Category Archives: Laguna Beach Real Estate

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Orange County Housing Report

Buyers who are holding out for a turn in the market in their favor are going to have to wait.

Buyer’s Market: There just is not enough inventory to tip the market in the buyer’s direction.

There are ominous signs that the market is slowing down. Open house directional arrows are flooding busy intersections. Homes are not flying off the market like the crazy days of the Spring Market. Buyers are not tripping over each other in viewing the latest home to hit the market. What’s going on? Is the market finally tipping in the direction of the buyer? No, it’s just the time of the year, the Autumn Market.

Every year after transitioning from the Summer to the Autumn Market, buyers start talking about a housing correction. Factoring into that belief is that it has been a strong seller’s market for five years now. Home prices have appreciated nonstop, and the median sales price eclipsed record levels earlier this year.  As a result, home affordability has dropped dramatically along with buyer’s purchasing power. Many believe that the run-up in values has reached a peak, not just for this year, but for this cycle. The housing market is due for a correction, right? No, not yet.

The expected market time for the Orange County inventory has remained low for years now. This is the expected time it would take to place a home on the market until a buyer and seller consummate a deal by signing an agreed upon contract and open escrow. Currently for the county, it is at 2.59 months, or 78 days, a slight seller’s market. Based upon today’s activity, if a home was just placed on the market, escrow would be opened on November 28th. Remember, that is the average for all of Orange County. The expected market time for the lower ranges is even faster, 51 days for all properties below $750,000. And, it is much higher in the luxury ranges, 385 days for homes priced above $2 million.

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The expected market time takes into consideration both the active inventory, homes on the market and not yet in escrow, and demand, the number of new escrows over the prior month. The last time housing leaned in the buyer’s favor was back at the very beginning of 2011.

Values have risen dramatically in the past several years and the expected market time has remained below 90 days, seller’s market territory. It has even been as low as 33 days back in March of 2013, a HOT seller’s market where homes were rapidly appreciating on a weekly basis.

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Many believe that the housing market is due for a correction and that it will finally be the buyers turn to take advantage of the market. What has been standing in the way is the active listing inventory and continual hot buyer demand. The inventory has been at anemic levels dating back to 2008. Homeowners are not placing their homes on the market like they did prior to the Great Recession. Slower, buyer’s markets come in the way of more homes on the market. There needs to be more than 8,000 homes on the market for a sustainable period of time. The inventory last surpassed that mark in August of 2014, but it only lasted for a month, and then quickly reversed direction. Other than at the end of 2009, the inventory was above 8,000 homes from 2006 through 2011, the meat of the Great Recession. Today, the active listing inventory is at 7,040 homes and dropping. It reached a peak in mid-July of 7,329 homes. The inventory is not poised to surpass and climb past 8,000 homes anytime soon.

Demand has been hot for a very long time and the low interest rate environment that the Federal Reserve created, and is in no rush to change, has helped keep homes affordable. Prior to the great recession, interest rates were at 6.25%. They are at 3.75% today. To put that in proper perspective, at $695,000 (the median detached home in July) the payment with 20% down would be $2,575 a month with a 3.75% interest rate versus $3,423 a month at 6.25%.

As the economy improves and interest rates rise, the inventory will eventually rise to a point where the market will finally lean in favor of buyers and prices will fall; not yet and not anytime soon.

Luxury End: Luxury demand dropped 10% in the past couple of weeks.

In the past couple of weeks, demand for homes above $1 million dropped from 465 pending sales to 417, a 10% drop. The inventory of luxury homes now totals 2,574, a drop of 84 homes, or 3%, in the past couple of weeks. As a result, the expected market time dropped from 5.72 months to 6.17 months, a slowdown that is a direct result of the transition from the Summer to Autumn Market.

