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By Mike Rains, May 12 2020 02:09PM

A picture they say is worth a thousand words. This picture shows us that things are starting to head in the right direction. As you notice on the graphs, the forced stay at home order abruptly changed the direction of what was to be another historic year for the housing market. The year started off with very low inventory, coming off a year where home prices hit all-time highs, and through February, were marching towards a record 1st Quarter, with low interest rates and buyer demand was very strong!

Then you see abrupt changes in direction for demand, which is measured in pending home sales. This is directly caused, not by a faulty economy or a financial meltdown, but as a forced shutdown to fight the spread of Covid-19 CoronaVirus. Homes in escrow continued for the most part, closing escrow, but few new escrows were being opened on new sales for two months as a result of the shutdown. It is very important to realize as a home owner, a buyer looking to buy, or an investment property owner that this temporary shut down is the cause of this pause in the market. We have NOT seen prices falling, and that is because sellers pulled their homes off the market in most cases, and with a very low supply coupled with a low demand, those two have been balancing each other out.

Now I know that there have been homes that sold for less than their asking price, but would it surprise you that in the last 60 days, that is the 2 months that we have been locked down, there has been just over 3135 homes that closed escrow, and have closed for 98.45% of their asking price? Well that is the numbers for Orange County, California across Detached and attached homes. My friends, your home is a fantastic investment and while there are situations that differ from what we are seeing, but these are the numbers. These are the facts on the ground and they demonstrate that you will do ok as our county, state and country begin to re-open its doors again. Senior economist Lawrence Yun has indicated recently on a podcast interview on the Brian Buffini Show, a real estate coach and trainer, that both buyers and sellers interviewed simply have delayed their purchase during this time and we will see the spring market shift to summer and summer to fall and that by the end of the year leading into next year, the national real estate market picture will demonstrate the strength of housing in the midst of this storm.

As always, fight fear with facts and get your advice from trusted resources. I am Mike Rains with Remax in Huntington Beach, CA. Stay safe and know that this too shall pass.

Mike Rains

REMAX TerraSol

(714) 462-2090

By Mike Rains, May 6 2020 05:51PM

Greetings from Huntington Beach and the Orange County California Real Estate market. As a realtor representing clients throughout this difficult time it is essential to have boots on the ground data and facts to share with my clients in order to make good sound financial decisions when it comes to buying and selling their home or purchase investment properties.

I go to several sources to get the overall national picture, regional, state and local pictures too. This week I just want to share the data from our local market that will help you see why we know that real estate is going to be just fine when we get on the other side of the Covid-19 crisis. You may be wondering if it is a good time to sell? Or is it a good time to be buying? These questions are asked all the time and I would just say as a buyer, if you are one of the fortunate ones who have a stable job situation, it is a great time to take advantage of 30 year fixed rate interest rates down in the low 3% range. it is fantastic!

If you are a seller considering making a move out of state or even to a different location in your community to get a larger home or even to downsize, I will just tell you that we have low inventory currently that is close to the demand, and will continue to be a factor going out of this crises in the near future, so home values are maintaining, and are predicted by Lawrence Yun, chief economist for the National Association of Realtors by the end of the year to have risen 1-3% as a year over year gain from 2019, which in of itself was a record year, so that works for me.

So here are our local numbers to share:

Orange County Housing Market Summary:

• The active listing inventory increased by 281 homes in the past two-weeks, up 6%, and now totals 4,625, its largest increase of the year. In the past four-weeks, 54% fewer homes were placed on the market compared to the prior 5-year average; thus, COVID-19 is suppressing the inventory. Last year, there were 7,185 homes on the market, 2,560 more than today, a 55% difference.

• Demand, the number of pending sales over the prior month, increased by 92 pending sales in the past two-weeks, up 9%, and now totals 1,172, its first increase since the “stay at home” order was placed back in March. In the past 5-years, demand has increased an average of 0%. COVID-19 is continuing to suppress demand; yet, the bottom was reached a couple of weeks ago. Last year, there were 2,653 pending sales, 126% more than today.

• The Expected Market Time for all of Orange County decreased from 121 days to 118, a Balanced Market (between 90 and 120 days). The drop was due to the rise in demand outpacing the rise in the supply. It was at 81 days last year, much better than today.

• For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 82 days. This range represents 37% of the active inventory and 53% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 86 days, a slight Seller’s Market. This range represents 19% of the active inventory and 26% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 165 days, a Buyer’s Market (greater than 150 days).

• For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the Expected Market Time decreased from 205 to 192 days. For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 252 to 229 days. For luxury homes priced between $2 million and $4 million, the Expected Market Time increased from 363 to 418 days. For luxury homes priced above $4 million, the Expected Market Time decreased from 1,118 to 586 days.

