Before going into the detail of the properties under $1m, I’d like to put it in context of where the Laguna market ended up in 2011.
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:
It’s all about rates this week as they have retreated back to their all-time low point that was also touched in September. Another strong Treasury auction and lack of any real solution to the European debt crisis helped, among other things.
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, 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:
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
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.
Many buyers have been waiting for this.
A relatively affordable ‘on the beach’ oceanfront home for less than $2 million.
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.
Click here to see the 13 Laguna oceanfront condos – Client Brief Report + Photos
Some people have home-finding stories that are the real estate equivalent of the skywritten marriage proposal tales. They drove by their dream home, knocked on the front door and the elderly owner offered it to them for a song. However, most recent home buyers have tales on the other end of the charming-and-easy spectrum; tales of year-long house hunts and fruitless offer after fruitless offer, followed by a nerve-wracking, hair-pulling, interminable negotiation with the bank are much more typical.
If you’ve been in the market for a home for what seems like a very long time to no avail, here are five strategies for getting things back on track.
1. Know how long is (truly) too long. If you’ve been saving up, primping your credit and fantasizing about your dream home for 5 years, then waiting for exact right moment in your life and the market to pull the trigger for 4, viewing 15 houses over 3 weeks might seem like an interminable amount of time.
And if you make an offer that is rejected? The agony of that defeat is outweighed only by the pain of your dream (home) being deferred.
Be aware that today’s market is a very slow-moving one. It’s completely normal in some areas for buyers to view dozens of homes over as many months, and have several offers rejected before getting into contract. Talk with your agent about how long local buyers normally have to prowl today’s market before getting some home buying satisfaction.
2. Identify where your process is breaking down. In order to course-correct your wayward house hunt, you first have to figure out what the problem actually is. If you’re looking at lots of homes, but not finding anything that suits you, you might have an expectation issue. These range from having champagne tastes on a beer budget to being part of a pair of buyers with conflicting expectations that no home will ever be able to satisfy (e.g., husband wants a fixer, wife wants move-in ready).
If you’re finding places you like, but your offers are consistently being shot down, you might need to work on bringing your home picks into alignment with your budget by increasing your price range, decreasing your wish list, or looking at a lower price range and making higher, more competitive offers.
Fact: an experienced buyer’s agent is an expert diagnostician of house hunt ailments. If your agent told you 7 months, 43 prospective homes and 9 offers ago that your expectations are out of whack or that you need to consider some compromises, you might circle back to that advice – and consider taking it.
3. Remember how many houses are in the world, but don’t try to see them all. It’s easy – but unproductive – to get upset about “the one that got away;” counter that frustration by reminding yourself that you are house hunting in a market relatively flooded with housing inventory. On the other end of the getting-out-of-your-own-way spectrum, if you do find a home that really works for you in your price range, get over the idea that you have to see everything in town before you make an offer.
One more mindset reset along these lines: understand that the *perfect* house does not exist – at any price range. Petra Ecclestone just dropped $80 million in cash to buy Candy Spelling’s Hollywood home and reportedly had the whole place gutted because the decor was not to her taste. In the same way people with curly hair wish they had straight and vice versa, people who have hilltop vistas wish they lived nearer to the grocery store and people who can walk to the store wish they had better views. No single home will ever satisfy every single one of your preferences, so don’t hold out waiting for one that will.
4. Rethink your deal-breakers. The greater the number of absolute deal-breakers you’ve communicated to your agent, the fewer prospective homes you’ll see. And the more flexible you can be about which listings you’ll look at, the higher the chances you’ll find something you like. I recently read an article in an architectural magazine about a woman who house hunted ad nauseum in a very small neighborhood she needed to be in, only finding success when her agent showed her a fourplex she could convert into the single family home she was looking for.
If you think your agent simply doesn’t understand what you want, ask them to remove all pricing filters and send you homes that reflect what they think your dream house really is. Alternatively, drive around and find homes for sale or visit Open Houses that you think are closer to what you want – then investigate their list prices, or send the addresses of “suitable” homes that aren’t for sale to your agent to find out what that house would go for today.
These exercises will get you and your agent communicating on the same page; will help you understand tradeoffs, wants and needs more concretely; and will very likely flick some of your mental switches around what you can expect from a property at various price ranges. This strategy is especially useful for reality-checking the expectation of home buyers relocating to a town with a higher cost of living than their current hometown.
