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April 2006 newsletter – OCBuyersMarket.com THE FRENZY…IS BEHIND US… That was the OC Register’s headline for March 15th, but does anyone really believe it? Orange County sales were sluggish compared to last month (which would be January, remember these are February numbers) and compared to last year (2005), but what numbers wouldn’t be sluggish? Alright, it’s a rhetorical question, but we all need to be reasonable. Just because we don’t continue at a pace of 25% appreciation per year and number of sales over 4,000 per month doesn’t mean we have slid into a housing recession or that a bubble has burst. We have simply settled into a “normal” market. It’s just that a lot of Californians don’t remember a normal market. This is exactly what needed to happen to avoid a bubble. We now have a healthy 14 week inventory. Buyers actually have time to look and choose their home. What will stall the market are sellers thinking that they can continue to overprice their homes based on last year’s appreciation stats and buyers thinking they can ridiculously low ball the seller.
WHAT WERE THE ACTUAL NUMBERS… The total number of sales for February was 2,672. That number breaks down to 1,452 single-family resale, 759 condominiums and 491 new homes. Sales were actually up 3% from January and off 7.5% from February of ’05. Single-family sales were off 3.8% from last month and 19.6% from February of ’05. Condominiums definitely picked up the slack with a 10.8% jump from last month, but were still off from ’05 by 17.4%. The numbers by price range were fairly well distributed until you got to the over $700,000 range. Homes under $400,000 landed at 337. Homes priced between $400,000 and $500,000 came in at 375. If you sold between $500,000 and $600,000 you were one of 484 sales. There was almost no difference at the next level with $600,000 to $700,000 totaling 491 sales. Finally, homes priced over $700,000 rallied to a total of 966 homes sold. (Source: DataQuick)
MORTGAGE RATES SURGE TO 3 YEAR HIGHS BEFORE EASING BACK…This newsletter warned of rising interest rates months ago. Hopefully everyone listened. Be reminded that rising rates will edge a payment up much faster, than slightly declining prices will lower a monthly payment. Buyers need to remember that. Rates have risen a point or so and will probably stay around that watermark. Rates are still great, but I doubt we’ll see the 5’s again for a while. Rates are basically rising amid inflation concerns and bond investors’ fears that Japan and Europe are embarking on a campaign of rate increases. Higher rates overseas draw money from U.S. bond markets, pushing up yields on bonds. That causes certain mortgage rates to rise. (LA Times)
CALIFORNIA ASSOCIATION OF REALTORS AND KIPLINGER EDITORS AGREE ON SLOWING SALES… According to the Kiplinger Report the housing downturn is no aberration. Sales volume may be off by up to 10%, but that’s ok, they say, because 2005 was so good. Prices may adjust a meager 3%, so don’t expect much there. CAR reports that buyers are optimistic and pleased that they have more choices. They feel, “like they are back in the game.” According to David Lereah, chief economist at the National Association of Realtors, “Annual price appreciation is still running at double digit rates, but as the market readjusts, price appreciation should return to more normal rates of growth this year.”
ALL SIGNS ARE POSITIVE FOR SUSTAINED GROWTH… The trouble spots are minimal with just 316 Notices of Defaults issued and only 14 properties in the entire county actually going to sale. These numbers are blips on the screen. If you would like additional information on anything in this newsletter, just give me a call and I’ll be happy to assist you. Prices are fluctuating and you will want a current market analysis of your home before you make any decision. Please feel free to call me anytime and we’ll sit down for a confidential appointment. I appreciate any opportunity to serve you or any referral you may have for me.
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