• The luxury end, all homes above $1.25 million, accounts for 33% of the inventory and only 14% of demand.

• Distressed homes, both short sales and foreclosures combined, made up only 1% of all listings and 1.6% of demand. There are only 18 foreclosure s and 26 short sales available to purchase today in all of Orange County, 44 total distressed homes on the active market, up3 from two-weeks ago. Last year there were 68 total distressed homes on the market, slightly more than today.

• There were 2,383 closed residential resales in March, 5% more than March 2019’s 2,277 closed sales. March marked a 17% increase compared to February 2020. The sales to list price ratio was 98.4% for all of Orange County. Foreclosures accounted for just 0.4% of all closed sales, and short sales accounted for 0.5%. That means that 99.1% of all sales were good ol’ fashioned sellers with equity.

Hopefully that helps you have a sense of confidence in real estate and the value of your home, as well as confidence to be a buyer in todays market. Should you have questions or want to discuss. mike@mikerains.com or 714-462-2090 office.

Mike Rains Remax TerraSol

Huntington Beach, California

By Mike Rains, Mar 25 2020 11:02PM

The Covid-19 virus has our country gripped in a crisis that we haven’t seen since the great recession of 2008. While the concern and fear about the future have much similarity between the two, there are many things different about today’s crisis. 2008 was a real estate crisis, not a health crisis. The fundamentals of the two real estate markets are very different indeed.

The 2008 market was a house of cards built upon poor real estate fundamentals. Home builders were building excess inventory at a clip of 2 million homes built annually creating excess inventory. Easy money loans were the norm; with no money down; no income documentation loans; pick a payment loans offering payments below an interest only loan payment were being used by everyday people not investors, and being underwritten to qualify at the lowest payment option, to name a few of the many poor fundamentals in place. When the cards started to fall, there was no strong foundation to keep it from falling down, and the first people that walked away, had nothing to lose but their credit, and they walked, and so on and so forth. The last people out were the ones who had a strong down-payment, but one or both spouses lost jobs, and despite burning through savings and possibly 401k monies to try and save the home, they still lost it.

Today’s fundamentals are very different, and when I talk about fundamentals I am talking about the economy, jobs, wage growth, supply of homes, demand for homes, and interest rates. As of February 29th, 2020 the real estate fundamentals were this for the Orange County California area: 1) lower inventory by 53% over 2019 available for sale 2) interest rate for a 30 year fixed rate averaged 3.25% 3) expected market time to sell was 35 days, (down from 65 days from 2019), for homes under $1 million which made up half of the inventory available and 76% of the demand of what buyers were searching for 4) There were 25% more home sales January 2020 than January 2019 5) Job numbers reported as of March 6th 2020 for February were up 273,000 for non-farm payroll with an unemployment number of 3.5% 6) stock market had reached all-time highs. So suffice it to say, all these fundamentals were in high gear and doing great! And then the Coronavirus pandemic hit the US in full force.

While I am writing this in the midst of the crisis, as a realtor, I want to help people have a level of concern and care of the crisis, without a doubt it is serious, and yet have a calm understanding of the fundamentals of the real estate market. So when we do come out of this crisis and time will tell whether that is a few weeks or several months, we need to understand that the STRONG fundamentals in the housing market going into this crisis are still in place, and will be the launching pad from where it goes from there. Here are some considerations for why I can say that.

Home builders have not been building homes at a pace to currently keep up with the demand for housing. This is one reason that we have endured a housing shortage for multiple years and a cause for home prices and rental prices to steadily rise. Currently the home build rate is about a million new units annualized, which has been behind the demand by a half a million units per year. So, low inventory will continue after we come out of this crisis.

Interest rates are currently averaging 3.375% and will be fuel for buyers demand to purchase homes, to take advantage of this. One benefit in today’s market is less buyers to compete with, which translates to less competition and possibly more opportunity to negotiate a fair price. The market time to sell is currently up at 39 days to sell with the same mix of demand and supply numbers for homes under $1 million.

Listen, there is little doubt that we are in strange times, but I have buyers who want to buy after this settles down and sellers who want to sell, so I just want to encourage you that there is a lot to be confident about for the future based on the fundamentals, despite the difficulties we are all having right now.

(Stats by OC Housing Report)

Mike Rains- Realtor RE/MAX TerraSol Huntington Beach CA

By Mike Rains, Mar 11 2020 10:31PM

Everywhere I go, people want to talk about real estate, and no even more so as the world is dealing with the Coronavirus pendemic. Whether you think it is overblown or not, it has affected behavior, and that can lead to an impact on markets, as we have seen lately in the stock markets, bonds, and price of oil, gold and silver. The best way to fight fear is with facts my mentor Brian Buffini, real estate coach and speaker/teacher, say.

