Sweet Orange

Earlier this year, we all turned our clocks back one hour to observe daylight savings time. Daylight savings time was first adopted in the U.S. to conserve resources and, therefore, aid the war effort during World War I.

Today, with the development of fluorescent light bulbs, we have another way to conserve our resources–and money. According to the EPA:

Lighting accounts for close to 20 percent of the average home’s electric bill. Changing to CFLs costs little upfront and provides a quick return on investment.

If every home in America replaced just one incandescent light bulb with an Energy Star-qualified CFL, it would save enough energy to light more than 3 million homes and prevent greenhouse gas emissions equivalent to those of more than 800,000 cars annually.

So, in addition to saving resources on the national level, using CFLs can save money on the personal level. Although the CFLs cost more upfront, the cost of the monthly utility bill will be lower, and the result will be a net savings.

Statistics from the EPA back this up:

An ENERGY STAR qualified compact fluorescent light bulb (CFL) will save about $30 over its lifetime and pay for itself in about 6 months. It uses 75 percent less energy and lasts about 10 times longer than an incandescent bulb.

Note: This is a rework of one of my Redfin posts.

Recently, I wrote a post about the Fed’s mortgage-backed securities buy-back program. In that post, mortgage exec Randy Johnson and vice president of HSH Associates (a mortgage-education company) Keith Gumbinger predicted that mortgage rates will go up after March 31, 2010. March 31st is the date the  buy-back of mortgage-backed securities by the Federal Reserve is scheduled to end. An article from Matt Padilla provides more information, and a different perspective, on the mortgage back securities (MBS) buy-back program.

Here is a quote from the Padilla’s article that states this different perspective:

Mortgage strategists at Credit Suisse say the slowdown in Fed purchases will not affect MBS spreads to any large degree. “The Fed’s exit from the MBS purchase program will likely be well absorbed by the market,” according to a weekly Credit Suisse “Market Watch” publication. After March 31, the “Fed will likely assume a backstop role for the MBS market to prevent a double dip in housing,” Credit Suisse strategists say.–Matt Padilla, “Treasury mum on halting mortgage-security purchases“

The 5 ambassadors from the remote Pacific Island of Tanna were handpicked by their elders to undertake the mission to America. They come from a community with a traditional way of life ….

They have never left Vanuatu before, and though aware of the outside world, they have made an active choice to retain these traditional ways.–Travel Channel

Today is Christmas, a good time to ask the question: Can we all find a way to set aside our differences and establish some good will in spite of these differences? Tribesmen from the remote Pacific island of Tanna, where none of the modern conveniences exist, seem to have found a way to find common ground with the various “U.S. tribes,” including the “Orange County tribe.” And the U.S. tribes seem to have taken a liking to these Tanna natives in spite of the many differences.

Take a look at some of the clips, and you will see what I mean. They suggest that common ground is possible among the various tribes of the world.

Best wishes for a wonderful holiday and a peaceful New Year.

Randy Johhnson, president of Independence Mortgage Company, and Keith Gumbinger, vice president of mortgage-education company HSH Associates, agree: Mortgage rates are likely to go up after March 31, 2010.The significance of this date is that this is when the Federal Reserve will stop buying mortgage-backed securities from Fannie Mae, Freddie Mac and Ginnie Mae.

The Fed started this buy-back program in January 2009, and by the end of the program the Fed will have bought $1.25 trillion dollars worth of these securities. The result is that mortgage rates have been kept low, but when the program ends, some, such as Johnson and Gumbinger,  believe that mortgage rates are likely to increase.

As Anna Prior points out in a Wall Street Journal article, rate might not increase that much, but

A one-percentage point rise could add more than $150 to a monthly mortgage payment for a $250,000 30-year fixed-rate loan.

In addition, mortgage industry exec Johnson advised a homeowner whose mortgage rate is about to reset that the end of the buy-back program will

…increase the likelihood that rates will climb. If I were you, I would initiate a refinance right now. (Randy Johnson, “Is it time to refinance?” The Orange County Register, December 13, 2009)

As a mortgage industry exec, Johnson has an interest in advising for refinancing. But the end of the buy-back program and the effect this will have on interest rates is something to put into the mix when considering refinancing.

Note: An upcoming post will provide another viewpoint.

Note: Usually, I would not publish another post until Monday; however, since this post is time-sensitive, I am posting Monday’s post today, Friday. Also, during the holidays, I might publish fewer posts per week than I have up to this point. We’ll see.

