Category Archives: Orange County

How much longer can southern CA home prices keep going up?

 

Home for sale in Dana Point. Click photo for details.

Source: OC Register

For 62 straight months, Southern California home prices have gone in one direction. Up. Five years ago, you could snatch up a median-priced condo in Orange and Los Angeles counties for about $280,000, 76 percent less than today’s prices. A median-priced house cost $323,000 in L.A. County five years ago and $495,000 in O.C., about $260,000 less than today’s prices in both counties.

What should a buyer do now? Will prices keep rising? Or are prices close to the top?

The OC Register asked a half-dozen economists and industry analysts what the future holds for home prices in the region. Among their answers:

  • Southern California home prices aren’t about to drop. In fact, they believe prices will keep rising for two more years, at least, and possibly longer.
  • The market isn’t in a bubble — yet — although bubble talk is starting to “raise its ugly head” at cocktail parties, one economist said. Some analysts are saying Southern California home prices are showing signs of being overvalued.
  • If you’re thinking about buying a home, now just might be the time to act — provided you don’t overextend yourself and you plan to live there awhile.

Here are five key questions about where Southern California home prices are heading in the future.

Q: Are we at the peak?

A: Not one of the economists interviewed thinks we are, at least not for entry-level homes. Luxury homes, priced at $2 million and up, may have reached a price peak and are facing an oversupply of listings, analysts said.

Nominal home prices have surpassed pre-recession highs in Orange and Los Angeles counties. Riverside and San Bernardino counties are about 18 percent below their price peaks. But none of those counties has reached pre-recession peaks in inflation-adjusted dollars.

If home prices were to keep rising at the current appreciation rate, and inflation were to continue at the current rate, Orange County’s median home price won’t get back to the pre-recession peak after inflation for about two to three years.

Another fact to consider: During the last market run up, Southern California home prices increased year over year for 126 consecutive months, or 10½ years. That’s twice as long as the current streak in home price gains.

Lastly, analysts say home prices aren’t rising that much. Price increases averaged 6.3 percent in Southern California in the past year, ranging from a low of 5.4 percent In Orange County to a high of 7.9 percent in San Bernardino County.

Q: How much longer will home prices go up?

A: Two years at least, most economists interviewed said. Possibly longer.

Projections by the California Association of Realtors show a gradual decrease in home price appreciation over the next few years, said Oscar Wei, a senior economist for the group. For example, CAR projects prices will go up 5 percent statewide in 2017, 4 percent in 2018, and 2.5 percent in 2019.

Assuming the Gross Domestic Product continues to grow at 2.5 percent and mortgage interest rates stay below 4.5 percent, Southern California home prices could be going up at 6 percent a year for the next six to seven years. At 6 percent a year, the median home price could reach almost $700,000 in Southern California by 2023, $500,000 in Riverside County, $800,000 in Los Angeles County and nearly $1 million in Orange County.

Q: Are we in a bubble now?

A: No.  Los Angeles and Orange counties had an 11½-month supply of homes for sale in the spring of 2007 compared with under four months available this year. Riverside County had an 8½-month supply of listings for sale, vs. just under four months today; San Bernardino County had a 16½-month supply, vs. four months today.

In California as a whole, 43 percent of borrowers had second mortgages in 2006, vs. 4.8 percent last year.  California’s median down payment was 11.8 percent of the purchase price in 2006, vs. 18.6 percent last year. To sum up, we don’t have as many people over-leveraging their homes.

Q: When is the next recession?

A: Not for at least two years, economists said. “Over the next two years, the recession probability is very low,” said UCLA economics professor William Yu, a member of the team producing the UCLA Anderson Forecast. “But beyond two years, that is very difficult to say.”

A major global calamity — like a new Korean War, a messy breakup of the European Union or a surge in oil prices — could trigger a recession, but forecasting exactly when is an extremely murky business, said Joachim Fels, a Pimco managing director and global economic adviser.

Q: Is it too late to buy a home?

A: Industry analysts have advised renters for the past four years to get into the housing market while interest rates and prices still are low. While it’s definitely more expensive to buy a home today than it was a few years back, the cost of buying will be even greater down the road.

