Pru Oc Market q1 6

ORANGE COUNTY
MARKET OVERVIEW a monthly real estate report | June 2010
Housing Growth Is on the Way

At the recent National Association of 2010 than in the last 14 months. Private — they’re paying cash for well-priced fine
REALTORS® midyear conference, top housing sector hiring increased 4.8%. Layoffs have properties. She reports hearing anecdotally that
economists cautiously predicted an imminent supposedly fallen to levels not seen since before luxury home sales are higher across the country.
housing recovery, lifted by the improving jobs the recession. Employers added 290,000 jobs
outlook and economic expansion. in April, the most in four years. “Fine home buyers are adding luxury real estate
as a portfolio play,” says Moore-Moore.
The caveat is how jobs will impact Housing conditions improve
foreclosures. Tom Dunlap, vice president and general
Among many reasons why housing could
manager of Prudential California Realty Los
Lawrence Yun and Mark Zandi, chief economists continue to climb in both sales volume and
Angeles region, suggests there are two levels of
for the NAR and Moody’s Economy.com, price is a return to record low interest rates.
luxury, and both have increased in the last six
respectively, agreed that jobs will continue to Despite the end of the home buyer tax credit,
months. “Our high-end would be $1 million
increase over the coming year, but they parted the pace of mortgage applications rose in May
to $3 million,” explains Dunlap, “and our
ways when it came to housing. 2010, says the Mortgage Bankers Association.
luxury level would be above $3 million. What
First quarter foreclosure activity is already we are seeing is a tremendous amount of cash
While both agreed that mortgage interest rates
falling from a year ago in 14 of the top 20 U.S. that has been parked on the sidelines coming
will remain historically low, the availability of
metros, according to RealtyTrac. back into play. Our prices have come down to
jumbo loans will improve, and home sales will
a level where they are perceived as a good value,
rise over the next few years, Yun believes that
Pending home sales were up more than 5% in and in some cases a bargain.”
foreclosures will be even with demand, at about
March, 21% higher than the previous year, says
30% to 40% of all sales transactions through California Outlook
the NAR.
the end of the year.
But for California home buyers waiting for the
The PMI risk index was also positive, with
Zandi disagreed, anticipating that foreclosures market to bottom further, the opportunity may
42 of the largest 50 markets demonstrating
will rise later in 2010 before easing in 2011. already be past.
diminished mortgage lending risk. Fitch
“Whether home prices weaken is unclear, but
Ratings reported last week that late payments The California Association of REALTORS®
it will take two more years to work off excess
on “Alt-A” loans fell for the first time in four has just reported a key indicator: affordability.
housing inventory at the current sales pace,” he
years, as borrowers caught up on payments When affordability goes up, prices are coming
said.
or were able to modify their loans to more down. When homes are less affordable, prices
Yun is more optimistic, believing that prices favorable terms. are on the rise.
will rise 2% to 3% this year, and that a housing
Meanwhile, the economy expanded 3.2% in The C.A.R. First-time Buyer Housing
shortage could be felt as early as two to three
the first quarter — the third straight quarter of Affordability Index was 66% in Q1 2010,
years from now, due to construction and
growth — diminishing the likelihood of rising down 3% from Q1 2009. The median home
household formation falling below long-term
foreclosures. price of an entry-level California home
trends.
was $246,270, which requires a minimum
The luxury market improves
The National Association of Home Builders qualifying income of $41,540 — $3,910 more
says employment will grow through 2010 and Jumbo loans are at their best rates in years — as than a year ago, based on an adjustable rate of
2011, reducing the unemployment rate to low as 5.7% for a 30-year fixed mortgage — 4.33%. The C.A.R. says that first-time home
around 9.3% from the current 9.7%. giving luxury home buyers more options than buyers typically purchase a home equal to 85%
paying cash. of the prevailing median price. A year ago,
More jobs are available first-timers only needed $37,630 to qualify for
Laurie Moore-Moore, founder and CEO of the
The Labor Department announced the best a loan on an entry-level home.
Institute for Luxury Home Marketing, notes
news in ages: more jobs were created in March
that some buyers aren’t waiting for better terms
Median home prices in Southern California between market peaks and last year’s lows bottom that may already be long gone. Get
increased 16.7% to $297,540 in Q1 2010 — affording a terrific investment play for your loan and preapproval with a reputable
over the previous year. Interestingly, sales home buyers. lender, like HomeServices Lending powered
volume was down for the region year-over- by Wells Fargo www.hslca.com, before you
year, largely due to consumer difficulty In many cases, buyers may find themselves do anything else. Make sure the lender
in obtaining jumbo mortgages. As the in fierce competition for the same home has all your financial information and
mortgage market expands over the coming against all-cash buyers who can close quickly. requires documents up front, so you can
months, volume may improve substantially. Says Dunlap, “We’ve seen a real shift in the move quickly to secure the home you want
last six months. We had an REO duplex without wasting time trying to finalize a
In addition, home prices are still well below come on the market in Hancock Park for mortgage.
where they were at the housing peak. $450,000. The property had 130 offers, and
sold for $650,000. Another home priced Advice for sellers: Because the market is
According to Zillow, five California markets at $1,495,000 had seven offers and closed improving, it may be tempting to overprice;
— Los Angeles, San Diego, San Francisco, escrow in two weeks with an all-cash offer but don’t do it. It’s better to price your home
Santa Barbara and Ventura — turned of $1,752,000.” at the market than to overprice and watch
positive in April or May 2010, with home your property sit without viewings or offers.
prices appreciating as much as 3.1% to 3.9% In this market, good homes that are well- The first seven days of a listing are the most
since hitting lows in the previous year. priced are generating multiple offers with critical; by then, serious buyers have already
no contingencies, and closing very quickly. seen everything on the market. Overpricing
But missing the bottom doesn’t mean
from the outset is the #1 mistake most sellers
opportunity is gone. Home values in these Advice for buyers: California home prices
make. Buyers will either wait or move on to
key areas are still 30% to 36% down, falling are recovering, so don’t wait any longer for a
another property.
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
Inventory ownership
in Months’ is determined
Supply – May 4, by whether it is a condominium, townhome, duplex, co-operative or other.
2010
All residential properties in SoCalMLS-Orange County
Inventory in Month’s Supply
Less than $1 million 2.9