For homes priced between $1 million to $1.5 million, the expected market time increased from 116 days to 125 in the past two weeks. For homes priced between $1.5 million to $2 million, the expected market time remained the same at 159 days. For homes priced above $2 million, the expected market time dramatically increased from 357 days to 385 days, over a year.

The current luxury trend has been evolving with a dramatic slowdown in the higher price ranges. The luxury end does not typically follow a normal cyclical pattern. Compared to last year at this time, it has been better below $2 million. However, the luxury end above $2 million has been profoundly slower with a lot more inventory and considerably less demand.

Active Inventory: After hitting a plateau, the active listing inventory dropped significantly in the past couple of weeks.

After peaking this year in mid-July at 7,329 homes, the active inventory only shed a few homes in the four weeks that followed. That drop picked up considerable steam in the past couple of weeks and shed 227 homes, a 3% drop, and now totals 7,040 homes. It will drop below 7,000 homes for the first time since June sometime within the next week. We are officially in the Autumn Market with fewer homes coming on the market. Also, unsuccessful sellers from the Spring and Summer Markets are opting to throw in the towel after not being successful during the best time of the year for real estate. The inventory will continue to drop for the remainder of the year.

Last year there were exactly the same number of homes on the market, 7,040.

Demand: In the past two-weeks demand dropped by 4%.

Demand, the number of new pending sales over the prior month, dropped by 124 homes, or 4%, and now totals 2,719 pending sales, levels not seen since the start of March. Demand is still stronger compared to last year when there were 74 fewer pending sales, 3% fewer than today.

The expected market time increased from 77 days two weeks ago to 78 days today.


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Dana Point/Monarch Beach Real Estate

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With Laguna Beach so expensive, is Dana the next big coastal opportunity? Keep abreast

Dana Point Articles
Dana Point homebuying: 5 things you need to know – The Orange County RegisterTurkey Trot Early Bird Registration Deadline Approaches | Dana Point Times

Dana Point Harbor Receives Ocean Water Warning – Laguna Niguel, CA Patch

Dana Point bucks trend by allowing Airbnb, short-term rentals – The Orange County Register

Photos: Tall Ships Sail Into Dana Point Harbor for Annual Festival | Dana Point Times

Tall Ships Festival Sails into Dana Point | NBC Southern California

City Council Approves Short-Term Rental Ordinance | Dana Point Times

Dana Point Ohana Music Festival and Luau Met with Rave Reviews – Laguna Niguel, CA Patch

Who’s Hiring in Orange County? Top Jobs Close to Laguna Niguel & Dana Point – Laguna Niguel, CA Patch

Here’s what was inside Dana Point’s 1966 time capsule – Daily Pilot

 

What’s inside 1966 Dana Point time capsule? – Weekend

Number of Mosquitoes Tested Positive for West Nile Virus Increases | Dana Point Times

Elections 2016: Dana Point Candidates for Dana Point City Council | Dana Point Times

 

DP Living

It’s History: Dana’s Lake
By Carlos N. Olvera

 

This area, once divided up into Mexican land grants, provided the means for cattle raising, which eventually lured Richard Henry Dana here. The scenic area brought many people here to settle. And the land grants were bought, divided and sold to accommodate the influx of those looking for a better life.

Click here to read the rest of the story

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It’s History: Dana’s Lake?

By Carlos N. Olvera

This area, once divided up into Mexican land grants, provided the means for cattle raising, which eventually lured Richard Henry Dana here. The scenic area brought many people here to settle. And the land grants were bought, divided and sold to accommodate the influx of those looking for a better life.

The Monarch Beach Community of Dana Point was once a part of those grazing lands. Rancho Niguel, established in 1842, was bought by Laguna Niguel Corp. in 1959 from Lewis Moulton and Pierre Daguerre, to build a new community. In November 1959, plans were announced for the new community of a 7,000-acre city bounded by the new freeway and the coastline. In these plans were many amenities, including a man-made sea lake. By July 1968, plans were announced describing the saltwater inland sea with a depth up to 65 feet. The surface would cover over 35 acres inland of Pacific Coast Highway. The Pacific Ocean and the lake were to be separated by a concrete dam.

