note, borrows will pay for the 2-month extension of the Social Security Tax Cut approved by Congress to the tune of about a .125% increase in cost over the next ten years.

Lenders: I predict that Mortgage Brokers will continue to increase their market share as they can provide more efficient, local service; can typically originate loans at a lower cost than the big banks; have more resources to choose from as more wholesale lenders are entering the market; and recent licensing laws require brokers to have more stringent licensing guidelines and knowledge than their unlicensed counterparts at the big banks.

Loan Programs: Fannie Mae and Freddie Mac lowered the maximum conforming loan limit from $729,750 to $625,500 while FHA kept their limit at $729,750 for the highest-priced markets such as Orange County. I expect FHA loans to be popular in filling that gap, although the higher cost of FHA mortgage insurance this year will force some to consider jumbo loans instead. Fortunately, more jumbo choices are available. The Government has also issued improved guidelines under their Home Affordable Refinance Program (known as HARP-2) which should enable more underwater homeowners to refinance and take advantage of lower interest rates.

Underwriting: The perception is that underwriting guidelines are too tight. While I don’t expect to see a return to “no-doc” or “stated-income” loans any time soon, we no longer see the parade of changes that have made it impossible for loan originators to keep up. We should all now know what to expect and advise our clients accordingly. (I’ll be writing about this in more detail very soon).

The Most Important Factors to a Sustainable Recovery in Housing:

• Will the recent signs of positive data continue? At the turn of the year we have seen an improving trend in Employment data; an uptick in manufacturing; negligible inflation; and increase in home sales; and improved consumer sentiment.
• The severity and the impact of the European debt crisis is still unknown, but the financial markets seem to be reacting less to the related events.
• Politics and the outcome of the presidential and congressional elections will most likely have an impact. But, in which direction?
• Employment, in addition to housing is the key to recovery. Is the recent improvement in the Unemployment Rate an aberration or is it a trend that will continue?

Have home prices hit bottom? Many economists predict this year as the turning point where values stabilize and even increase moderately. Non-distressed home values are already showing signs of stabilization and distressed sales are accounting for a smaller percentage of overall sales in recent months.  The shadow inventory of foreclosures and its impact on housing will continue to be a topic of debate.

2012 is starting out to be an interesting year. Lets’ hope it is the turning point for an overall improvement in the economy.

Mortgage Rate Update:

After mortgage rates rose last week, the mortgage markets improved late this week in reaction to the Fed’s surprise statement saying the Federal Funds rate would stay at 0.00% to 0.25% through the end of 2014. Prior to yesterday the Fed was saying mid-2013.  The motivation from the Fed is that the central bank has lowered its forecasts for US growth this year and next. Federal Reserve Chairman Bernanke apparently is more concerned about growth than he was six weeks ago. The recovery seen so far he considers anemic and he is probably believing Europe will decline into another recession and that there will be defaults on a lot of the debt.

Unless and until there is another Europe shock it is unlikely that US rates will push to new low rates. It will take a few days for traders and investors to assess the message from the Fed when the Committee made such an unusual move. Nevertheless, mortgage rates are at we are at an all-time low again!

For a daily update on the mortgage market and the factors moving it, visit the Daily Rate Lock Advisory page of my website at:
http://www.rtcmortgage.com/DailyRateLockAdvisory
Mortgage Interest Rates*
Rates as of Thursday, 26th January, 2012:

You will find the best of both worlds in this white water ocean view cottage, located in the highly desirable area of Woods Cove. This charming cottage offers sparkling ocean views with the convenience of living near the beach, shops and restaurants. Perfectly situation on an elevated corner lot just blocks from the beach, this wonderfully maintained cottage offers ocean views of Emerald Bay and the north coast of Laguna Beach. Featured in this cozy beach cottage are 2 bedrooms, hardwood floors throughout, updated windows, fireplace, master bedroom sliding glass door to patio, and a wrap around fenced patio and yard that provides a wonderful spot to entertain and watch the sunsets. Mature landscape and foliage compliment the vibrant yard. In addition to the finished garage, there is a very large storage area with a concrete floor located under the home and accessible via the garage. Don’t hesitate as this classic Laguna Beach cottage won’t last long.

Directions: PCH to Ruby. Go two blocks to corner of Ruby and Catalina.

Year End Highlights: 32 sales in the month of December, the highest month for all of 2011; 90 sales in the 4th quarter, best quarter of 2011; only 228 Active Listings at the end of the year, the lowest number of Actives since December of 2007 (four years ago).

Secondly, it is pre spring, which is when the homes for sales usually sustainably increase.

Thirdly, a client shared with me the following graph on homes for sale under $1m for the last 10 years. Pretty interesting that from 2004 to 2007 there were hardly any properties for sale under a million. Spiked up to over a 100 in April 2011 and now is at 49 properties.

We need to keep an eye on what happens this spring, which starts next month.

There are currently 49 properties for sale for less than a $1 Million

That’s about a 3 month inventory based on 15 sales a month, which has been the average amount of sales in this price range.

