Each month I publish the OCHN Market Newsletter. It provides the most detailed and accurate view of the housing market available without the realtor spin. I believe potential homebuyers should have the best information possible to make reasonable and rational decisions regarding the purchase of a home. Despite how bearish I have been, my strictly mechanical reports have been issuing strong buy signals since last fall. Now that house prices have turned positive, rents are still going up, interest rates are trending down, affordability is at record highs, and houses are undervalued by historic norms, the report is very bullish. And as I noted recently, I am turning bullish too.
Notice the downside overshoot in the chart below. It may be artificially induced by low interest rates, but it is a real phenomenon all the same. Anyone buying today is getting a bargain relative to the long-term cost of ownership in Orange County. And as I noted in an earlier post, the monthly cost of home ownership down over 50% from 2006.
The monthly report focuses on the valuation of cities and certain zip codes relative to historic norms. Although many cities are still priced well above rental parity, they are undervalued compared to the last period of price stability from 1993 to 1999.
This has sent my ratings solidly into the green.
And as I demonstrated in a post in early September, these ratings are seldom green. (please see OC housing market ratings and historic city values.)
Anyone using the OCHN rating system would have avoided buying when they were likely to end up underwater. The system even warned about buying in 2009 when everyone else was calling the bottom. Since interest rates have declined along with prices and rents have gone up, affordability is at record highs, and the OCHN rating system is issuing a strong buy signal. The last such strong buy signal was in 1998, the bottom of the last housing bust.
Anyone remember Dennis Miller?
Do any of you remember Dennis Miller? Perhaps some of you still listen to his radio show. Dennis Miller became famous as a liberal who would go on acerbic rants. I used to enjoy watching his show back in the day. Then suddenly, and without much warning, he turned conservative. It was very jarring to his audience, and he has faded from view every since. Am I the next Dennis Miller?
I became known as a housing bear. I like to think I am an impartial market observer who was bearish when the conditions were bearish; however, I’m sure many don’t see me that way. Many of you may come here to get a dose of bearish market news, and my recent change of opinion may be jarring to you. For as much as I would like to please all my readers, I must be true to who I am and my view of the housing market. Although I still see many reasons to be concerned about the future of our housing market — and I will continue to write cautionary posts — I see more reasons to buy than I see reasons to wait. As I always have, I will continue to call ‘em like I see ‘em.
Perhaps I am just late to the party. I spent most of the summer criticizing the chorus of bottom callers. Perhaps I was wrong. It took Bernanke’s promise of unlimited housing stimulus to finally convert me. Perhaps it is my cautious nature, but seeing the bottom in the rear-view mirror and having sufficient reason to believe it will endure finally won me over.
I don’t know how this will effect my blog posts. Only time will tell. I will continue to focus on housing and post my interpretations of the most recent housing news and the occasional in-depth analysis post. We’ve entered a new era. The bust is over, and the recovery has begun.
Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborhood values. Don't be a fool. Don't suffer the pain of an underwater mortgage. The surest way to lose your house is to overpay for it. Our reports identify overvalued and undervalued neighborhoods. Use it to broaden or narrow your search area. Savvy buyers work with us to find bargains. We've saved thousands from financial ruin. Let us save you too. If you want peace of mind while shopping for your next home, sign up for our monthly market newsletter.
We're sorry, but it seems that we're having some problems loading MLS # S714183 from our database. Please check back soon.
Proprietary Irvine Housing News home purchase analysis
$448,800 …….. Asking Price
$625,000 ………. Purchase Price
6/18/2004 ………. Purchase Date
($176,200) ………. Gross Gain (Loss)
($50,000) ………… Commissions and Costs at 8%
============================================
($226,200) ………. Net Gain (Loss)
============================================
-28.2% ………. Gross Percent Change
-36.2% ………. Net Percent Change
-3.9% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$448,800 …….. Asking Price
$15,708 ………… 3.5% Down FHA Financing
3.43% …………. Mortgage Interest Rate
30 ……………… Number of Years
$433,092 …….. Mortgage
$127,917 ………. Income Requirement
$1,928 ………… Monthly Mortgage Payment
$389 ………… Property Tax at 1.04%
$108 ………… Mello Roos & Special Taxes
$112 ………… Homeowners Insurance at 0.3%
$451 ………… Private Mortgage Insurance
$316 ………… Homeowners Association Fees
============================================
$3,305 ………. Monthly Cash Outlays
($285) ………. Tax Savings
($690) ………. Equity Hidden in Payment
$17 ………….. Lost Income to Down Payment
$76 ………….. Maintenance and Replacement Reserves
============================================
$2,423 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$5,988 ………… Furnishing and Move In at 1% + $1,500
$5,988 ………… Closing Costs at 1% + $1,500
$4,331 ………… Interest Points
$15,708 ………… Down Payment
============================================
$32,015 ………. Total Cash Costs
$37,100 ………. Emergency Cash Reserves
============================================
$69,115 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
Cost of Ownership Analysis
Are you ready to make an offer, but you are worried the cost of ownership is really more than you can afford? Don't make a mistake that might cost you the family home, your life savings, and your good credit! Get the advice of a seasoned professional. Contact us at info@ochousingnews.com today!
