orange county
Market Overview a monthly real estate report | June 2010
Housing Growth Is on the Way
At the recent National Association of
REALTORS® midyear conference, top housing
economists cautiously predicted an imminent
housing recovery, lifted by the improving jobs
outlook and economic expansion.
The caveat is how jobs will impact
foreclosures.
Lawrence Yun and Mark Zandi, chief economists
for the NAR and Moody’s Economy.com,
respectively, agreed that jobs will continue to
increase over the coming year, but they parted
ways when it came to housing.
While both agreed that mortgage interest rates
will remain historically low, the availability of
jumbo loans will improve, and home sales will
rise over the next few years, Yun believes that
foreclosures will be even with demand, at about
30% to 40% of all sales transactions through
the end of the year.
Zandi disagreed, anticipating that foreclosures
will rise later in 2010 before easing in 2011.
“Whether home prices weaken is unclear, but
it will take two more years to work off excess
housing inventory at the current sales pace,” he
said.
Yun is more optimistic, believing that prices
will rise 2% to 3% this year, and that a housing
shortage could be felt as early as two to three
years from now, due to construction and
household formation falling below long-term
trends.
The National Association of Home Builders
says employment will grow through 2010 and
2011, reducing the unemployment rate to
around 9.3% from the current 9.7%.
More jobs are available
The Labor Department announced the best
news in ages: more jobs were created in March
2010 than in the last 14 months. Private
sector hiring increased 4.8%. Layoffs have
supposedly fallen to levels not seen since before
the recession. Employers added 290,000 jobs
in April, the most in four years.
Housing conditions improve
Among many reasons why housing could
continue to climb in both sales volume and
price is a return to record low interest rates.
Despite the end of the home buyer tax credit,
the pace of mortgage applications rose in May
2010, says the Mortgage Bankers Association.
First quarter foreclosure activity is already
falling from a year ago in 14 of the top 20 U.S.
metros, according to RealtyTrac.
Pending home sales were up more than 5% in
March, 21% higher than the previous year, says
the NAR.
The PMI risk index was also positive, with
42 of the largest 50 markets demonstrating
diminished mortgage lending risk. Fitch
Ratings reported last week that late payments
on “Alt-A” loans fell for the first time in four
years, as borrowers caught up on payments
or were able to modify their loans to more
favorable terms.
Meanwhile, the economy expanded 3.2% in
the first quarter — the third straight quarter of
growth — diminishing the likelihood of rising
foreclosures.
The luxury market improves
Jumbo loans are at their best rates in years — as
low as 5.7% for a 30-year fixed mortgage —
giving luxury home buyers more options than
paying cash.
Laurie Moore-Moore, founder and CEO of the
Institute for Luxury Home Marketing, notes
that some buyers aren’t waiting for better terms
— they’re paying cash for well-priced fine
properties. She reports hearing anecdotally that
luxury home sales are higher across the country.
“Fine home buyers are adding luxury real estate
as a portfolio play,” says Moore-Moore.
Tom Dunlap, vice president and general
manager of Prudential California Realty Los
Angeles region, suggests there are two levels of
luxury, and both have increased in the last six
months. “Our high-end would be $1 million
to $3 million,” explains Dunlap, “and our
luxury level would be above $3 million. What
we are seeing is a tremendous amount of cash
that has been parked on the sidelines coming
back into play. Our prices have come down to
a level where they are perceived as a good value,
and in some cases a bargain.”
California Outlook
But for California home buyers waiting for the
market to bottom further, the opportunity may
already be past.
The California Association of REALTORS®
has just reported a key indicator: affordability.
When affordability goes up, prices are coming
down. When homes are less affordable, prices
are on the rise.
The C.A.R. First-time Buyer Housing
Affordability Index was 66% in Q1 2010,
down 3% from Q1 2009. The median home
price of an entry-level California home
was $246,270, which requires a minimum
qualifying income of $41,540 — $3,910 more
than a year ago, based on an adjustable rate of
4.33%. The C.A.R. says that first-time home
buyers typically purchase a home equal to 85%
of the prevailing median price. A year ago,
first-timers only needed $37,630 to qualify for
a loan on an entry-level home. 
Median home prices in Southern California
increased 16.7% to $297,540 in Q1 2010 over
the previous year. Interestingly, sales volume
was down for the region year-over-year, largely
due to consumer difficulty in obtaining jumbo
mortgages. As the mortgage market expands
over the coming months, volume may against all-cash buyers who can close quickly. has all your financial information and
improve substantially. Says Dunlap, “We’ve seen a real shift in the requires documents up front, so you can
last six months. We had an REO duplex move quickly to secure the home you want
In addition, home prices are still well below come on the market in Hancock Park for without wasting time trying to finalize a
where they were at the housing peak. $450,000. The property had 130 offers, and mortgage.
sold for $650,000. Another home priced
According to Zillow, five California markets Advice for sellers: Because the market is
at $1,495,000 had seven offers and closed
— Los Angeles, San Diego, San Francisco, improving, it may be tempting to overprice;
escrow in two weeks with an all-cash offer
Santa Barbara and Ventura — turned but don’t do it. It’s better to price your home
of $1,752,000.”
positive in April or May 2010, with home at the market than to overprice and watch
prices appreciating as much as 3.1% to 3.9% In this market, good homes that are well- your property sit without viewings or offers.
since hitting lows in the previous year. priced are generating multiple offers with The first seven days of a listing are the most
no contingencies, and closing very quickly. critical; by then, serious buyers have already
But missing the bottom doesn’t mean
opportunity is gone. Home values in these seen everything on the market. Overpricing
Advice for buyers: California home prices from the outset is the #1 mistake most sellers
key areas are still 30% to 36% down, falling are recovering, so don’t wait any longer for a
between market peaks and last year’s lows make. Buyers will either wait or move on to
bottom that may already be long gone. Get another property.
— affording a terrific investment play for your loan and preapproval with a reputable
home buyers. lender, like HomeServices Lending powered
by Wells Fargo www.hslca.com, before you
In many cases, buyers may find themselves
do anything else. Make sure the lender
in fierce competition for the same home