It was promoted as the first man-made mini-ocean of its kind. It was to be called Sea Lake Village and located in what is today the northern half of the Monarch Beach Golf Links. Dreams included fishing activities, vacation homes and a water cultural center with dolphin performances.

Huge pumps would be required to bring in ocean water in the amount of 300 million gallons. The concept of a lake was proposed as cheaper than maintaining a golf course, and just under $1 million. To overcome evaporation and seepage, the pumps would run periodically to cover the level change of about seven feet a year, but would be free of any tides. The salt content of the water was expected to vary, but able to sustain several species of ocean fish.

By 1969, AVCO Corp., based in New York, was successful in developing the planned community of Rancho Bernardo in San Diego County and a merger with Laguna Niguel Corp. ensued. The plans continued with an August 1969 newspaper announcement that Mr. & Mrs. Morris S. Book, of Arcadia, had moved into their new home at Laguna Niguel overlooking an inland sea area known as “Sea Lake Village,” even though it hadn’t been built yet.

In 1971, AVCO got an agreement with the County of Orange to abandon some public prescriptive rights associated with the Salt Creek Beach area. But after some debate, the deal wasn’t deemed reasonable. Part of the reason was rumors from Sacramento of a freeze on all of the shoreline. We know today that rumor was the creation of the California Coastal Commission in 1972.

A subsequent lawsuit followed. AVCO continued under their 1971 development agreement with the county. About 473 acres, formerly known as the Capron Property, came under the new Coastal Zone. The county would not grant permits until after the grading. After the grading, the Coastal Commission said AVCO did not have their building permits and therefore not vested and not exempted from the new act. This lawsuit carried on through 1975. And at that time, the real estate building industry was going through a recession.

Somewhere in all of this mess, the Sea Lake Village dried up. Ten years later, David Stein and Barry Brief, the managers of the AVCO project, defaulted on their loans. Today, we have the St. Regis and a champion golf course.

Carlos N. Olvera is Chair of the OC Historical Commission, and Councilman of Dana Point.


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Sellers’ Market Continues in Laguna & OC for the lower priced homes

Biggest Take Aways:

  • 75% of the sold home in Laguna were below $2.5m
  • 6 sales (20%) were above $4,000,000.
  • Important 37 homes are in escrow – very low, which shows the most accurate demand measurement
  • Inventory is still high but it is noteworthy that more than 52% of the Active Listings (147 of the 277) are priced above $2,500,000.

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Orange County – It’s Called AUTUMN!!

Housing in Autumn: The Orange County housing market is quickly evolving as it enters the Autumn season.

In the coming weeks, many who are involved in the real estate market will exclaim, “The housing markets is slowing!  Homes are starting to sit on the market longer! There are not as many showings! What’s going on?!?” It’s actually a cyclical phenomenon. We experience it every year. It’s called AUTUMN.

Here’s what happens; every year the kids go back to school and the market changes.Yes, homes take a little longer to sell.Yes, there are fewer showings.There are also fewer sellers coming on the market.Many sellers who were unsuccessful during the Spring and Summer Markets will decide to throw in the towel and pull their homes off of the market completely.Collectively, with both fewer sellers coming on the market and many sellers throwing in the towel, the active listing inventory drops for the remainder of the year, until it reaches a low on New Year’s Day.

Last year, from the end of August through the end of the year, the active listing inventory dropped 31%. Homeowners get it: the Spring and Summer markets are officially in the rear view mirror. With the best and second best time of the year to sell now is the past, fewer homeowners pull the trigger and list their homes. As a result, the inventory falls as the year unwinds.

The number of buyers in the marketplace drops as well. Now that the kids are back in school, it is not the most advantageous time of the year to move. Moving is disruptive, which is precisely why more closed sales occur in June, July, and August. It’s much easier to move a family during the summer months when the kids are in transition from one school year to the next.

