Well, as the summer comes closing in, we continue tracking the real estate market and statistics in the city of Laguna Niguel.  Generally, we’ve been optimistic about the market place and about inventory over the summer, and honestly we still are!  (The picture looks different…)

At this point, inventory is on the rise - this is dangerous for Sellers, since increasing inventory brings increasing competition in attracting buyers, and this means that Sellers are truly in a beauty contest and a price war! 

The inventory this week is very precise - there are 417 Active Listings in Laguna Niguel.  Of those active listings, there are 296 Regular Sales, and 121 Short Sales. 

There are 200 In Escrow listings, of which only 74 are Regular Sales.  There are 126 Short Sales in Escrow. 

The monthly inventory (the number of months to sell all active listings if no other homes were listed), therefore, is 296/74 = 4 MONTHS OF INVENTORY exactly.

The inventory has therefore increased by approximately 18% - this makes for a much softer market as the number of motivated sellers increases.  This is to be expected since the market has increased, allowing a number of sellers to sell without taking a loss, which has opened the door for more listings.

As a buyer, the time is ripening - keep watching for good deals!

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Just a brief reminder:

If you or someone you know is looking for a home with a panoramic ocean view in a great location in Laguna Beach, we have a spectacular listing down that way, and the views are unreal - panoramic from north coast all the way down past south Laguna, plus a canyon view - and all of this space and without any steps, making this home a super unique opportunity.

Plus the 2700 square feet of living space and the shocking price tag of 1,330,000 makes this the best buy in Laguna Beach!  Call for a showing!!

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The United States federal government has just released a new website intended to help homeowners facing financial trouble.  The goal of the website is to facilitate the process of loan modifications and refinances for home owners who are having trouble with getting a short sale or loan modification completed.  The website is quite informative, and contains a calculator which should give you a projected monthly payment cap, should you qualify for a modification, and a way to track and expedite a short sale. 

Feel free to check it out here, and let us know your thoughts!

OFF WE GO!!!

Well, as the summer moves on, we are reminded again that the real estate market is cyclical and varied.  The market statistics follow, as well as an analysis of what this means for you for the rest of the summer and ‘fall’.

As of today, there are 395 ACTIVE listings in Laguna Niguel, ranging in price from 180K to well over 6 Million.  Of those homes, 112 are SHORT SALES leaving 283 regular sales. 

Further, there are 209 IN ESCROW in Laguna Niguel, and of that number, 130 are SHORT SALES, leaving 79 regular sales in escrow.

So what does this information mean?  Well, you’ll notice that the ratio of active to in escrow short sales is much greater - 79 to 395 regular sales in escrow versus 130 to 112 short sales in escrow.  This would indicate that the properties in escrow are dwindling as the market slows into the summer months.  The numbers of properties that are entering escrow are slowing, and the pricing of regular sales is being rejected by the wider marketplace.  This would indicate that the real estate market in our area is entering the expected seasonal summer doldrums. 

What does this mean for the longer term?  Well, honestly, that’s anyone’s guess.  With the market still selling, and low interest rates and some well-priced homes, the time may still be right to jump on a sale and unload that old rental property, etc..  Further, in a market climate like this, moving up is fantastic!  The percentage changes make the gains very tempting. 

For market questions and statistics, email us anytime at Stats@JonRonRealEstate.com.

Here’s what the Federal Reserve Board said about the Economy here in the Wild Wild West:

“Real Estate and Construction
Demand for housing in the District appeared to deteriorate somewhat from the previous period, while demand for commercial real estate was largely unchanged at very low levels. The pace of home sales remained mixed across areas but appeared to decline on net, even as home prices edged up further in some parts of the District. Several contacts noted again that limited availability of nonconforming “jumbo” loans is holding down sales of higher-priced homes in some areas. Conditions in commercial real estate markets remained depressed, as vacancy rates for office and industrial space stayed at very elevated levels in many parts of the District. One California contact noted that although only a few large commercial properties have sold in recent months, the prices received were surprisingly high.”

If you’d like more information about this or any other Market Statistics, especially Laguna Niguel specific, let us know!

Mortgage lenders are concerned with your ability to repay the mortgage. To decide if you qualify for a loan on a new home, they will consider your credit history, your monthly gross income and how much cash you will be able to accumulate, or have accumulated, for a down payment. So how much house can you afford? To know that, you need to understand a concept called “debt-to-income ratios.”

Debt-to-income ratios

The basic types of debt to income ratios are known as front end and back end ratios.  The front-end ratio is the amount of house debt versus the total gross income.  The back-end ratio is the total debt management with house and all other debt versus monthly gross income.

Front-end ratio: The housing expense, or front-end, ratio shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income. To calculate your housing expense ratio, multiply your annual salary by 0.28, then divide by 12 (months). The answer is your maximum housing expense ratio.

