It seems like our area has flattened out as far as prices and multipul offers let get togeather asap.
Location is still the key.
The original poster's question was about NOW. Most of the answers - from actual LOCAL experts - have more than capably shown that the price range he is in is NOT likely to be lower 6 months from now.
You mean the one guy who keeps posting over and over again how all is fine and dandy?
He'd have a decent point if not for the two years where the MTA ran around 5% and fully indexed rates near 8%, driving all those option ARMs DEEP into negative amortization through 06-07.
So let take the guy who bought the $725K home on one of these loans. There are thousands (tens of thousands?) of these guys in O.C. He negative amortized another... to be gentle lets say 7.5%... over the five year period. So at time of recast he owes $780K. His recast means his new payment is the equivalent of a 25-year amortized loan on $780K, but at an AWESOME interest rate of... again, to be generous... 3.8%.
His monthly jumps about $800, with new PITI slightly over $5000/month. A tad bit more than the $3200 PITI he was paying the a couple years ago. But so long as Treasury yields stay around 0.5% -- at least it won't get much worse. Treasury yields are certain to stay that low, right?
Of course the home is now worth maybe $500K, putting him nearly $300,000 underwater... and the house next door is renting for $2700/month.
I see now why there's no need to worry about recasts on option ARMs. Raise the "Mission Accomplished" banner!
1. You're talking about moving and needing something larger in a relatively short time frame. That makes it a questionable purchase to begin with (in large part as early mortgage payments pay down very little of principle), much less in an area where MANY still believe prices are well inflated. You run a substantial risk of being upside-down for far longer than 5 years especially when considering the 7%-8% loss you'll take in agent fees and closing costs upon sale.
2. Relates to point #1... The ONLY thing keeping prices even this high is the cheap cost of borrowing. You still have people buying $450,000 homes who can't afford them by any traditional income/price ratio, but they CAN afford the mortgage payment thanks to absurdly low interest rates. Four or five years down the road, when mortgage rates are back up to normal levels, will there be the income growth in the area to support these home prices? Highly, HIGHLY doubtful.
Five years down the road you may well find yourself heavily underwater but with a very cheap mortgage. Not the worst deal for someone planning to live in the home for another 10-20 years -- save excessive property taxes and substantial loss of value in paying > base mortgage payment. For someone looking to move however, it's a bleak scenario.
3. You're looking at the lower end of the market. This segment is quite active right now, hitting the distressed inventory hard. This stems from a pent-up market of first-time buyers finally able to enter the market. The question is, just how large a pool is there of a) credit-worthy buyers, b) with suitable incomes for these homes c) who aren't ALREADY homeowners? It's not that large. Let them fight among each other for $375K torn-up REO being spoon-fed into the market. That well will dry up soon enough.
You'll hear a bunch of junk above floods of investors snapping up all the "super cheap bargain inventory!!" That's hogwash, just another scare tactic by the industry to coax would-be buyers into the market ala 2004. 19% of April SoCal home sales were to absentee buyers and investors versus the average 15% since 2000. That's a trickle of an increase, not a flood. There's no siege of investor money scrambling to buy a $500,000 capital trap -- plus property taxes, insurance, non-occ months and maintenance -- for the right to receive $2500/rent (or should say "hopefully receive", as the doubling of unemployment in one year and continued rise makes that revenue suspect). There's far better inflation-hedges out there, the other claimed reason investors are flocking to residential real esate The overwhelming majority of purchases are by the huge supply of first-time buyers, a pool that's going to turn into a puddle in time.
My advise: Completely ignore what's happened to date -- meteoric rise and massive fall in price. Look at the now... what are rents like right now, what are area incomes like right now, what's the employment picture look like right now and what are home prices like now -- and can the region maintain these prices. I don't follow Dana Point but a quick glance at a bunch of Craigslist postings, coupled with some unemployment stats, suggest very strongly "No, it cannot"
If that didn't suggest caution, glance at the yellow bars on these charts -- revised recasts of payment option ARMs, a nightmare product O.C. ate up like candy in the middle of the decade:
Choice is yours however. Seems in most cases people asking these sort of questions aren't really seeking advice, more trying to validate a decision they've already made. Best of luck.
Of course no one can predict the future, but what we do have are sales statistics that tend to paint a picture as to where the market is headed. Specifically in Dana Point there was a home that sold in April for $335,000. It was a 2 Bedroom 2 Bathroom 1,000 square foot home. In March there was another home in Dana Point that sold for $240,000. 2 Bedrooms 2 Bathrooms 855 square feet. Sales trends in the area suggest that there was an increase in the average price of a home by 15% in April as compared to March. That tells us that at least for the month of April as opposed to March sale prices have not dropped but actually increased in value. I don't think that prices are going to drop anymore. Based on city, county, and regional statistics we have had now about four months of sustained median home price which are signs that we have hit the bottom and most economists agree that we have bottomed out. Right now there is only one home listed for under $400,000. It is a 2 Bedroom 2 Bath 855 square foot home. For the 3 Bedroom 2 Bathroom home your looking for prices start at $459,900 and can go up from there. If you are flexible on price point you could definitely get that home in Dana Point for just a little bit more. And of course in the world of Real Estate everything in negotiable. Visit my website at http://www.MGrimm4Homes.com and feel free to browse the MLS at your leisure. If you like you can put your search on autopilot by having me putting your search criteria into my system and sending automatic email updates when something new that meets your criteria is listed that way you will be one of the first to see the listing. Also if you need financing for your purchased I can assist you with that as well.