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With fewer homes coming on the market for the remainder of the year, that means there are fewer choices. This too contributes to a drop in demand.As a result, demand drops for the remainder of the year, until it hits a low on New Year’s Day. If you are keeping track, both demand and the listing inventory drop to their lowest levels on New Year’s Day. It’s not just a lack of demand; it’s also a lack of supply.

Some buyers mistakenly think they can get a big “deal” during this time of the year, especially in November and December. The standard logical thinking sounds a bit like this: “If a homeowner has their home on the market during the holidays, they must be desperate.” It’s just not the case. We have been in an appreciating market for years now. Just because it is the holly, jolly season does not mean that sellers are all of a sudden going to become generous and provide a big discount. “Merry Christmas, Happy Hanukkah, Happy Kwanzaa!! Mr. and Mrs. Buyer, go ahead and take 20% off the asking price.” It’s just not going to happen.Sellers simply want every dime they can get for their home, regardless of the time of year.

And, for those buyers that are holding out for a major correction, there is not one on the horizon, not anytime soon. There are still not enough homes on the market and demand is HOT. With interest rates remaining below 4% and not looking to change much in the near future, Orange County will continue to experience a seller’s market.  Janet Yellen, chair of the Federal Reserve, just last week stated that they are most likely going to increase the short term rate in December. In December last year, she foreshadowed that they were looking at increasing the rate four times in 2016; instead, it will only be one little change of a quarter percent and it won’t come until the very end of the year. These low interest rates are fueling the hot demand that we are experiencing today.

Sellers need to be wary of the season as well. This is not the time of the year where buyers are willing to stretch that far beyond the most recent comparable sale. Overprice today and sellers will not find success for the remainder of the year. It’s that simple. It is the season where everybody is a bit more price sensitive. Price according to the most recent comparable pending and closed sales and most homes fly off the market, even during the Autumn and Holiday Markets.

Luxury End: Luxury demand has dropped 4% in the past couple of weeks.

In the past couple of weeks, demand for homes above $1 million dropped from 483 pending sales to 465, a 4% drop. The inventory of luxury homes now totals 2,658. Demand will continue to drop as we push our way into the Autumn Market, but so will the luxury inventory.

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For homes priced between $1 million to $1.5 million, the expected market time increased slightly from 114 days to 116 in the past two weeks. For homes priced between $1.5 million to $2 million, the expected market time decreased slightly from 159 days to 152 days. For homes priced above $2 million, the expected market time dramatically increased from 304 days to 357 days, just shy of a complete year.

Regardless of how hot the market it in the lower ranges, it behaves differently in the luxury ranges, especially above $1.5 million. Homes do not fly off the market with multiple offers like they do in the lower ranges. Price, patience, and perseverance are essential ingredients in order to find success.

Active Inventory: The inventory has hit a plateau and is poised to start its cyclical drop.

The active inventory peaked early this year, mid-July, at 7,329 homes, but it really has not changed much since. In the past couple of weeks it dropped by only 28 homes, and, since reaching the peak, has only shed 62 homes. Today, the inventory sits at 7,267 homes. Now that the kids have gone back to school, summer is over and fewer homeowners will place their homes on the market; and, many sellers leftover from the Spring and Summer Markets are going to throw in the towel and pull their homes off the market. As a result, the inventory will drop.

Last year there were 89 fewer homes on the market, 1% less, totaling 7,178.

Demand: In the past two-weeks demand dropped by 3%.

Demand, the number of new pending sales over the prior month, dropped by 92 homes, or 3%, and now totals 2,843 pending sales. Demand is still much stronger for this time of the year, levels not seen since prior to the Great Recession. Last year at this time there were 121 fewer pending sales, 4% less than today.

The expected market time increased from 75 days two weeks ago to 77 days today.


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