ORANGE COUNTY

The National Association of REALTORS® says nearly 26% of homes sold in the U.S. were bought with cash
in April 2010. It’s obvious that occupying home buyers and investors are acting on prices so attractive that
they’re not waiting for the mortgage markets to open up further.

With home prices still well below the peak, California home buyers are also “cashing in.” It’s no surprise that the
heated housing market, particularly in the affordable and upscale price ranges, is now an established trend.
Inventory levels have improved greatly over the past few months in Orange County. Homes less than $1 million
are in a feverish seller’s market, while upscale homes priced $1 million to $4 million are in a fairly balanced
market, as unique and upscale homes aren’t expected to sell at the same pace that affordable homes in the
conforming loan ranges do. Only when prices rise above $4 million do inventories stagnate.

*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.

Listings Sold by Calendar Quarter

All residential properties in SoCalMLS-Orange County
9 quarters List Price Range (Less than $1 million) through March 31, 2010
All Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$600 9,000
Avg Sale Price Listings Sold Units
The seller’s market in homes under $1 million has lifted
$500
6,625 6,598 6,865
sales prices up 8.9% and sales volume up 1.2% in the
$400 5,565
6,377
6,000 period between Q1 2009 and Q1 2010.
6,026

$300 5,075 5,136

3,201

$200 3,000
$489 $476 $445 $410 $393 $412 $429 $434 $428

$100
1-year avg. price trend: Up 8.9 % 1-year sales trend: Up 1.2 %
2-year avg. price trend: Down 12.5 % 2-year sales trend: Up 60.4 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are January 1, 2008 through March 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
 Inventory in Months’ Supply – May 4, 2010
Detached properties in SoCalMLS-Orange County

Detached Properties - Inventory in Months

Under $300K 1.9

Detached homes are selling as fast as they can close
$300K - $399K 2.4
under $300,000, but all price ranges are selling at a
$400K - $499K 2.5
feverish pitch as well.
$500K - $599K 2.9
$600K - $699K 3.3
$700K - $799K 3.9
$800K - $899K 3.9
$900K and over 8.6
Inventory in Months’ Supply – May 4, 2010
0.0
Attached 2.0 in SoCalMLS-OC
properties 4.0 6.0 8.0 10.0

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

Attached Properties - Inventory in Months

Under $300K 2.5

Attached homes under $1 million are also selling quickly.
$300K - $399K 2.7
Only homes priced $900K and above are in a definite
$400K - $499K 2.9
buyer’s market.
$500K - $599K 4.3
$600K - $699K 5.1
$700K - $799K 7.9
$800K - $899K 7.7
$900K and overPricing Reality – May 4, 2010 10.5
List prices per square foot by MLS status
0.0 2.0 4.0 6.0 8.0 10.0
Detached properties in SoCalMLS-Orange County 12.0

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

Detached Properties - Pricing Reality for Sellers, per square foot

Sellers should carefully consider current buyer

Active $500 The vast gap between active listings price per square foot
demand when pricing their home for sale.
When list prices per square foot of Backup
and Pending status properties are below that
and that of closed sales further illustrates the difference
of Active properties, sellers should ask for
pricing counsel from their Agent.