34 are single family residences – Client Brief Report + Photos

15 are condos – Client Brief Report + Photos

Breakdown by areas of Laguna

10 are in South Laguna – Client Brief Report + Photos
Printable Map

10 are in North Laguna (8 are condos) – Client Brief Report + Photos
Printable Map

8 are in Laguna Canyon – Client Brief Report + Photos
Printable Map

22 are in Laguna Village (includes Arch Beach Heights and Top of the World) – Client Brief Report + Photos
Printable Map

Breakdown of Distressed Properties for less than a Million

53% of properties for less than $1m are distressed properties (short or foreclosed)

4 are foreclosures – Client Brief Report + Photos
Printable Map

11 are short sales – Client Brief Report + Photos
Printable Map

Spotlight on Two new ones that came on the market today (one $500k and the other $615k) – Client Brief Report + Photos

Videos of 2 properties for less than a million in the Oak Street Village Area – Sorry if they are a little hoj pod but that happens when you have to work around people that are in the residence. Better than nothing.

The year in Review in Graphs:

While mortgage rates are not based on US Treasuries, the Mortgage-Backed-Securities (MBS) that do influence rates are similar to Treasuries and tend to trade in the same direction. Read on for a better understanding………….

Can Rates Go Any Lower?

A huge factor in how low mortgage rates can go is the underlying Mortgage-Backed-Securities (MBS) market.  Nearly all loan products offered by lenders are sold to Fannie Mae and Freddie Mac and end up as part of MBS pools or securities.  These MBS securities are then purchased by institutional investors.

In general, the lender that services the loan will receive .375% of the rate on a 30-year fixed rate loan. The ultimate investor in the MBS will receive the rest, except for the remaining .125% that gets eaten up by a variety of fees. So, on a 4% loan, the servicing lender gets 0.375% and the investor receives 3.5% as their rate of return.  Lenders can pool loans +/- .25 of the MBS rate. So, if the MBS security being sold into is at 4%, lenders can deliver loans with rates between 3.75% and 4.25% into that pool.

If rates go any lower, there will be a need to create a 3% MBS pool with a 3.5% interest rate. But, in order for lenders, Fannie and Freddie, to create MBS’s with a lower rate, there has to be investors willing to buy these MBS’s at a lower rate. With rates so low already, there likely isn’t much, if any, demand for lower rates on Mortgage-Backed Securities.

Therefore, the nature of supply and demand for Mortgage-Backed Securities will probably prevent rates from going lower. Unless economic factors force them down even more. And, any positive signs in the economy or in Europe can make rates pop back up again in no time.

The Fed

The Fed, officially known as the Federal Reserve, had one of their regularly scheduled Federal Open Market Committee meetings this week too. Although their comments were generally non-committal, Many observers believe the Fed will step in to take steps to stimulate growth in 2012, first through communications measures that drive home their expectation that interest rates will not rise for a long time, and then through more bond buying. Some have said the central bank should resume purchases of mortgage-backed securities to help revive the depressed housing market; others would prefer to stick with purchases of U.S. government debt, i.e., Treasury securities.

In the meantime, ‘tis the season…………

To track the factors that influence mortgage rates on any given day or week, you can always click on the following link to my Daily Rate Lock Advisory:

http://www.rtcmortgage.com/DailyRateLockAdvisory

Mortgage Interest Rates*
Rates as of Thursday, 15th December, 2011:

Boy, things surely got steamed up last week with the Laguna foreclosed beach front property offer for $2 million. The video was seen by over 150 people and I got lots of calls of interest.

While the listing agent won’t give me the exact amount since it’s in escrow, he did tell me it was $3+ million, which is an awesome price.

A lessoned learned though is that most of the people who were interested did not have the loan approval letter that was required on the offer submission. Great opportunities happen fast and you need to have your powder dry and loaded, so get those pre-approvals.

Call Rick Cirelli at RTC Mortgage at 949-494-4701

I thought you’d get a kick out of this – Attached is a 1977 purchase agreement – 1 PAGE – that’s it. I especially like Paragraph #16 wherein it states that should the buyer default; the buyer’s deposit is given half to the agent and half to the seller

Click Here to View the 1977 Agreement

Interesting Quote – I get asked all the time ‘when is the real estate market going to turn around?’ and thought this quote from John Burns, a real estate consultant to builders, is as good as any. “With the general view that prices and mortgage rates are more likely to get better than worse, many buyers are staying on the sidelines. When they can say, “We should have bought 6 months ago,” we expect the pent-up demand to begin to unleash”

In other words, many will see the bottom in the rear view mirror.

Inventory of homes for sale is at a yearly low of 264 properties versus the high of 425.

As of November 30, 32 properties have closed (10 were below $1m, 13 were between $1m to $2m, and 9 were over $2m)

• 5 were short sales and 4 were foreclosures
• 19 homes went into escrow
• 13 were less than $1m, 2 between $1m and $2m, and 4 are above $2m
• The number of listings ‘for sale’ has decreased to 264 properties. 131 are over $2m.
• 12% of homes for sale are distressed properties, which is low compared to OC 35%
• There are 10 properties for sale in foreclosure which is consistent.
• There are 24 short sale listings, which is consistent.

52 properties had price decreases month to date which is less than the average of 75 the last 6 months..

A relatively affordable ‘on the beach’ oceanfront home for less than $2 million.

Client Brief Report + Photos

It’s got some serious neighbors

Offers must be in by Dec. 11 and the seller will let you know the highest offer and everyone can make a ‘best and final’ offer.

The next least expensive sfr is $3.5 million.

Check out the 28 Laguna homes for sale on the oceanfront. Client Brief Report + Photos – Printable Map

Click here to see the 13 Laguna oceanfront condos – Client Brief Report + Photos