If you wait, home prices probably will go up about 8 percent or so in the next couple of years. Plus you’re probably going to see some increase in mortgage rates. Analysts predict mortgage rates will go up half a percentage point this year and half a percentage point next year.

Source: OC Register

Listing of the week: 31252 Via Cordova

A South OC house just under $700K? No wonder it’s already in backup offers…

31252 Via Cordova
3 bed, 2 bath
1,478 square feet total
$699,950

Here’s why I think this is a great buy:

  • It’s on a big lot–6,250 square feet
  • Quiet location at the end of the street
  • Great backyard for entertaining (or room for adding on)
  • Access to San Juan Capistrano hiking and biking trails

Want to check it out? Contact me today.

 

Spotlight On: Best Golf Courses in South Orange County

Monarch Beach Golf Links (Dana Point)
50 Monarch Beach Resort N, Dana Point, CA 92629
949-248-3002


Arroyo Trabuco Golf Club (Mission Viejo)
26772 Avery Pkwy, Mission Viejo, CA 92692
949-305-5100


San Juan Hills Golf Club (San Juan Capistrano)
32120 San Juan Creek Rd, San Juan Capistrano, CA 92675
949-493-1167


Ben Brown’s Golf Course at The Ranch Laguna Beach (Laguna Beach)
31106 Coast Hwy, Laguna Beach, CA 92651
949-499-2271

Shorecliffs Golf Course (San Clemente)
501 Avenida Vaquero, San Clemente, CA 92672
949-492-1177


San Clemente Municipal Golf Course (San Clemente)
150 E Avenida Magdalena, San Clemente, CA 92672
949-361-8384


Talega Golf Club (San Clemente)
990 Avenida Talega, San Clemente, CA 92673
949-369-6226


Bella Collina Golf Course (San Clemente)
200 Av. La Pata, San Clemente, CA 92673
949-498-6604

Listing of the week: 30967 Steeplechase Drive

Before you balk at the price of this property in San Juan Capistrano, look at the square footage!

30967 Steeplechase Drive
5 bed, 6 bath
6,220 square feet total
$1,599,000

Here’s why I think this is a great buy:

  • It’s in the exclusive gated community of Hunt Club Estates in San Juan Capistrano
  • It’s HUGE!
  • A kitchen Martha Stewart would love
  • Dream backyard: Pool, built-in BBQ, basketball court
  • Custom finishes and appointments throughout,including Palladian windows, hardwood flooring, leathered granite countertops in the laundry room and remodeled baths, plantation shutters, a 3-car garage and extensive attic storage

Want to check it out? Contact me today.

 

Listing of the week: 31281 Paseo Sereno

This week’s property is right near the historic Mission in San Juan Capistrano!

31281 Paseo Sereno
3 bed, 2 bath
2,025 square feet total
$1,199,999

 

Here’s why I think this is a great buy:

  • Beautiful interior, complete with Mission-style touches (Spanish flooring, ornate iron light fixtures, tile flooring, old-world style chandelier, exposed wood beamed ceiling)
  • Historic location, very close to the Mission in San Juan Capistrano
  • Close to downtown San Juan Capistrano, which continues to add great restaurants and bars
  • Privacy! The house is surrounded by 8-10 ft walls
  • Chef’s kitchen with white marble counters, custom cabinetry, and top-of-the-line appliances

Want to check it out? Contact me today.

Understanding building codes and zoning laws

Home for sale in Dana Point. Click photo for details.

Source

When buying (or selling) a home, it’s important to be cognizant of a property’s local zoning and code violations. If you’re thinking about adding onto a property, doing a remodel, maybe subdividing to generate some supplemental income, knowing where your property stands in terms of its code compliance as well as its zoning restrictions can yield lots of crucial information on your house hunt.

What Are Code Violations?

If your home falls short of a county or municipal building code, it has a code violation. Many homes have some form of code violation. This is because building codes change all the time, and a house that was code-compliant when you bought it may now lag behind current standards. These innocent violations are “grandfathered” in, which means they are not regarded as violations if the home was up to code when it was built.

How do you know when a property was built, when any upgrades were completed and whether it’s in violation of codes or zoning ordinances?