The Irvine Community Land Trust in partnership with Neighborhood Housing Services Orange County is putting its first three Irvine homes on the market. The deadline to apply online is soon (December 22nd by 11.59 pm PST), so if you are interested, hurry. Also, be aware that restrictions such as income limits and resale restrictions exist. For more information, see the land trust website.

Here is some more information on the three homes that are currently being offered to qualified buyers. In some cases, the square footage and value estimates involved some educated guessing on my part.

80 Clearbrook (Woodbridge)

• 1980 condo
• 3 bedrooms/2 baths with approximately 1,113 SF
• List price: $264,600
• Estimated value: $370,000

56  Clearbrook (Woodbridge)

• 1980 condo
• 2 bedrooms/2 baths with approximately 920 SF
• List price: $231,850
• Estimated value: $320,000

49  Torocco (Orangetree)

• 1983 condo
• 2 bedrooms/2 baths with approximately 995 SF
• List price: $240,400
• Estimated value: $270,000

Recently, I wrote about two condos in Irvine that were both about 1,400 square feet and selling for about $400,000. One was a 1982 home in Northwood, and the other is part of  the new Ivy development that is located in Woodbury East. In that post, I asked the question: Which of these two homes is a better deal? Well, maybe you prefer to look elsewhere for something cheaper. If so, here is an example of what has sold in Costa Mesa.

At 3431 Pinebrook (South Coast Metro neighborhood) is a 1977 condo with 2 bedroom, 1.75 baths, and 1,254 SF. The home sold on 06/01/2009 for $270,000 ($215/SF). However, a year and a half ago this home was listed for $399,000. Homeowner association fee is $320 per month. No Mellos Roos tax is listed.

This home is somewhat smaller than the Irvine condos, but so was the overall selling price as well as the price per square foot. In addition, this condo has the convenience of being close to South Coast Plaza shopping center and the South Coast Metro Arts and Cultural Center.

Here is the listing history:

Jun 05, 2009	Delisted	–	–	Inactive SoCalMLS #1
Jun 01, 2009	Sold (MLS)	$270,000	–	Inactive SoCalMLS #1
Feb 23, 2009	Relisted	–	–	Inactive SoCalMLS #1
Jan 26, 2009	Price Changed	$270,000	–	Inactive SoCalMLS #1
Jan 26, 2009	Relisted	–	–	Inactive SoCalMLS #1
Sep 20, 2008	Price Changed	$299,000	–	Inactive SoCalMLS #1
Sep 03, 2008	Price Changed	$350,000	–	Inactive SoCalMLS #1
Jun 20, 2008	Listed	$399,900	–	Inactive SoCalMLS #1

In some recent posts, I listed a sample of homes in North Orange County and South Orange County that are currently bank owned. Today, we’ll take a look at a sample of  homes in Central Orange County that are bank owned. In other words, these homes have gone through a trustee auction which resulted in ownership of the home reverting to the bank. I have included an estimated value, last sold price and the market value (list price) of the home. The information for all of the following homes is from Foreclosed Homes.

801 S Lyon Sreett #33 Santa Ana, CA 92705: condo with one bedroom

• estimated value: $177,870
• last sold on July 19, 2005 for $142,500
• list price: $61,900

215 Knox Street Costa Mesa, CA 92627: single-family home with two bedrooms/two baths

• estimated value of $598,137
• last sold on July 28, 2009 for $427,174
• list price: $609,000

3771 Claremont Street Irvine, CA 92614: single-family home with three-bedrooms

• estimated value of $546,837
• last sold on August 28, 2009 for $510,000
• list price: $509,500

10520 Lakeside Drive N, Garden Grove, CA 92840: single-family home with two-bedrooms/one-bath home

• estimated value: $264,622
• last sold: n/a
• list price: $110,000

1025 W Bishop Street, Santa Ana, CA 92703: single-family home with three-bedrooms/three baths

• estimated value: n/a
• last sold: n/a
• list price: $103,500

144 Orange Blossom, Irvine, CA 92618: 1976 condo with two bedrooms/one bath

• estimated value: $239,933
• last sold: n/a
• list price: $278,000

Note: The Altos Market Action Index shows the balance between potential buyers and sellers, in other words, the balance between supply and demand. Above 30 is a sellers’ market; below 30 is a buyers’ market.

