REAL ESTATE
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The state of real estate
If you’re looking to buy, there are at least three good reasons to do it now.
by Mary Ann HarmonPublished: February 01, 2009
Valentine Ochoa and his wife had been looking for their first home all last year. They came up with a few requirements for this purchase: a new home in a new complex, and a place close to his work in La Palma. Oh, and there had to be room for a crib; the Ochoas are expecting their first child in July.
Just in time for Christmas, the Ochoas found what they were looking for and purchased a two-bedroom townhome in Anaheim’s new Colony Park.
A buyer’s market
According to Chapman University’s “Economic & Business Review,” Orange County is definitely a buyer’s market – reason No. 1 to buy now – and is nearing a historical average on home prices, creating excellent opportunities for prospective owners.
In his many years in the housing industry, Steve Swanson, of Prospect Village/Pelican Properties, has weathered economic highs and lows and has seen the market fall, only to regain momentum again, building up stronger than ever.
“This is a unique time for those who plan to purchase and then rent out property because, historically, the purchase price has always been more than what was supported by rental income,” Swanson says.
“For the first time in many years, people are able to purchase income property and maybe do more than break even, which hasn’t been available for a long time in Orange County. Location-wise, where the best values can be found today is hard to say, but if the future is anything like the past, people involved in purchasing property today will be very pleased in the future.”
For the Ochoas, it presented the perfect opportunity to buy their first home. And they’re thrilled that their new house has everything they wanted.
“My wife and I are ecstatic that we were able to buy this house,” says Ochoa, who enjoys an easy 15-minute commute to his job.
Throughout most of Orange County and across the state, home prices started on a decline two years ago, following a years-long booming real estate market. By 2007, the boom busted, and the bubble burst; housing prices continued to drop through 2008. The result: home prices nearing an average level that hasn’t been seen for many years in Orange County.
“We lost about five years of appreciation in 1 1/2 years,” Chapman University Economist Esmael Adibi said during a recent presentation at the Orange County Performing Arts Center’s Segerstrom Hall. “But that means affordability is improving, which is a positive factor.
“By the end of this year, we will be at or near the bottom for median homes or lower-priced homes. For higher-priced homes, I think we’re going to continue to see some adjustment. We are back to a historical norm.”
Great opportunities
Experts say today’s market offers potential homebuyers great opportunities on many levels – reason No. 2. Plenty of inventory, low interest rates, a choice of floorplans and communities, flexible move-in dates and tax incentives are just some of the positive points that can help secure a sale.
The Chapman economic review indicates that the changes in home prices are an important influence on the 2009 economy. At press time, the most recent information from the California Association of Realtors sets the Orange County median single-family home price at $499,000, down 33 percent from the peak price of $747,000 in April 2007. Prices plummeted even more dramatically last year, with a 47 percent decline; average home prices dropped from a peak of $594,000 to $317,000 in September 2008.
The numbers are telling and continue to drop; the Chapman report predicts that O.C. home prices will decrease by 7 percent in 2009, though considerably lower than the double-digit depreciation of 21.6 percent last year.
Though higher underwriting standards are excluding some potential buyers from the market, increased housing affordability is bringing first-time homebuyers into the game, particularly in the lower-priced home market.
Experts advise those seeking homes to start the search by clarifying their needs. A family with children will require a community with great schools; empty nesters might be looking for something smaller. Outstanding public services, low crime rates and a stable neighborhood are also likely to be on the checklist – most of Orange County fits the bill. Irvine, Mission Viejo, Yorba Linda, Fullerton and the beach cities are regarded as solid communities for home purchases.
“Today is a great time to invest in real estate for many reasons, and price is certainly one of them. But equally valuable are the many choices available to homeowners,” says Rocky Tracy, vice president of sales at Brookfield Homes. “Choice is important, because it means that you don’t have to settle for just anything since the price is low.”
Best interests
Tracy also points to historically low interest rates – reason No. 3 – and notes that they can’t stay there forever. If interest rates increase even 2 percent and prices drop down, homebuyers are usually still better off with the lower rate.
While getting ready to purchase real estate, industry professionals caution homebuyers to keep their credit score fine tuned and in excellent condition. This kind of “financial housekeeping” is valuable, because a good credit score can lead to lower interest rates and save on the bottom line.