Although unique and upscale homes are not expected to
$1 million to less than $2 million 7.2 sell at the pace of affordable homes in the conforming
$2 million to less than $3 million 13.7 loan ranges, multi-year inventory levels are considered
$3 million to less than $4 million 17.6 stagnant.
$4 million to less than $5 million 21.5
$7 million and over 32.9
0.0 10.0 20.0 30.0 40.0
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.
All residential $1M+ properties in SoCalMLS-Orange County
12 months through April, 2010
Monthly Listings Taken and Absorbed

Properties $1,000,000 and above
600 400
New Listings Listings Absorbed
570
531
Since inventory lows reached in December 2009, new
500 home listings have soared 230%. Absorption rates are up
436 300 95%, but sellers should be cautious about “testing” the
400
356 market while inventories are multiplying.
300 200
234 229 227
215 215 231
195
200
161
100
100
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 215 234 229 215 227 231 195 161 356 436 570 531
Listings Absorbed 184 192 208 236 199 208 162 148 157 211 246 289
Listings Sold by Calendar Quarter

9 quarters List Price Range (From $1,000,000 to $1,999,999) through March 31, 2010
Listings Sold, 9 Calendar Quarters through March 31, 2010

$1,000,000 - $1,999,999
Average Sale Price (Thousands) Homes Sold
$1,500
Avg Sale Price Listings Sold Units
600
In homes priced between $1 million and $1,999,999,
$1,200 468 446
500 prices are holding fast, allowing sales volume to surge
53.3% in the period between Q1 2009 and Q1 2010.
497
471
372
400
$900 326
348
318 300
227
$600
200
$1,287 $1,296 $1,287 $1,272 $1,289 $1,293 $1,297 $1,289 $1,306
$300
100
1-year avg. price trend: Up 1.3 % 1-year sales trend: Up 53.3 %
$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.

