Orange County Home Price Hits 4½ Year High…

My two cents–The information below holds true for the Newport Beach and Costa Mesa areas.  Driving these improving numbers are combined factors of a healing (albeit slowly) job market, historically low interest rates, and limited housing inventory.  Sellers would do well to consider listing if they have good reason.  Buyers should focus with one Broker who is plugged in with their community of choice, as early access to listings is a buyer’s best chance.  Get financing documentation in order so you can show a pre-qualification letter and proof of funds to close escrow with your offer.  

-Grant Bixby

Source: Orange County Register, 1/17/2013

The Orange County housing market ended 2012 on a strong note, as sales soared and prices climbed to the highest level in 4 ½ years, according to two reports released Tuesday. The median price of Orange County houses and condos hit $470,000 in December — up 17.5 percent from a year ago, Data-Quick Information Systems reported. That’s the highest price since June 2008,

Buyers bought 34,380 homes in 2012, the most deals for any year since 2006. Homes sales in December alone jumped 19.4 percent from the same month a year earlier. Low mortgage rates and a belief that the market had hit bottom lured reluctant buyers to invest again.

Separately, the California Association of Realtors reported Tuesday that existing Orange County single-family houses sold for a median price of $582,930 in December — up 20.3 percent from December 2011. It was the highest median for single-family homes in the association’s records since March 2008. Realtors reported a sales gain of 24.2 percent.

Both year-end reports show that the Orange County home prices hit bottom around the middle of the year as home listings dropped to lows not seen for at least a decade. A drop in the number of foreclosures and “short sales” – homes selling for less than their mortgage debt — accelerated demand and ignited bidding wars among buyers across all price ranges.

The year began with forecasts that banks would pick up the pace of foreclosures and unleash a flood of discounted homes that would depress the market. Instead, Orange County foreclosures fell to 4,531 homes last year, down 37 percent from 2011 and 61 percent below the peak in 2008. At the same time, lenders stepped up the pace of “short sales,” allowing buyers to sell homes for less than they owed the bank. As a result, many neighborhoods were spared the blight of vacant, often decaying homes. As foreclosures dwindled, the number of homes for sale also fell, dropping from 8,100 listings at the start of 2012 to 3,161 earlier this month. That’s the lowest housing inventory in records dating back to 2004.

Sales for homes priced at $700,000 or more accounted for 23 percent of all Orange County transactions last month, compared to 16 percent a year before, Data-Quick figures show. Deals for $2 million or more increased 48 percent in 2012 compared to 2011.

On Tuesday, a third market tracker, Irvine-based data firm Core-Logic — which runs a month behind — reported an 8 percent jump in single-family home prices for November. That’s the biggest percentage gain since June 2006. Core-Logic showed more modest gains than the other two indexes for November, but also showed housing price gains for six consecutive months.

Although all of the reports show the first meaningful price gains since the housing bubble burst in 2008, last month’s median price of $470,000 for all homes sold remains at February 2004 levels. Last year’s sales still are 20 percent below Orange County’s average of 43,000 transactions a year in the preceding 24 years.

Fiscal Cliff Bill Extends Mortgage Debt Relief

The so-called “fiscal cliff bill” passed late in the night on December 31st included an amendment extending the Mortgage Debt Relief Bill for one more year.  This is good news for CA homeowners who remain underwater on their primary residence and are considering a short sale.  Please remember not all taxpayers qualify under the terms of aforementioned bill. For that reason, consultation with a CPA / Tax Advisor / Accountant remains a prudent course of action for any homeowner evaluating options.

 What does this mean in dollars to short sale sellers?

For example:  If you sell your home for $100,000 less than you owe the bank, that $100,000 debt relief will not count against you as income received.  You will therefore pay no federal tax on the amount you are short.  If the bill were to expire, you could be looking at paying anywhere from 15% to 40% tax on that $100,000 (depending upon your tax bracket in individual situation).

 What does this mean to short sale buyers?

The extension will likely increase the overall number of short sale homes on the market, which should increase supply and provide buyers with more options.  The listings coming on the market could also be at a lower price point compared to non-distressed listings.  However, buyers should be aware there may still be stiff competition for homes if you are in a resurgent market.