“The value for your housing dollar has never been better,” Tracy adds. “It is possible that prices will go down at some time, but the same value for the money will likely not be there. The ones who are adventurous are the ones who will really take advantage of the great opportunities available now.”
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Just in time for Christmas, the Ochoas found what they were looking for and purchased a two-bedroom townhome in Anaheim’s new Colony Park. A buyer’s market According to Chapman University’s “Economic & Business Review,” Orange County is definitely a buyer’s market – reason No. 1 to buy now – and is nearing a historical average on home prices, creating excellent opportunities for prospective owners. In his many years in the housing industry, Steve Swanson, of Prospect Village/Pelican Properties, has weathered economic highs and lows and has seen the market fall, only to regain momentum again, building up stronger than ever. “This is a unique time for those who plan to purchase and then rent out property because, historically, the purchase price has always been more than what was supported by rental income,” Swanson says. “For the first time in many years, people are able to purchase income property and maybe do more than break even, which hasn’t been available for a long time in Orange County. Location-wise, where the best values can be found today is hard to say, but if the future is anything like the past, people involved in purchasing property today will be very pleased in the future.” For the Ochoas, it presented the perfect opportunity to buy their first home. And they’re thrilled that their new house has everything they wanted. “My wife and I are ecstatic that we were able to buy this house,” says Ochoa, who enjoys an easy 15-minute commute to his job. Throughout most of Orange County and across the state, home prices started on a decline two years ago, following a years-long booming real estate market. By 2007, the boom busted, and the bubble burst; housing prices continued to drop through 2008. The result: home prices nearing an average level that hasn’t been seen for many years in Orange County. “We lost about five years of appreciation in 1 1/2 years,” Chapman University Economist Esmael Adibi said during a recent presentation at the Orange County Performing Arts Center’s Segerstrom Hall. “But that means affordability is improving, which is a positive factor. “By the end of this year, we will be at or near the bottom for median homes or lower-priced homes. For higher-priced homes, I think we’re going to continue to see some adjustment. We are back to a historical norm.” Great opportunities Experts say today’s market offers potential homebuyers great opportunities on many levels – reason No. 2. Plenty of inventory, low interest rates, a choice of floorplans and communities, flexible move-in dates and tax incentives are just some of the positive points that can help secure a sale. The Chapman economic review indicates that the changes in home prices are an important influence on the 2009 economy. At press time, the most recent information from the California Association of Realtors sets the Orange County median single-family home price at $499,000, down 33 percent from the peak price of $747,000 in April 2007. Prices plummeted even more dramatically last year, with a 47 percent decline; average home prices dropped from a peak of $594,000 to $317,000 in September 2008. The numbers are telling and continue to drop; the Chapman report predicts that O.C. home prices will decrease by 7 percent in 2009, though considerably lower than the double-digit depreciation of 21.6 percent last year. Though higher underwriting standards are excluding some potential buyers from the market, increased housing affordability is bringing first-time homebuyers into the game, particularly in the lower-priced home market. Experts advise those seeking homes to start the search by clarifying their needs. A family with children will require a community with great schools; empty nesters might be looking for something smaller. Outstanding public services, low crime rates and a stable neighborhood are also likely to be on the checklist – most of Orange County fits the bill. Irvine, Mission Viejo, Yorba Linda, Fullerton and the beach cities are regarded as solid communities for home purchases. “Today is a great time to invest in real estate for many reasons, and price is certainly one of them. But equally valuable are the many choices available to homeowners,” says Rocky Tracy, vice president of sales at Brookfield Homes. “Choice is important, because it means that you don’t have to settle for just anything since the price is low.” Best interests Tracy also points to historically low interest rates – reason No. 3 – and notes that they can’t stay there forever. If interest rates increase even 2 percent and prices drop down, homebuyers are usually still better off with the lower rate. While getting ready to purchase real estate, industry professionals caution homebuyers to keep their credit score fine tuned and in excellent condition. This kind of “financial housekeeping” is valuable, because a good credit score can lead to lower interest rates and save on the bottom line. “The value for your housing dollar has never been better,” Tracy adds. “It is possible that prices will go down at some time, but the same value for the money will likely not be there. The ones who are adventurous are the ones who will really take advantage of the great opportunities available now.” |
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