Michael G. Grimm, Realtor
Loan Consultant, Loan/Debt Modification Consultant
(877) 444-3993 (toll free direct)
(949) 547-3957 (direct)
Let me first say ,I can't predict the future, so I am going to tell you what has happened in Dana Point for the last 6 months. No detached houses have sold for under $400,000.
There are 2 active properties for sale today at $436,800 and $439,900 both REO's. There is 1 REO pending and 1 REO sold at $405,000 but it was in very bad shape and needed alot of work. There is nothing else but REo's in Dana Pointfor under $450,000.
You might have to look at areas around there.
First of all, NOBODY knows that prices - especially under $450k, and also especially in Dana Point - will be CHEAPER in 6 months. I MY primary area - South Orange County - prices on houses like you described have BARELY budged in the past year. Most right now are selling quickly, many with multiple offers, with sales prices higher than the list price was. ( An average of 102% )
You've picked the most competitive price range in the South Orange County real estate market - so don't expect to be doing much wheeling & dealing any time over the next year and a half - in my humble, but 32 year's of local experience, opinion.
Get an experienced Realtor, and get prequalified with an experienced lender ( I have one in Laguna Niguel with over 30 year's experience, as well.) and use a search the MLS for free type of website, like the one linked below.
There are actually quite a few homes currently listed for sale with 3 bedrooms/2 baths and priced under $500k. See the list below:
# Beds Baths Stories Garage Sq feet Yr Built Price
3 2/2 1 2 1,400 1953 $436,800
3 3/2 2 2 A 1,673 1977 $449,000
3 2/2 1 2 A 1,482 1970 $495,000
4 2/2 1 2 1,833 1972 $439,900
3 3/2 2 2 A 1,711 1984 $420,000
3 3/2 2 2 D 1,754 1985 $455,000
3 2/2 1 1 1,400 1974 $440,000
4 2/2 1 2 A 1,833 1972 $439,900
Let me know if you'd like to take a look at any of these or if you'd like me to email you the full listing sheet with photo's. Also in terms of when to buy...everyone has a different opinion...I can only say I wish I had a crystal ball! But you know how real estate works, no one ever knows when we've actually hit bottom until it's already started going back up! But I can tell you this, interest rates are the lowest they've been in ages and that is one extremely positive factor for the current market. The other is that real estate always comes back. If you're planning on living here a few years and then upgrading...you are better of putting money into a home and building equity, rather than pay rent and help someone else build equity, and when the market starts to rise, your property will also be increasing in value, which will help you on the purchasing end! Let me know if I can answer any other questions. You can reach me at: firstname.lastname@example.org. Thanks!
I am a local realtor who lives in South Laguna Beach (Three Arch Bay) and works this coastline area. I am now seeing prices on homes and condos that are several hundred thousand dollars less than they were a year ago. Prices have dropped, and may go down a bit more. It is so hard to know when interest rates will rise, and then the bit of money saved on waiting will not be worth the wait. I believe that the best thing to do is get to know the market at a leisurely pace. Check out what is on the market now, and when there is a home in your price range that you like and meets your needs, that is the time to buy. Another consideration is the money you will save in taxes with home ownership because you will be able to write off a percentage of your mortgage interest on your taxes.
Best Wishes and I would love to help,
I'm getting ready to set up an open house for under $400,000 in San Clemente this afternoon. It is a 3 bedroom, 2 1/2 bath home with 1900 sq ft and a 2 car direct access garage. It is a townhome with 2 common walls. It is ust east of the freeway, but has pano ocean views. It is the lowest price ocean view home that is near the beach in San Clemente or Dana Point. Come see me at 4 Vista Encanta till 6PM today.
There are a couple of beach cottages that are walking distance to the beach. They only have 2 bedrooms however. They're priced from $569,000 to $670,000. Dana Point has a new 2 bedroom listed at $505,000. It is a detached home of 1,200 sq ft.
These are about the best deals you will find near the beach.
I think the thing to do is to get setup with a service that will only show you homes that you are interested in and that will also update itself automatically so that you can get a good idea of what prices are like in the areas. It will take some time to get adjusted to the areas and get a sense of the price you will likely pay for what you want but it will give you confidence in your purchase... and that is what you really want right? You want to find a home that you feel confident is the 'right house for you at the right price'...
Trust me... there will almost always be a home that sells for less than what you paid for it.... in almost all cases.... and since you already stated that you are looking to use this home as a in between before you move into a larger home then you are looking at the perfect time to buy... prices are low... will they go lower? possibly... maybe not by much.... and will they all go higher in the coming years when you'll want to sell? surely... so the thing is finding you two the best home for you when prices are at the relative lowest that they can be....
Go to my site... http://www.iwantaBIGGERhouse.com and create an account. You control the search, you control when to change... I am just here to help answer your questions and offer my services when you are ready... the search will show you pictures, info, neighborhood info, etc... its really helpful for your stage of the buying process...
Any other questions you can give me a call or email....
Century 21 Professionals
Watch out...you are about to get several million opinions!
I think that this is a good time to start exploring. I just came from Dana Point, in fact....nice day down there :).
I don't know of any SFRs in Dana Point under $400,000....but certainly there are 3 bedroom homes. There are some patio homes in that area with one attached wall that might interest you also. What I would suggest is that I can set you up with a personal website and load it with a search of homes in Dana Point under $400,000 with 3+ bd/2+ ba and then you can see what's available now. If you find something....great....if not, you can start to watch the market. Just this morning I heard someone saying that the California real estate market has seen the worst and that prices will start to creep up....
My personal opinion is that the lowest prices will be in September-October....homes that didn't sell in the summer will see price reductions. But I could be wrong...either way, this website..which is totally free..will allow you to watch the prices, if they start to move up...you can jump.
Let me know if you would like to have me send you this link?