ORANGE COUNTY

Market Overview a monthly real estate report | April 2010

The State of the Market

Breaking News – At the time of production of than the original asking price and $32,315 less mortgage interest rates and a continuing supply
this report, Governor Arnold Schwarzenegger than the median asking price. of distressed homes to keep sellers realistic
signed AB 183, authored by Assembly member about pricing.
Anna Caballero (D-Salinas) and Senator Roy Just as sellers found difficulties in meeting
Ashburn (R-Bakersfield), which will provide mortgage obligations in 2009, buyers also In addition, the federal tax credit for first-time
a tax credit of up to $10,000 to Californians faced financing challenges. A startling 63% and move-up buyers is good until the end of
who are buying their first home or purchasing a of homes fell out of escrow prior to closing, April 2010. Qualified buyers need only to have
brand-new home. Consult your tax advisor and with nearly 70% of buyers unable to get an a solid contract and take possession by June 31,
see your local Prudential California Realty sales acceptable mortgage, according to sellers 2010.
professional for more details. surveyed. More than 60% of sellers cited
buyers “backing out” as the primary reason the Proof that incentives are working is the increase
For the past few years, California has home fell out of escrow. Other reasons cited in first-time home buyers: 47% in 2009,
experienced significant setbacks in housing were buyer’s remorse (26%), lender withdrew up from 35.9% in 2008. That’s the highest
— including its dubious position as the state and did not fund (24%), and declining home percentage increase since 1995. Typically, says
with the second-highest foreclosure rate in the prices (18%). the National Association of REALTORS®,
nation. first-time home buyers make up about 40% of
Even homes that sold faced hurdles, failing the market.
According to the California Association of to close on time 50% of the time compared
REALTORS® recent study of 2009 and 2010 to 36% of the time in 2008. Subsequently, In a recent survey of home buyers, C.A.R.
home sellers, 67% of California home owners seller confidence in buyers’ ability to close found that nearly 40% said they would not have
put their homes on the market in 2009 as a plummeted, with 75% of sellers reporting purchased without the tax credit incentive. One
result of difficulties related to meeting their concern, an increase from 54% in 2008. reason for its strong appeal is that the Federal
mortgage obligation. That’s a substantial Housing Administration (FHA) increased its
increase over 2008, when C.A.R. found 20% Particularly hard-hit were first-time sellers qualifying loan guarantee from $362,790 to
of homeowners, or one in five, sold due to (59%). Nearly half of surveyed sellers had $729,750 for high-cost areas such as California.
financial difficulties. owned their homes for two years or less, Reflecting that move, the percentage of home
compared to one-third in 2008. First-time buyers using an FHA-insured loan increased to
Among the reasons for such sales cited in 2009 home sellers increased to 44% of all sellers, 32% in 2009 from 18.9% in 2008. These loans
and 2010 were difficulty meeting mortgage compared to 33% in 2008. also allowed first-timers to buy bigger. Most
obligations (30%), job loss (18%) and resetting purchased single-family homes (80%) at an
adjustable loans (18%). Lower housing After such a thrashing, one out of three sellers average 1,560 square feet, compared to 1,300
prices rendered some home owners unable to surveyed moved out of California in 2009, square feet in 2005.
refinance; others saw home prices fall below compared to one in four in 2008.
what they owed on their mortgages. Investors also jumped back in the pool, with
According to First American CoreLogic, 35% 70% purchasing short sales and REOs (bank-
Not surprisingly, only 7.5% of surveyed sellers of California mortgage holders are underwater owned properties). The median price of a
reported they had a fixed-rate mortgage. 92.5% — meaning they owe more on their mortgage typical investment property was $232,750,
had an adjustable rate mortgage (ARM) with a than their home is worth. This makes it appear with a median size of 1,367 square feet.
two-year, three-year or five-year fixed rate, or a that 2010 will be as challenging for sellers as
negative amortization ARM. 2009 was. The momentum generated by first-time and
move-up buyers purchasing with government-
Nearly half of homes sold in 2009 were Good news for buyers guaranteed loans and investors buying with
distressed homes in some stage of foreclosure As difficult as the market is for sellers, buyers cash largely moved mostly homes priced under
or short sales. As a result of having such a high are responding to extraordinary incentives — $500,000, causing quick sales, multiple offers
number of distressed homes on the market, including the most affordable home prices in and rising prices in “affordable” homes.
homes that sold in 2009 averaged $20,958 less a decade, historically low government-aided
For that reason, the median California home months of supply, versus 4.5 to 15 months tax time, when home owners get to take
price is projected to increase to $280,000 in a year ago. Homes priced $1 million and advantage of mortgage interest rate and
2010 from $271,000 in 2009. above were at 27.9 months of supply on property tax deductions, energy rebates and
hand a year ago, and at 15.7 months on other incentives.
Like the rest of the nation, home sales hand to date.
volume declined in February 2010 (-2.2% Advice for sellers: Because buyers currently
from January), but curiously, the median Overall, C.A.R.’s Unsold Inventory Index have the most incentives, now is the time to
price rose 14.1% year-over-year, from stands at 6.3 months on hand compared to put the best possible price on your home.
$245,230 in February 2009 to $279,840. 7.1 months’ supply a year ago. Keep in mind that buyers taking advantage
of first-time and move-up buyer tax credits
California Association of REALTORS® Advice for buyers: Because of uncertainty must make their decision to buy quickly,
chief economist Leslie Appleton-Young about what will happen in the marketplace so be available and agreeable for contract
explains the anomaly: “Supply continues after the home buyer tax incentive is negotiations. The more negatives you can
to lag demand at the more affordable end removed, home buyers may be tempted to overcome before a buyer sees your home,
of the market, with a 3.9-month supply of wait and see if prices fall further — but that the less there will be to negotiate, and the
homes priced below $300,000, compared possibility must be weighed against possible higher the likelihood of agreeing on a price
with the long-run average of more than rising mortgage interest rates or tighter loan and terms quickly and solidly.
seven months. This contrasts sharply with standards. Incentives are here now, and they
the nearly 15-month supply of homes for won’t last.
sales priced at $1 million or more at the
upper end of the market.” This is the time to go by the numbers.
Weigh as many calculations as you can,
However, large inventories have been including tax incentives to help with your
chipped away. For homes priced under $1 closing costs. Weigh the cost of renting vs.
million, inventories are between 3 and 8 the cost of home ownership, including at