We produce detailed reports showing the cost of ownership based on the most likely transaction price and current financing terms. You will know how much you will spend each month in out-of-pocket expenditures and the true monthly cost of ownership factoring in tax deductions, loan amortization, and opportunity costs on your down payment. In addition, we show you how this cost compares to a rental of equal quality to make sure buying is the right decision for your situation.
An OC Housing News Cost of Ownership Analysis will calm your worries and give you peace-of-mind.
Let us show you the way!
Reports are available for properties in the Southern California MLS coverage area, and are generally delivered within 24-72 hours. If you wish to receive multiple properties, please contact us at info@ochousingnews.com, and we will prepare the reports for you.
OC Housing News FREE Guides!
Nearby Foreclosures
Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."Comparative Market Analysis
Are you ready to make an offer, but you are worried you will either (1) underbid and miss the property or (2) overbid and pay too much? Don't make a mistake and miss your dream home, or worse yet, overpay for it! Get the advice of a seasoned professional. Contact us at info@ochousingnews.com today!
Are you thinking about selling, but you are worried you will either (1) overprice and fail to sell or (2) underprice and leave money at the negotiating table? We are the experts in real estate valuation. Work with us to set the right prices to sell your property quickly for the largest amount possible. Let us show you what your property is worth today!
An OC Housing News Comparative Market Analysis will calm your worries and give you peace-of-mind.
See for yourself right now!
Reports are available for properties in the Southern California MLS coverage area, and are generally delivered within 24-72 hours. If you wish to receive multiple properties, please contact us at info@ochousingnews.com, and we will prepare the reports for you.
This is not what the federal reserve hoped would happen.
Reports: Refi Numbers Low Despite Low Mortgage Rates
It was no surprise when mortgage rates dropped in the weeks following the Fed’s announcement that it would purchase $40 billion of agency mortgage-backed securities (MBS) each month until the labor market shows substantial improvement.
Even with the record-low mortgage rates seen today, refinancing numbers are still not as high as expected.
In CoreLogic’ most recent MarketPulse report, Sam Khater and Molly Boesel noted, “the overall level of refinancing is still low given current mortgage rates, and there are still many homeowners nationwide with above market rates.”
Despite the new expansions from HARP 2.0, including the removal of its 125 percent LTV ceiling, other restrictions are still preventing homeowners from refinancing.
One of those restrictions is a HARP guideline that makes borrowers ineligible if they obtained their GSE-backed mortgaged after May 31, 2009.
CoreLogic conducted an analysis to find out who would be excluded from HARP based this particular requirement.
According to its analysis, CoreLogic found that “lifting the restriction on origination date would expand eligibility of HARP by an additional 2 percent of currently outstanding mortgage, or approximately one million borrowers.”
The report found that those borrowers who are ineligible based on their origination date have an average mortgage rate of 5.22 percent and would save an average of $333 a month.
The authors suggested removing the origination date restriction to extend HARP benefits to an additional one million borrowers, who could then use the savings as a economic stimulus.
Capital Economics also discussed the weak impact of low mortgage rates on refinancing in an analysis wrapping up economic news for the week.
Authored by economists Paul Ashworth and Paul Dales, the report did acknowledge that low mortgage rates led to a surge in mortgage applications, especially for refinancing.
Despite the surge, Capital Economics noted refinancing applications still didn’t rise above levels seen in early 2009 when interest rates were also declining.
Rather than focusing on what’s specifically preventing HARP refinancings, Capital Economics provided a more general picture of what is happening in refinancing.
“This illustrates how big a restraint it is that almost half of mortgage borrowers can’t qualify to refinance because, thanks to the collapse in home prices and tighter lending standards, they don’t have the 20% in home equity needed to qualify,” the research firm observed.