Backup Offers $317 between the affordable and luxury market momentum.
Lower backup offers suggest buyers have some
negotiating room.
Closed Sale $334

Hold Do Not Show $308

Pending Sale $300

Pricing Reality – May 4, 2010
List prices
$0 $100per square
$200 foot by MLS
$300 status$500
$400 $600
Attached properties in SoCalMLS-OC

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
Attached Properties - Pricing Reality for Sellers, per square foot

Sellers should carefully consider current buyer

Active $328 The chasm between active attached home listings’ price
demand when pricing their home for sale.
When list prices per square foot of Backup
and Pending status properties are below that
per square foot and that of solds is much smaller than
of Active properties, sellers should ask for
pricing counsel from their Agent.
detached home spreads. Lower backup offers suggest
Backup Offers $256
buyers have some leverage.

Closed Sale $266

Hold Do Not Show $251

Pending Sale $238

$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 April, 2010

Detached Properties - Monthly Listings Taken and Absorbed

12 Months through April 2010
3,000 3,000
New Listings Listings Absorbed
2,608 2,623
Since reaching inventory lows in December 2009,
new detached home listings have flooded the market,
1,993 2,012
2,000 2,000 up 119% in four months. Fortunately for sellers,
1,594 1,629 1,521 1,473 1,575 absorption rates weren’t far behind, up 109%.
1,536
1,358
1,200

1,000 1,000

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

New Listings 1536 1594 1629 1521 1473 1575 1358 1200 1993 2012 2608 2623
Listings Absorbed Monthly
1521 Listings
1617 1542 Taken
1605 and1406
1540 Absorbed
1313 1120 1231 1442 1968 2340

Attached properties in SoCalMLS-OC

12 months through April, 2010

Attached Properties - Monthly Listings Taken and Absorbed

12 Months through April 2010
1,800 1,800
New Listings Listings Absorbed
1,533 1,500
1,500 1,500
New attached home listings rose 83% from December
1,286
1,235
2009, while absorption rates reached higher, up 108%.
1,200 1,200
966 1,025
931 946 992 1,034
926
900 821 900

600 600

300 300

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

New Listings 931 966 1025 946 992 1034 926 821 1286 1235 1533 1500
Listings Absorbed 914 1073 1036 986 989 967 803 762 974 1007 1390 1585

Listings Sold by Calendar Quarter

Detached properties in SoCalMLS-Orange County
9 quarters through March 31, 2010
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$900 6,000
Avg Sale Price Listings Sold Units

4,621
Prices are up 18.9% in detached homes for the period
4,392
4,079
4,574
between Q1 2009 and Q1 2010, possibly causing
$600 4,000
4,061
4,272
buyers to put the brakes on sales volume.
3,301 3,308
2,279

$300 2,000
$825 $758 $679 $632 $586 $629 $688 $682 $697

1-year avg. price trend: Up 18.9 % 1-year sales trend: Up 0.2 %

2-year avg. price trend: Down 15.5 % 2-year sales trend: Up 45.2 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Listings Sold by Calendar Quarter

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.

Attached properties in SoCalMLS-OC

Analysis dates are January 1, 2008 through March 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.

9 quarters through March 31, 2010

Attached Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$500 4,000
Avg Sale Price Listings Sold Units
Attached home prices are up 11.1% in the period
$400

2,692
2,905
2,681
3,000 between Q1 2009 and Q1 2010. Sales volume is up
$300 2,190 2,635
nearly as much at 10.6%.
2,410
2,291 2,000
2,072
$200 1,381

$404 $396 $354 $312 $293 $309 $327 $329 $326

1,000
$100

1-year avg. price trend: Up 11.1 % 1-year sales trend: Up 10.6 %

2-year avg. price trend: Down 19.4 % 2-year sales trend: Up 65.9 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are January 1, 2008 through March 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
©2009 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. Our company’s mailing materials are printed on paper certified by the
Forest Stewardship Council (FSC) as the product of sustainably managed forests. An independently owned and operated member of the Prudential Real Estate Affiliates, Inc. This is not intended as a solicitation if
your property is currently listed with another broker.