ORANGE COUNTY

Like other areas of Southern California, Orange County is enjoying a healthy seller’s market in homes priced
under $2 million, which proves that affordability is making an impact on sales volume.

*A balanced market is widely accepted as having six months of inventory on hand with market conditions favorable to both buyers and sellers.
A buyer’s market is characterized by conditions such as high inventories, falling prices, concessions by sellers, and incentives among other
indicators. A seller’s market has low inventories of homes for sale, escalating prices, and keen competition between buyers, including multiple
offers.

Detached homes stand alone and share no common walls with any other neighboring home. Attached homes share at least one common wall
with another home. The type of home ownership is determined by whether it is a condominium, townhome, duplex, co-operative or other.

With over 3,400 sales associates in 58 offices across Southern California and the Central Coast, Prudential California
Realty is the name to trust when buying or selling a home. Our agents close more than $12 billion in sales volume and well over
16,000 transactions each year. We also provide every aspect of domestic and international relocation to corporations around the
world. As one of the top five brokerages in the nation and the largest affiliate in the Prudential Real Estate international network,
we have the resources and connections to protect your interests and make sure your experience is a successful one.

Prudential California Realty is proud to be a member of HomeServices of America Inc., a Berkshire Hathaway affiliate.
For more information, visit www.prudentialcal.com.
 Inventory in Months’ Supply – March 5, 2010
Detached properties in SoCalMLS-Orange County

Detached Properties - Inventory in Months

Under $300K 1.7
Detached homes are in a blistering seller’s market in all
$300K - $399K 2.2
price ranges under $1 million.
$400K - $499K 2.3
$500K - $599K 2.6
$600K - $699K 3.3
$700K - $799K 3.4
$800K - $899K 3.8
$900K and over 8.4
Inventory in Months’ Supply – March 5, 2010
Attached
0.0 properties
2.0 in SoCalMLS-Orange
4.0 County
6.0 8.0 10.0

Attached Properties - Inventory in Months

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Under $300K 2.4

Attached home sales are also thriving, with inventories
$300K - $399K 2.6
tipping into a mild buyer’s market once prices rise above
$400K - $499K 3.0
the conforming loan ranges.
$500K - $599K 3.6
$600K - $699K 4.9
$700K - $799K 7.4
$800K - $899K 7.6
Pricing Reality – March 5, 2010
List prices per square foot by MLS status
$900K and over 10.8
Detached
0.0 properties
2.0 4.0in SoCalMLS-Orange
6.0 8.0 County 12.0
10.0

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Detached Properties - Pricing Realty for Sellers, per square foot

Sellers should carefully consider current buyer

ACTIVE $506 The large gap between listing price per square foot and
demand when pricing their home for sale.
When list prices per square foot of Backup
and Pending status properties are below that
closed sales further illustrates the pace of sales in the
of Active properties, sellers should ask for
pricing counsel from their Agent.
affordable ranges.
BACKUP OFFERS $319

CLOSED SALE $330

HOLD DO NOT SHOW $300

$295
Pricing Reality – March 5, 2010
PENDING SALE

List prices per square foot by MLS status

Attached
$0 properties
$100 in SoCalMLS-Orange
$200 $300 $400 County
$500 $600

Attached Properties - Pricing Copyright

Realty© 2010,
for Real
Sellers, per square
Data Strategies, Inc. All rights foot
reserved. Use is by license agreement only.

