Spring signals the traditional start of real estate’s busy selling season, and while that’s all well and fine, when it comes to making your own momentous personal real estate decision—whether to buy a home or to sell your own—trying to decide exactly when to make the move is easier said than done.
It is true that this year national observers are unusually unanimous in expecting that last year’s sales upswing will continue. But if you are deciding whether now is the right time to buy a Orange County home (or list yours for sale), the reasons behind the quickening sales activity might be an eye-opener. Here are five of the headline reasons why so many will decide to buy a home in Newport Beach in 2014:
A Third Cheaper Than Renting
Web giant Trulia’s national averages show that it is still 35% less expensive to own than to rent. In the 100 largest metropolitan areas, even after mortgage rates rose from 3.75 to 4.50%, the home ownership advantage continued.
Protection Against Rising Rents
Renters are finding it more of a hassle even to find an apartment. In the third quarter of 2013, the U.S. apartment vacancy rate fell to its lowest level in over a decade (4.2%) even as the average effective rent in the U.S. rose by 3%, year over year. With supply of rental accommodation tight and unemployment falling, experts expect even higher rents in 2014.
House Prices Are Still Relatively Low
Again according to Trulia, house prices are still below benchmark value levels. In 91% of the largest metropolitan markets, analysts estimate that homes were 7% undervalued in 2013…and headed up.
It’s Becoming Easier to Qualify for a Mortgage
As interest rates rise, mortgage lender refinance business will suffer. Consequently, lenders will need to compete harder for new home buyers. That’s expected to lead to loosening of lending strictures, effectively increasing the number of prospective buyers.
House Prices Are Expected To Rise
House prices increased by 2% in the third quarter of last year, according to Federal Housing Finance Agency (FHFA) figures. If consensus predictions hold true, house prices will continue to rise by 3% in 2014….making sooner rather than later the optimal way to participate in that upward trajectory.
Whether you are hoping to buy a home in Newport Beach this year or beginning to think it’s time to explore selling, the signs are certainly there. Call me anytime this week—or drop by the office to chat!
Right now, mortgage rates in Orange County (as in the rest of the nation) are higher than they’ve been for 15 months—a trend that’s likely to continue. We have to wonder about the impact higher Newport Beach mortgage rates will have on Southern California home sales in the coming year.
First, some perspective. If mortgage rates do increase in 2014, it’s no ‘done deal’ that home buyers will be put off—nor that a wave of foreclosures will follow. The reason? By past standards, interest rates will still be low, even at the 5½% predicted by the N.A.R. Any hike in mortgage interest rates are coming off the historical 3.52% set in the spring of last year. Consider: most of us were paying mortgage rates between 7 – 8% throughout the 1990’s! 5½% looks like a fire sale compared with those.
Factor Two: surprisingly, a projected rise in interest rates is not predicted to dampen the enthusiasm for acquiring property. The Mortgage Bankers Association predicts that home sales will increase nationally by 10% in 2014. I have no doubt that some Southern California first time home-buyers could be waylaid by rising interest rates—after all, a 1% increase in mortgage rates equates to approximately a 10% rise in monthly payments. But overall, buyers who can meet the current lending standards should still be able to afford to own. Given the cost of the renting alternative, they may decide they can’t afford to pass up the right house at the right price.
Additionally, there is a strong argument that the principal effect of rising interest rates is less likely to be on Newport Beach home sales than on refis. The Mortgage Bankers Association predicts that refinancing demand will drop by half in 2014 (when you chart that kind of number, it looks like a cliff!). Many homeowners will already have locked in last year’s interest, so they certainly won’t be interested.
Any drying up of the refinancing business may have yet another effect. There could be a follow-on effect as lenders start loosening their lending criteria to attract new business. First time buyers that have been locked out of the market until then may (we are now two after-effects later, so this has to be a ‘may’) find themselves suddenly eligible for a home loan.
Given the healthier economy and falling unemployment, the outlook for the Newport Beach housing market in 2014 has reason to look positive. Thinking of selling your home this spring? Now’s the time to call me to discuss timing!
If you own a luxury home in Newport Beach, this will be good to know: according to researchers at DataQuick, the number of homes sold at more than $1 million rose nationally by 37% in the first half of 2013. Last Friday, the Wall St. Journal headed its Mansion section with “the recovery in high-end real estate,” and Bloomberg reports that luxury home prices in the biggest four cities that had fallen nearly 46% during the downturn have now more than doubled.
If the formerly-missing luxury home buyers have been buoyed by record-breaking Wall St. returns, it’s not surprising that they’re now ready to come out of hiding. For some owners of luxury homes in Newport Beach, that’s what they’ve been waiting for.
Of course, marketing a luxury home in our neck of the woods takes a deft hand. Selling any product in the luxury category requires some familiar skills: since the price tags are top-tier, the buyers require service and goods to match. The ‘customer’ is a successful person; someone whose time is important; who is likely well-schooled in discerning quality that goes beneath the surface and who won’t hesitate when it comes to making important decisions.
To appeal to discriminating prospects, you need first class marketing. Briefly, here are some of the technical points I advise my clients to keep in mind when I list their luxury homes:
We will be targeting a very narrow segment of the population. Our advertisements need to be placed on websites and in luxury publications that those buyers frequent. It’s important to realize that placement in elite publications will enhance a property’s perceived value by association.
When people purchase a luxury property in Newport Beach, they aren’t just buying a house, they are reinforcing a preferred way of life. That means the community should be a prime selling point. You have insider knowledge of your community—knowledge that I as your agent can use in marketing. When potential buyers have a sense of being in the know, it allows them to more confidently picture life in their new community.
Successful people usually regard themselves as standouts because, well…they are! It’s hard to find the luxury home buyer who wouldn’t choose a distinctive property over one that, even though luxurious, isn’t special in some way. That’s why we carefully identify the points that make a luxury home in Newport Beach unique—then tell that story!
If you are preparing to sell your Orange County luxury property, it’s also important to team with a Realtor® with the contacts and networks that keyed to that segment. For a completely confidential property evaluation, contact me today to see what your luxury home might be worth in today’s market!
There is less guesswork than you might think about establishing an on-target Orange County real estate listing price. There is really very little mystery:
When you hear your Realtor™ refer to ‘the comps,’ you probably think of them as the printouts of the Irvine real estate listings which are comparable to your own property. More comprehensively, a CMA, or Comparative Market Analysis, also includes a broad look at pending and completed sales, as well as withdrawn listings. That analysis will also include and account for differentiating factors, such as upgrades you have made to the home, location, and other features that make your home unique.
Market conditions will also play a strong role in developing a real estate listing price that’s likely to attract serious buyers. If conditions indicate a seller’s market, it means that there aren’t many homes available for sale. Contrarily, if it is a buyer’s market, recent trends show that numerous homes are available for sale, but buyers are in short supply. Other factors can come into play. If an area has become economically depressed, for instance, pricing a home on the higher end of the standard is more likely to result in a higher DOM (days on market).
Getting an appraisal is helpful in nailing down an acceptable real estate listing price. The extra expense provides a highly educated estimate for what today’s market will bear (and also valuable preparation for you are likely to hear when you enter into serious negotiations). It’s also important to remember that the bank’s loan approval will hinge on whether or not the selling price is in excess of the appraised value of the home.
One of the major benefits of working with a Southern CA Realtor™ when developing the real estate listing price for your home is the degree of expertise we bring to the process of setting an advantageous listing price. My own years of experience and knowledge of the Orange County market is invaluable when it comes to setting a fair price that spurs buyers to act quickly. Looking to sell? Call me today!
Check out our new website and get detailed information on any home. www.southochomesforsale.com