See what the OC Property Assessor shows. Call your City’s Building and Code Enforcement Department and ask them for any permits pulled on the property. Ask them about any non-conforming use.  Ask when and how a non-conforming use has to become conforming. Ask if the property is a “legal non-conforming use.” Further, your Realtor should have access to tools that shed a lot more light on the current status of your prospective home from a code and zoning perspective.

Most serious code violations happen because the homeowner adds more living space without the proper permission. Other examples include water heaters or electrical points installed without a permit, failure to use non-flame retardant roofing material and the absence of smoke detectors: the list is endless.

Why are Zoning Laws Important?

Is my home legal? Can I get a loan on my home? Can I rebuild my home if destroyed? These questions can be answered if you know whether your property is in compliance with local zoning codes or not. A property’s zoning status is classified as legal, legal nonconforming (“grandfathered”) or illegal.  Legal compliance means that a property conforms to current code and can be rebuilt if destroyed, and qualifies for a FNMA loan.  Legal non-conforming means that at one time the property complied with zoning code but does not currently comply, but the nonconforming use may continue; generally these homes can be rebuilt and qualify for a FNMA loan.   Illegal indicates that the property does not conform to the zoning code and must be restored or removed, and cannot be rebuilt if destroyed and do not qualify for a FNMA loan.

What about remodeling and illegal uses?  Adding an addition to a home without permits does not automatically make the property illegal; being non-permitted is not the same as being an illegal use in the zoning.  If the addition would normally be allowed by zoning, the issue of non-permitted areas can often be resolved by working with your building department and obtaining letter of compliance or a permit as long as the addition meets code.  However, if the building addition would not be allowed by zoning, the addition will most often need to be removed or significantly modified so that the addition complies with current zoning.

 

Finding a good home inspector

Is Your Home Inspector Legit? Why Buyers Should Inspect Their Inspectors

Of the roughly 30,000 U.S. home inspectors nationally, those in about 15 states don’t need to be licensed, according to the American Society of Home Inspectors. Among the non-licensure states—you guessed it includes California.

How to inspect the home inspectors—and find a winner

Good sources to finding a Home Inspector are professional trade associations. There are two quality associations available in California: the California Real Estate Inspection Association, CREIA and the American Society of Home Inspectors, ASHI. Both organizations require their members to pass an exam showing competence in the home inspection profession along with requiring that each member maintains continuing educational credits each year, CREIA requiring 30 hours per year and ASHI requiring 20 hours per year.

The client should interview all potential Inspectors they are considering and ask the following:

  • Is the inspector a member of CREIA and/or ASHI?
  • What does the inspection cover? Make sure the inspection and the inspection report meet all applicable requirements and comply with the CREIA and/or ASHI Standards of Practice. Both Standards of Practice are recognized by the California Legislature
  • How long has the inspector been practicing and how many inspections have they completed?
  • Does the inspector’s company offer to do repairs or improvements based on the inspection? This is against the CREIA and ASHI Code of Ethics as it is a defined conflict of interest
  • How long will the inspection take? The average for a single inspection is 2 to 3 hours for a typical single-family house; anything less may not be enough time to do a thorough inspection. Some inspection firms send a team of inspectors and the time frame may be shorter
  • Does the inspector prepare a written report? Ask to see samples and determine whether or not you can understand the inspector’s reporting style
  • Does the inspector encourage the client to attend the inspection? This is a valuable educational opportunity, and an inspector’s refusal to allow this should raise a red flag
  • Does the inspector participate in continuing education programs to keep his or her expertise up to date? One can never know it all, and the inspector’s commitment to continuing education is a good measure of his professionalism and service to the consumer

As for what to do if problems crop up that the inspector should have found, the first course of action should be to contact the inspector directly to discuss the issue. No corrective work should be undertaken before the inspector has an opportunity to review the report and be given the chance to revisit the property. Good inspectors will make good on their services if they missed something that should have been discovered during the course of the inspection. Keep in mind that the inspector is operating per an accepted Standards of Practice which states what is required to be inspected and what is not. Also many Inspectors carry professional liability, errors and omission insurance (although it is not required).