$2,000,000 - $2,999,999
$3,000 125 Prices gave some ground in homes that sold from $2
124
million to $2,999,999, down 2.5%, but sales volume shot
up 50% for the period between Q1 2009 and Q1 2010.
100
$2,000 91 79
68 70 75
78
60
54 50
$1,000 36
$2,301 $2,297 $2,273 $2,272 $2,304 $2,316 $2,336 $2,215

$2,253 25
1-year avg. price trend: Down 2.5 % 1-year sales trend: Up 50 %
2-year avg. price trend: Down 3.7 % 2-year sales trend: Down 30.8 %
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1
$3,000,000 - $3,999,999
$4,000 45
41
40
In homes that sold between $3 million and $3,999,999,
$3,000
35 prices stayed down to earth, allowing room for sales
32
34
27
29
27 30 volume to skyrocket 107.7%.
30
25
$2,000
18
20
13
15
$1,000
$3,248 $3,209 $3,153 $3,298 $3,308 $3,125 $3,163 $3,249 10
$3,163
1-year avg. price trend: Down 1.5 % 1-year sales trend: Up 107.7 %
5
2-year avg. price trend: Up 2.7 % 2-year sales trend: Down 10 %
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1
$4,000,000 - $4,999,999
Prices retreated 4.8% in homes that sold between

$5,000 25
22 Avg Sale Price Listings Sold Units
$4,000 20 $4 million and $4,999,999, but sales volume stirred

18
16
upward only 10%.
17
$3,000 15
13
12
11
10
$2,000 8 10
$4,201 $4,395 $4,272 $4,339 $4,316 $4,169 $4,314 $4,034 $4,108

$1,000 5
2-year avg. price trend: Down 2.2 % 2-year sales trend: Down 35.3 %
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

$5,000,000 - $5,999,999
$6,000 12
Avg Sale Price Listings Sold Units 11
$5,000 10
Sales prices in homes that sold between $5 million and
$5,999,999 rose 4.7% in the period between Q1 2009
9
8 8 8
$4,000 8
7
and Q1 2010. Sales volume climbed 83.3%.
6
$3,000
5 6
$2,000 3 4
$5,203 $5,082 $5,430 $4,924 $5,047 $5,403 $5,213 $5,158

$5,153
$1,000 2
2-year avg. price trend: Down 0.9 % 2-year sales trend: Up 37.5 %
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

$6,000,000 - $6,999,999
$8,000 5
4 4
With prices down 10.9% in the period between Q1
2009 and Q1 2010, sales volume had room to rise
4
$6,000
3 3 3
3 50%.
$4,000
2 2
2 2
$5,865 $6,213 $5,678 $6,373 $5,835 $5,916 $6,140 $5,676

$2,000
1
0
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1
Listings Sold
Analysis dates by1,Calendar
are January Quarter
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 List Price Range ($7 million and over) through March 31, 2010
$7,000,000 and over
$15,000 14
Prices dropped 28.1% in homes that sold at $7 million
13
12 12
and above, freeing sales volume to soar 125% for the

$12,000 11
10
9
period between Q1 2009 and Q1 2010.
9
$9,000
8
7
6
6
6
$6,000
4
4
$10,793 $11,149 $10,036 $11,375 $12,291 $12,409 $8,806 $8,177
$3,000
$8,708
1-year avg. price trend: Down 28.1 % 1-year sales trend: Up 125 % 2
$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1
©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.

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ORANGE COUNTY

MARKET OVERVIEW a monthly real estate report | June 2010

Housing Growth Is on the Way

Inventory in Month’s Supply

Less than $1 million 2.9

0.0 10.0 20.0 30.0 40.0

Monthly Listings Taken and Absorbed

Listings Sold by Calendar Quarter

Listings Sold, 9 Calendar Quarters through March 31, 2010

Listings Sold by Calendar Quarter

$2,301 $2,297 $2,273 $2,272 $2,304 $2,316 $2,336 $2,215

Prices retreated 4.8% in homes that sold between

$4,000 20 $4 million and $4,999,999, but sales volume stirred

$4,201 $4,395 $4,272 $4,339 $4,316 $4,169 $4,314 $4,034 $4,108

Listings Sold by Calendar Quarter

$5,203 $5,082 $5,430 $4,924 $5,047 $5,403 $5,213 $5,158

All residential properties in SoCalMLS-Orange County

$5,865 $6,213 $5,678 $6,373 $5,835 $5,916 $6,140 $5,676

All residential properties in SoCalMLS-Orange County

and above, freeing sales volume to soar 125% for the

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