Front-end ratio

Maximum housing expense ratio = annual salary x 0.28 / 12 (months)

Back-end ratio: The total debt-to-income, or back-end, ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.

Back-end ratio

Maximum allowable debt-to-income ratio = annual salary x 0.36 / 12 (months)

Example

Take a homebuyer who makes $80,000 a year. The maximum amount for monthly mortgage-related payments at 28 percent of gross income is $1866. ($80,000 times 0.28 equals $22,400, and $22,400 divided by 12 months equals $1866.66.)

Fannie and Freddie, together with the Federal Housing Administration, are guaranteeing more than 9 in 10 loans, a consequence of the government’s propping up of the housing market and the withering of the private securitization market. Fannie and Freddie own or guarantee a little over $5 trillion of the nation’s $10 trillion of mortgages.

Both agencies operated for 30 years as shareholder-owned corporations that financed home loans with the limited support of the federal government. When the housing market collapsed, so did Fannie and Freddie. They were taken over by the Treasury Department in September 2008. So far, the U.S. has spent $145 billion to keep the companies afloat.

For decades Fannie and Freddie have bought mortgages and bundled them into securities and sold them to investors. The mortgage backed securities market generates fresh cash that can be channeled back into additional affordable loans.

The question now at hand is whether to eliminate Fannie and Freddie altogether, and recreate a more dynamic system that can respond to today’s mortgage climate, or to seek a restructuring process in the existing system.

No matter where this ends, there are some changes coming for the American mortgage market!!  Keep in the loop by stopping back by the blog periodically.

Thinking of some remodels?  Here are a few things that can pay back great dividends when you sell!  

1. Make your kitchen really cook

The kitchen is still considered the heart of the home. For a few hundred dollars, you can replace the kitchen faucet set, add new cabinet door handles and update old lighting fixtures with brighter, more energy-efficient ones. If you have a slightly larger budget, you can give the cabinets themselves a makeover. Rather than spring for a whole new cabinet system, which can be expensive, look into refacing the ones you have. Many companies will remove cabinet doors and drawers, refinish the cabinet boxes and then add brand-new doors and drawers at a price considerably less than new cabinets. Unless the cabinets are mica, a fresh coat of paint can also do the trick.

2. Give appliances a face-lift

If your kitchen appliances don’t match, try ordering new doors or face panels from the manufacturer. Many dishwasher panels are white on one side and black on the other. It can be as simple as removing a couple of screws, sliding the panel out and flipping it over.

3. Buff up the bath

Next to the kitchen, bathrooms are often the most important rooms to update. They, too, can be improved without a lot of cash. Simple things like a new toilet seat and a pedestal sink are pretty easy for homeowners to install, and they make a big difference. You can replace an old, discolored bathroom floor with easy-to-apply vinyl tiles or a small piece of sheet vinyl — often applied right over the old floor. If your tub and shower look dingy, consider regrouting the tile and replacing any chipped tiles. A more complete cover-up is a prefabricated tub and shower surround. These one-piece units may require professional installation, but still can be cheaper than paying to retile walls and refinish a worn tub.

Summer Fun Contest Winners!!!!!  JonRon Team

Top cash prize winners - Ami McGloon  $225,  William Anderson $150,  Celeste Gonzalez $105.

$20 In and Out Burger Gift Cards: 

Joanne Fitz, Rosie Flores, Lyle Radeleff, TJ Van Dusen and Carole Wood.

 Wasn’t that fun?  Enter our next contest soon - “Back to School” by mail or on our website - JonRonTeam.com.

Short Sale Myths

1. You must be defaulting on your mortgage to negotiate a short sale. WRONG. Short sales are not a function of default status on a mortgage. They are the result of the bank mitigating a potential default situation that, in the long run, will cost more money to the investors. We have completed many short sales in instances when the borrower was not in a default situation.

2. Listing my home as a short sale is embarrassing. WRONG. A property can be listed for sale without a sign - this keeps the neighbors from knowing about the short sale, at least for a while.  Also, the fact that the home is a short sale can be kept from widespread public knowledge by a good realtor.

3. Buyers aren’t interested in short sale properties. WRONG. Short Sale properties are often times available at a competitive price to other properties on the market. In many cases, short sale properties are very well cared for and have not had to endure the deferred maintenance of a REO property. Short Sale properties are in great demand in the marketplace.

4. There’s not enough time to negotiate a short sale before foreclosure. WRONG. A good negotiator takes into account the timeline affiliated with a foreclosure. There is always a chance that a short sale can be negotiated. However, the only way to know for sure is to try.

5. The bank would rather foreclose than complete a short sale. WRONG. Banks do not want to foreclose on property. It is expensive and carries a high level of liability once the bank owns that property as an REO. Wherever possible, banks are seeking other loss mitigation options before foreclosure.

6. Short sales are impossible and never get approved. WRONG. Short sales are complicated, but not impossible. We negotiate short sale approvals every day.