U.S. ADDS 216,000 JOBS & U.S. LAYOFFS LOWEST SINCE 1995

These were a couple of very encouraging headlines starting out the second quarter of 2011.  Not only were these figures higher than expected, but unemployment also dipped to its lowest level since 2008.  In a recent article OC Register writer Jonathan Lansner had a similar headline, "Job Growth Could Cure Ailing Market."  The gist of the article is really found in the Beacon Economics updated housing forecast for California.  Research manager Jordan Levine finds some optimism that is driven by, "rising employment and incomes, which we project to grow by between 4% and 6% on the income side and 2% to 3% on the employment side."  In other words, people really do need jobs to buy a house.  And their income needs to be proportional to the price.  Something the sub-prime and stated loan programs seemed to forget.  The other encouraging things was that these jobs were "real" jobs; not seasonal, not minimum wage, but substantial jobs in technology, import, service, management, and manufacturing.  Originally the Fed thought job recovery would be 5 complete years.  Statistics now suggest that job recovery will happen by installment, both in types of jobs and location.  Remember, it is projected (see last month for details) that California may be a little slower than some parts of the country, since we were hit so hard by the loan meltdown, but Southern California, specifically Orange County, was projected to emerge first.

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DEMAND FOR HOMES REACHES 7 MONTH HIGH

There are also articles stating the opposite.  "Winter Doldrums Worsen, Defying Usual Pattern," was seen on March 16th.  It was published just as demand was taking off.  More on the actual numbers later, but they are down compared to both the month before and the year over year.  But remember, a year ago we had a federal tax credit that was driving thousands of buyers into the market.  This year that is gone, and so the numbers we have may not be quite as high, but they reflect the true market and the true level of recovery.  According to the Orange County Home Inventory Report from Steven Thomas, pending sales at the beginning of the year were1,856.  Since then, it has increased by 61%.  What may be more interesting is a look at "market time" which is how many days on the market it takes a property to sell.  You take that number and combine it with how many properties are available and you get your "market inventory."  In other words, if not another home came on the market starting today, how many months would it take to sell everything we've got, at our current pace.  A seller's market is said to be under 6 months, an even market about 6 months, and a buyer's market at more than 6 months.  Well, right now, believe it or not, that number is under 6 months.  And yet prices are falling.  We may never see this exact market phenomenon again.  Buyers are sensing that there are some very good deals on the market.  But because financing is tight and because there is much competition from REO (real estate owned by banks), cash is king and cash can generally get a lower price.  But, having said all that, it is not uncommon right now to see multiple offers on in demand properties in good locations in the right price range.

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RATES NEAR ALL TIME LOW'S! ACT NOW!

Rates have dropped to near all time lows! If you have needed to refinance your home loan and was unable to—due to the economic changes—there has never been a better time to refinance! Conventional 30-year fixed program rates are now at 4.50% or below.

Call us today, toll free at 1-866-468-7800, so we can discuss the new options available for you today, such as:

• Lower your monthly payment!
• Getting out of your Adjustable Rate Mortgage, into a low fixed rate (call before your payment increases).
• Pay off your high-interest credit cards and improve your FICO scores (ask us about “Credit Xpert®”)
• Consolidate your 1st and 2nd mortgages (such as your high-interest Home Equity Line of Credit)
• Get Cash for College or pay off your Student Loans 
• Get Cash for Home Improvements or to purchase another Investment Property
• Gain a monthly income while being retired, using a “Reverse Mortgage” product (call for details)
• Call to find out whether you have a Fannie Mae or Freddy Mac loan.  We have the ability to refinance your loan without mortgage insurance.
• If you have a FHA Call me regarding a streamline refinance and reduce your mortgage.

Please give us a call ASAP at so we can determine how much you can save each month!

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WHAT WERE THE ACTUAL NUMBERS?

The following numbers are for closed transactions only for the month of May, the latest full month available.  Expect these numbers to be big, but not as big as the June numbers will be as homebuyers scrambled to close their transactions before the tax credit expired.  (It has been extended for closings ONLY, not new contracts, until September.)  The total number of sales was 3,257.  This was up 22% from the previous month of April and up 22.1% from May ’09.  There were 2,015 single-family resale, 942 condominiums and 300 new homes.  There was a 240% increase in new homes from the previous month due largely to buyer incentives offered by the builders. The median price for all properties was $450,000, and for a single-family resale it was $515,000.  Condo’s came in at $305,000 and new home’s median price was $645,000.  The trend towards lower prices continued with nearly 80% of all sales under $700,000 and only 653 sales over $700,000 . The average down payment was 19.2%, a sharp departure from 100% financing and indicative of intensified lender scrutiny.

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ECONOMY SEEMS TO SLIP BUT UCLA SEES EARLIER RECOVERY IN ORANGE COUNTY

UCLA predicts that California, “will slog through another year of double-digit unemployment, but Orange County and other coastal counties will bounce back before the inland communities.”  This and other facts came out in their quarterly forecast.  The forecast sees the state unemployment rate averaging 12.1% this year with 167,000 jobs being added.  Unfortunately, that will not make a dent in the 1.3 million jobs lost throughout the recession.  The report went on to state, “the economy will begin to pick up slightly in the beginning of 2011 and by the middle of 2011 begin to grow at more normal levels.”
 
Nationwide, experts predict a modest recovery with gross domestic product averaging 3.4% this year.  Many of the original numbers regarding exports were modified after Europe’s crisis became clear.  According to the report, it typically takes four to six years to recover from a major restructuring of a local economy, which defines southern California to a certain extent because of the lopsided employment in the housing sector that occurred during the sub-prime boom.  The good news is that California exports and manufacturing will likely pick up the slack and lead California forward. 
 
Even better news for the resale market is that as a result of the worst downturn in decades in new construction, housing demand will fall on existing homes for at least the first two years of the recovery while new housing catches up.

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CALIFORNIA WARNS ABOUT SHORT-SALE SCAMS

Attorney General Jerry Brown is warning homeowner’s to be wary of scam artists offering to short cut the system or promising results that are not reflective of a true short sale.  His office offers the following tips: 1)  With limited exceptions, only licensed real estate agents or attorneys can engage in short-sale negotiations with a homeowner’s lender.  2)  Licensed agents seeking upfront fees from homeowners for short sales must first submit an advance fee contract to the Department of Real Estate and receive a no-objection letter.  3)  Surcharges and hidden fees just to place an offer on a home are illegal.  4)  Misrepresenting the market value of a property to a homeowner’s lender by only submitting offers on the property from affiliated straw buyers is illegal.  Most short sale transactions are handled by Realtor’s directly with no upfront fee, and negotiated directly with the lender by the agent, escrow, or a short sale intermediary hired by the agent.

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