5. Ignore the peanut gallery. People who have not bought a home in your town, your desired neighborhood and your price range at the same moment in time you find yourself house hunting are not authorities on any of the following:
(a) how dirt cheap ‘those foreclosures’ are,
(b) how much of a discount you should be able to negotiate,
(c) how much is too much for you to pay, or
(d) how desperate the banks or sellers are to sell.
That lack of authority, though, will not stop your family members, friends and neighbors from chiming in and offering their own critiques, exasperation, suggestions, or “what I would do if I were you is. . .”-style analyses of your own home buying strategies. Many a would-be homeowner has remained just that – a would-be homeowner – by following the advice or suggestions of someone who read a headline but has no idea of the real market dynamics you face.
Depending on where you’re buying, those dynamics might include:
So, check your own references – double and triple check where you are getting your information about what homes should cost and what you should offer, and make sure that the sources are expert and up-to-date, like the experienced local agents
Homes selling for over $1m typically require jumbo loans (or cash) versus the conforming loans.
What is the difference?
First the Shift of Sales to Higher Priced Homes
Basically, mortgage loans are categorized into three groups which determine interest rates: Conforming, Super-Conforming and Non-Conforming or Jumbo. Read on for more detail………
The rates that you see published by the media always pertaining to “conforming” loans. These are loans that meet the criteria set forth by the two Government-owned agencies known as Fannie Mae and Freddie Mac plus HUD which oversees FHA loans. These rates always pertain to loan amounts of $417,000 or less. Loans sold to these agencies by all lenders account for 99% of all mortgage financing in the U.S. today. They are called “Conforming” loans because they conform to the guidelines established by these governmental agencies.
Interest rates for Conforming loans are determined by the supply and demand for Mortgage-Backed Securities (MBS’s) which are traded in the financial markets all day long just like stocks and bonds. Therefore, the rates for these types of mortgages change every day and throughout the day. Neither the Fed nor Lenders set these rates.
Super-Conforming Loans or High Balance Conforming Loans:
These are loans also governed by Fannie Mae, Freddie Mac and HUD but they allow larger loans in certain designated “High-Cost” markets. The limit in Orange and Los Angeles Counties is $625,500 – recently reduced from $729,750. Interest rates for these loans work in the same manner as rates for the smaller conforming loans described above with the exception that loans between $417,000 and $625,500 are always about .25% higher in rate than loans of $417,000 or less. Again, the rates are changing all the time and are not set by the Fed or by individual lenders.
Non-Conforming or Jumbo Loans:
This category describes loan amounts above $625,500 that are not saleable to Fannie Mae or Freddie Mac. Accordingly, there are far fewer lenders offering true jumbo loans. In general, the underwriting criteria and guidelines are stricter than they are for Fannie Mae/Freddie Mac and each lender is free to set their own rates and terms. However, in order to remain competitive I don’t see much variation between all of the lenders offering this type of financing. Interest rates are typically about .75% higher than they are for the loan amounts of $417,000 or less. Lenders usually adjust these rates daily also.
How to Finance More Than the Conforming Limit and Still Get the Low Rate:
Suppose you need to finance $800,000 yet you want the Super-Conforming Rate? Sometimes we can use what we call a “Piggy-Back” loan where we make a first mortgage for say $625,000 and simultaneously close a Home Equity Line of Credit (HELOC) for the rest – in this example $174,500.
Despite efforts by Realtor and Mortgage trade organizations to fight for an extension of Fannie Mae, Freddie Mac, and FHA conforming loan limits, Congress failed to extend the $729,750 loan limits and allowed them to expire Sept. 30. This means the maximum loan amount that Fannie, Freddie, and FHA will buy or guarantee is $625,500, and anything above that amount will be non-conforming requiring a jumbo loan. As explained earlier, these loans typically carry a higher mortgage interest rate and require a higher down payment and therefore a higher monthly payment.
Our Government had a perfect opportunity to help homeowners and buyers by extending the loan limits. It just makes no sense to me that they would ignore something that could help so many people and do it without adding to our national debt. The California Association of Realtors estimated that this would affect as many as 30,000 potential home sales in California.