So, how will the Coronavirus outbreak affect housing? There is no absolute, 100% certain answer. Instead, it all boils down how long this crisis will last and how large of an impact it will have on United States soil and the rest of the world. In China, the number of new cases is dwindling, a glimpse of hope that this too will end. Currently, the data does not indicate any change in the local housing market. The supply of homes to purchase in Orange County is at its lowest level for a start to March since 2013, and demand (last 30-days of pending sales) is at its highest level since 2016. With not enough supply and strong demand, the Expected Market Time (the time between pounding in the FOR-SALE sign and opening escrow) is at 48 days, a HOT Seller’s Market and its lowest level since 2013.

As a direct result from the COVID-19 outbreak, mortgage rates have dropped to a record low and will most likely drop even further. There is a chance that they break below 3% and into the 2’s. This inevitably will provoke many more to purchase, juicing demand. For a $750,000 mortgage, today’s 3.25% rate amounts to a $492 per month savings compared to March 2019’s 4.4% rate. That’s a savings of $5,904 per year. If rates drop to 3%, it’s a $594 per months savings, or $7,128 per year. And, at 2.75%, it’s a savings of $694 per month, or $8,328 per year. In doing the math, it is easy to see how lower rates will stimulate demand. The impact on affordability is astounding.

If you are considering a purchase or in need of selling your home, it is essential to, now more then ever, work with a professional that has your best interests at heart! Mike Rains- Professional Realtor

By Mike Rains, Mar 15 2019 01:44PM

Do you own property for investment and manage it yourself? Are you thinking of buying investment property and want to save money by managing it yourself? While I think it is true that no one will care for your property like you do, I still believe there is tremendous value in having a property manager, and this article will explore those reasons.

What are the biggest concerns that an investor has when it comes to their properties? Being an investor myself, I think that most people want to have the BEST Tenants, earning the HIGHEST market rents, staying compliant with all of the tenant laws and regulations that exist, and finally, being PROTECTED and SEPARATED from tenant issues that arise by having the right contracts and agreements in place.

The #1 killer of good investment property is VACANCY. When a unit sits empty, the owner is losing money every day that it sits there. Vacancy happens, but there are distinct reasons for prolonged vacancy. The first and most important reason is poor tenant screening. The pressure to fill that property with a tenant can be tremendous for an owner, and they might cut corners on having proper screening, only to find out later, that the applicant looked great on paper, but had issues in the past rentals. The second is also important, and that is having poor property condition, which leads to tenant dissatisfaction, which can lead to chronic vacancy as tenants constantly switch out at the end of the lease. By the way, poor property condition can also be detrimental to the long term value of the asset as well, especially in areas where market appreciation is big like in California. Many properties are evaluated by investors by CAP rates; which is your rate of return on the investment, and when used with what the actual rents less the expenses in a formula, turns out a number that determines the value. So you can see if the property condition isn't as good, you get less in rents, therefore less in value of the asset.

The KEY to a good investment for an owner, in my estimation, is having good property management! Whether you do it yourself or hire one. The property manager screens tenants thoroughly; collects rents so you get paid on time; handles the tenant issue that arise at a moment’s notice; periodic inspections; monthly and annual reporting; uses proper contracts and helps you make the right disclosures to keep you compliant with tenant laws; does rental analysis to keep you apprised of current market rent trends.

Other benefits include simple things like being able to take vacations without worry of tenant issues or collecting of rents. It also assures that even long term tenants are not paying "under-market" rents. I have met owners who have had the same tenant for years and years, and have had a great friendship develop, so much so that the owner doesn't feel like they should raise the rents when it is time, and thus after a number of years find themselves significantly lower than they should be. Now I will grant you, that there is tremendous value in having a long term tenant, as it addresses the "vacancy" issue raised above, but that being said when ten years goes by and your $500 lower in monthly rent than you should be, that is VERY costly indeed.

One of the biggest advantages of having a professional property manager is that liability. The property management company is licensed, insured, and stands in the gap to mitigate your liability, shielding you from potential tenant issues that can often lead to lawsuits. The costs of a property manager are easily made up with this protection as well as addressing issues quickly to maintain the property, and having current market rents.

Find yourself a good one, who has good problem solving skills, great communication skills and cares about your investment like you would care for it. Should you ever have any questions about property management or investment properties in general, please email me at mike@mikerains.com or visit my website at www.MikeRains.com #askMikeRains #mikerainsrealtor

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