Sellers should carefully consider current buyer

demand when pricing their home for sale.
ACTIVE $331 Attached home prices per square foot are generally closer
When list prices per square foot of Backup
and Pending status properties are below that
to sold prices than that of detached homes. Lower-priced
of Active properties, sellers should ask for
pricing counsel from their Agent.

BACKUP OFFERS $257 pendings and backup offers suggest price weakness.

CLOSED SALE $261

HOLD DO NOT SHOW $246

PENDING SALE $234

$0 $100 $200 $300 $400

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
 Monthly Listings Taken and Absorbed
Detached properties in SoCalMLS-Orange County
12 months through February, 2010

Detached Properties - Monthly Listings Taken and Absorbed

12 Months through January 2010
2,500 5,000
New Listings Listings Absorbed 2,231 2,192
Detached home inventories rose 42% since December
2,000 4,000 2009, but the absorption rate was even higher — up
1,673 1,713
1,552 1,521 1,567 1,635 1,577
1,597 63% for the same period.
1,472
1,500 3,000
1,287

1,000 2,000

500 1,000

0 0
2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12 2010/01 2010/02

New Listings Monthly

1552 Listings
1521 1567 Taken
1635 and1577
1673 Absorbed
1597 1713 1472 1287 2231 2192
Listings Absorbed
Attached
1469
properties
1584 1540
in SoCalMLS-Orange
1659 1588 1670 1635
County
1597 1571 1515 2302 4182

12 months through February, 2010

Attached Properties - Monthly Listings Taken and Absorbed

12 Months through January 2010
1,600 3,000
New Listings Listings Absorbed 1,401 1,317
Attached home sales have also seen an increase in
1,200 1,111
new listings (+32%) and absorption rates (+61%) since
1,079 1,047 1,048
974 950 989 975 965
2,000 December 2009.
903

800

1,000
400

0 0
2009/03 2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12 2010/01 2010/02

New Listings 1079 974 950 989 1047 975 1048 1111 965 903 1401 1317
Listings Absorbed 981 977 928 1095 1081 1047 1058 1077 986 1041 1639 2667

Listings Sold by Calendar Quarter

Detached properties in SoCalMLS-Orange County
9 quarters through December 31, 2009
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through December 31, 2009
Average Sale Price (Thousands) Homes Sold

$1,000 6,000
Avg Sale Price Listings Sold Units With prices down 26.7% over the last two years,
5,000
$800 4,621
4,392
4,573
detached home sales volume has risen 86.7%. Yet 2009
4,079 4,060

$600
4,077
4,000
volume is flat for the year on rising prices.
3,300 3,000
2,279
$400
2,184

2,000
$935 $825 $758 $679 $632 $586 $629 $688 $685
$200
1,000
1-year avg. price trend: Up 8.5 % 1-year sales trend: Up 0.4 %
2-year avg. price trend: Down 26.7 % 2-year sales trend: Up 86.7 %

$0 0
2007/4 2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4

Listings Sold by Calendar Quarter

Attached properties in SoCalMLS-Orange
December 31, 2009. Does not reflectCounty
Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are October 1, 2007 through all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.

9 quarters through December 31, 2009

Attached Properties - Listings Sold by Calendar Quarter
9 Quarters through December 31, 2009
Average Sale Price (Thousands) Homes Sold

$500 4,000
Avg Sale Price Listings Sold Units
Attached homes are also priced 26.1% lower than two
$400

2,692
2,903
3,000 years ago, boosting sales volume 89.3%. While prices
2,635
$300 2,190 2,571
rose in 2009, sales volume kept pace only modestly.
2,409
2,000
2,071
$200 1,358 1,381

$448 $404 $396 $354 $312 $293 $309 $327 $331 1,000
$100

1-year avg. price trend: Up 6 % 1-year sales trend: Up 6.7 %

2-year avg. price trend: Down 26.1 % 2-year sales trend: Up 89.3 %

$0 0
2007/4 2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are October 1, 2007 through December 31, 2009. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.

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