Also, these Altos Research numbers are for detached houses only (condos are not included). For this reason, I have included numbers that show the percentage of homes in each city that are detached houses. The Redfin numbers are for both houses and condos.

To see additional information from Redfin including which homes are currently on the market as well as what homes have sold for recently, click on the Redfin link. To see additional Altos Research numbers for each city, click on the Altos Research link.

Summary: For the most part, I let you peruse these numbers yourself and decide what they mean. However, I will point out that list price and the sold price for homes in Newport Beach, the highest priced Central Orange County housing market, went down. And the list price and the sold price for homes in Santa Ana, the lowest priced Central Orange County housing market, went up.

Also, since I like to compare and contrast Irvine and Costa Mesa, here are some observations on the housing market in these two cities: The list price and the selling price for single-family homes in Costa Mesa went down. However, the selling price for Costa Mesa condos went up. In Irvine, the list price for single-family homes went down, but the selling price for both single-family homes and condos went up.

The Altos index numbers (which are for single-family homes only) show the health of these two markets to be about equal; however, the Altos numbers also show that the Irvine housing market is trending in a more positive direction.

Note that the selling price that I am referring to in the above paragraphs is the price per square foot. The list price is the overall list price.

Following are some recent Altos Research and Redfin numbers for the Central Orange County housing market:

Costa Mesa: approximate % homes on market that are detached–70%

• Altos Research Market Index Number:
  December 13, 2009: 20.20
  October 18, 2009: 20.96
  September 13, 2009: 18.97
  July 12, 2009: 21.13
• Altos median list price for detached house:
  December 13, 2009: $566,785
  October 18, 2009: $570,626
• Redfin median sold price:
  November 2009: house–$333/SF; condo–$262/SF
  September 2009: house–$403/SF; condo–$217/SF

Fountain Valley: approximate % homes on market that are detached–80%

• Altos Research Market Index Number:
  December 13, 2009: 22.79
  October 18, 2009: 23.86
  September 13, 2009: 20.72
  July 12, 2009: 26.05
• Altos median list price for detached house:
  December 13, 2009: $592,377
  October 18, 2009: $598,615
• Redfin median sold price:
  November 2009: house–$307/SF; condo–$219/SF
  September 2009: house–$307/SF; condo–$304/SF

Huntington Beach: approximate % homes on market that are detached–70%

• Altos Research Market Index Number:
  December 13, 2009: 17.80
  October 18, 2009: 17.86
  September 13, 2009: 16.63
  July 12, 2009: 14.50
• Altos median list price for detached house:
  December 13, 2009: $760,492
  October 18, 2009: $770,762
• Redfin median sold price:
  November 2009: house–$374/SF; condo–$334/SF
  September 2009: house–$344/SF; condo–$344/SF

Irvine: approximate % homes on market that are detached–45%

• Altos Research Market Index Number:
  December 13, 2009: 19.98
  October 18, 2009: 19.21
  September 13, 2009: 17.18
  July 12, 2009: 18.31
• Altos median list price for detached house:
  December 13, 2009: $831,685
  October 18, 2009: $863,177
• Redfin median sold price:
  November 2009: house–$357/SF; condo–$331/SF
  September 2009: house–$338/SF; condo–$318/SF

Los Alamitos: approximate % homes on market that are detached–75%

• Altos Research Market Index Number:
  December 13, 2009: 17.28
  October 18, 2009: 16.83
  September 13, 2009: 12.31
  July 12, 2009: 11.90
• Altos median list price for detached house:
  December 13, 2009: $869,961
  October 18, 2009: $860,346
• Redfin median sold price:
  November 2009: house–$302/SF; condo–$277/SF
  September 2009: house–$260/SF; condo–$275/SF

Newport Beach: approximate % homes on market that are detached–65%

• Altos Research Market Index Number:
  December 13, 2009: 16.27
  October 18, 2009: 13.61
  September 13, 2009: 11.04
  July 12, 2009: 11.42
• Altos median list price for detached house:
  December 13, 2009: $1,972,692
  October 18, 2009: $1,998,992
• Redfin median sold price:
  November 2009: house–$610/SF; condo–$435/SF
  September 2009: house–$789/SF; condo–$504/SF