What a difference a week makes. It was only a week ago that the media jumped all over the Freddie Mac report that rates had hit the lowest point ever in the preceding week. Unfortunately, those lowest rates only lasted about a day. We’ve had a steady stream of small increases in Mortgage pricing ever since thanks to last Fridays stronger than expected Employment Report, improvement in the Greek and European Debt crisis and a rising stock market. Today we are getting a little bit of relief in part to an oversold bond market, a good response to today’s auction of 30-year Treasury securities and PIMCO’s announcement yesterday that they are buying more Mortgage-Backed Securities. PIMCO is the world’s largest bond trader.
You can always visit the “Daily Mortgage Lock Advisory” on Rick Cerreli for current news about mortgage rates. Just click here: http://www.rtcmortgage.com/DailyRateLockAdvisory
If you’re at all familiar with Laguna you know it’s full of characters.
Well one of the more well known infamous characters is Jean Paul aka ‘The Coffee Nazi’ the owner of Jean Paul Goodies located by Pavilions in North Laguna.
For coffee aficionados, Jean Paul arguably offers the best coffee in town, but you better be on your toes or you’ll be banned to Starbucks for the rest of your life.
Similar to Seinfeld’s ‘Soup Nazi’, Jean Paul has very high standards that his customers must adhere to or you’ll warrant a ‘get out’ rant. Heaven forbid you ask for non fat milk. You quickly be ‘told’ to take your business elsewhere. And that’s being nice.
I‘m to the point that I even stay in the car, and let a friend go in, and I can swear he looks for me in the car and his stare send shivers down my spine and I slouch down so he can’t see me.
That said, he’s achieved a following of customers that are willing to maintain his required decorum and you’ll see them hanging in front of his store.
Well, see for yourself in this popular YouTube video. You can’t say you haven’t been warned.
Link here ‘No Coffee for You': http://youtu.be/XP1YvNEVzbk
If you’re looking for a relatively inexpensive weekend or vacation retreat condo in Laguna it doesn’t get much better than this.
In fact over the last 4 years there hasn’t been a condo for less than this price except for a couple 400 sqft condos.
Check out the video of the place.
It’s a single bedroom, no garage and it doesn’t have an ocean view. However, its move-in ready, clean, private and an unbelievable central location.
Yesterday the headlines across the country screamed “Mortgage Rates Below 4% for First Time” and my phone rang off the hook with people saying “they lowered the rates, lock me in”!!!!
I actually locked a few deals in at 3.75% with no points last week so yes, rates did hit an all-time low. But, let’s examine the headline and what it really means.
Every week Freddie Mac releases a report announcing the average rate for loans originated Monday thru Wednesday of the previous week on a 30-year fixed rate mortgage that is owner-occupied for an amount less than $417,000.
Things to Know:
So, remember that while the headline attracts readers, it’s only an average, and its old news by the time you read it.
I hate to spoil the party but rates have risen slightly since last week’s Monday-Wednesday average rate of 3.94% with 0.8 points was reported. So don’t expect next week’s Freddie Mac report to show lower rates than this week.
The spoiler was today’s monthly Employment Report. On the first Friday of every month the Government releases the official Employment numbers for the previous month. While the rate of Unemployment was unchanged at 9.1%, the number of new jobs created was higher than expectations. This caused a sell-off of Mortgage-Backed Securities this morning forcing rates a little higher.
First of all, you have to deal with a mortgage professional with the experience and knowledge of how mortgage rates work. We subscribe to services that alert us to the trends and patterns of MBS trading and help us determine the best time to lock in your rate. The banks are too big to manage this type of service whereas independent mortgage brokers can not only keep their eye on the moving target of interest rates but they also deal with multiple lending resources to find the most competitive terms to fit your needs.
Secondly, if you are refinancing and wait for the headlines, you will be too late. Make your application and get your loan processed. Once you are in the system I can watch the rates and take advantage of the dips which sometimes last only a few hours. Mortgage rates are just as volatile as the stock market these days and the average borrower has no chance of timing the market to take advantage of opportunities when they occur.
You can always visit the “Daily Mortgage Lock Advisory” on my website for current news about mortgage rates. Just click here: http://www.rtcmortgage.com/DailyRateLockAdvisory