Orange: approximate % homes on market that are detached–85%

• Altos Research Market Index Number:
  December 13, 2009: 19.91
  October 18, 2009: 19.96
  September 13, 2009: 18.15
  July 12, 2009: 19.26
• Altos median list price for detached house:
  December 13, 2009: $555,345
  October 18, 2009: $552,197
• Redfin median sold price:
  November 2009: house–$255/SF; condo–$217/SF
  September 2009: house–$254/SF; condo–$213/SF

Santa Ana: approximate % homes on market that are detached–65%

• Altos Research Market Index Number:
  December 13, 2009: 22.84
  October 18, 2009: 23.04
  September 13, 2009: 20.40
  July 12, 2009: 21.75
• Altos median list price for detached house:
  December 13, 2009: $342,823
  October 18, 2009: $339,523
• Redfin median sold price:
  November 2009: house–$244/SF; condo–$147/SF
  September 2009: house–$236/SF; condo–$103/SF

Seal Beach: approximate % homes on market that are detached–25%

• Altos Research Market Index Number:
  December 13, 2009: 17.11
  October 18, 2009: 14.89
  September 13, 2009: 14.24
  July 12, 2009: 12.91
• Altos median list price for detached house:
  December 13, 2009: $967,231
  October 18, 2009: $980,553
• Redfin median sold price:
  November 2009: house–$384/SF; condo–$138/SF
  September 2009: house–$398/SF; condo–$592/SF

Tustin: approximate % homes on market that are detached–50%

• Altos Research Market Index Number:
  December 13, 2009: 20.67
  October 18, 2009: 20.18
  September 13, 2009: 17.55
  July 12, 2009: 19.09
• Altos median list price for detached house:
  December 13, 2009: $589,884
  October 18, 2009: $629,922
• Redfin median sold price:
  November 2009: house–$306/SF; condo–$177/SF
  September 2009: house–$372/SF; condo–$156/SF

Villa Park: approximate % homes on market that are detached–100%

• Altos Research Market Index Number:
  December 13, 2009: 14.35
  October 18, 2009: 16.09
  September 13, 2009: 14.33
  July 12, 2009: 8.43
• Altos median list price for detached house:
  December 13, 2009: $1,230,423
  October 18, 2009: $1,202,962
• Redfin median sold price
  November 2009: house–$308/SF; condo–n/a
  September 2009: house–$376/SF; condo–n/a

What do homeowners think has happened to the value of their homes? According to Zillow’s Homeowners Confidence Survey, which came out at the beginning of this year and asked homeowners how much, if any, the value of their home decreased in 2008, the answers are as follows:

• In the South, 48% thought that their home lost value. The reality is that 70% lost value.
• In the Midwest, 59% thought that their home lost value. The reality is that 73% lost value.
• In the West, 70% thought that their home lost value. The reality is that 90% lost value.
• In the Northeast, 58% thought that their home lost value. The reality is that 71% lost value.

Zillow’s report also stated that 70% of U.S. homeowner thought that their home would increase or stay the same in the beginning of 2009.

Source: Marilyn Kalfus, “We’re beginning to admit our houses are worth less,” The Orange County Register, February 12, 2009

If you follow the housing news, you have probably read and heard numerous times that the median price for an Orange County home has gone up in recent months. For example, DQNews reports that the October median selling price for Orange County homes is up 3.9% from last October.

However, a report by The Real Estate Research Council of Southern California, which is located at Cal Poly Pomona, provides a different picture. Housing appraisers provide the input for the report by reviewing a sample of homes every October and April. The sample consists of the same homes being appraised and compared during each appraisal cycle.

Here are the October 2009 results:

• Orange County home prices are falling 15% annually. (The April report showed that O.C. home prices were down 14% from the previous April.)
• Orange County housing prices have been falling for three years.
• The amount of decline varies by region:
  –North Orange County: down 20.9%
  –Central Orange County: down 17.7%
  –South Orange County and beach areas: down 9%

A report by mortgage insurer PMI Group also shows a decline in Orange County housing prices. The PMI report states that the value of Orange County homes in the second quarter of this year was down 7.81%. In addition, PMI calculates that Orange County housing prices have a 99.9% chance of declining in the next two years.

A likely explanation for the conflicting pictures that the various numbers are painting is as follows: More homes at the mid- and high-end of the market are selling now than in the recent past. This brings up the median price for Orange County homes as a whole, but individual home prices might still be decreasing.

Sources:
Jonathan Lansner, “Appraisers see O.C. home prices off 15%,” The Orange County Register
Kristen Schott, “Orange County among 10 riskiest housing markets nationwide.” OC Metro