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In Memoriam: Liz Noriega
(1955-2017)

It is with great sadness that we announce the passing of a beloved member, Liz Noriega. Noriega worked as a REALTOR at RE/MAX Terrasol in Huntington Beach.

Memorial services will be held at the Huntington Harbour Yacht Club at Warner and PCH on Wednesday, December 20 from 11am-2pm with tacos being served at noon as Liz would have liked. This is a party to celebrate her life, so bright colors and happy memories are required. Liz's family members are requesting that everyone that attends bring a written memory of Liz with some pictures that they can use to make a scrap book of her life for her grandkids.

Huntington Harbour Yacht Club
3821 Warner Ave
Huntington Beach, CA 92649

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By David Girling
GIRLING REAL ESTATE INVESTMENT GROUP

 

Tax reform, reduced housing affordability, limited inventories, and rising home prices and rents dominate the headlines. All are interrelated. As REALTORS®, we need to read past the headlines and make sense of the facts for our clients. The goals of this article are (1) to give you some information to address questions that may arise from recent headlines and (2) to clarify the conclusions drawn concerning these headline topics. 

Headline No. 1:  Tax Plan Will Hurt Homeowners
Lawrence Yun, NAR Chief Economist, November 2017

The National Association of REALTORS® (NAR) says, “Home values could drop 10 percent if the Senate or House tax reform bill is signed into law. The bills double the standard deduction and, as a result, fewer people itemize using the mortgage interest deduction. This will give people less incentive to buy a home.” Added Lawrence Yun,

“It will lead to a renter nation and away from an owner nation.” 

Analysis Based on Actual 2017 Sales Transactions

I arrived at the conclusions below from an analysis of three actual 2017 sales transactions (in Newport Beach, Mission Viejo, and Aliso Viejo), as well as an additional scenario where the purchase price was the same as the U.S. median home price. All four properties were later leased as investment properties. Purchase prices ranged from $245,000 to $2.9 million. Housing payments before and after the application of tax benefits were compared to the monthly rents. 

  • Newport Beach: $2.9 million purchase price, $7,900 monthly rent. It is clearly better for a person to rent this property than to purchase it. If the tax reform bill is signed into law, more than $40,000 in potential tax benefits (e.g., property taxes and the mortgage interest deduction) will be lost. Assuming 2 percent appreciation, the return on equity (ROE) is negative. 
  • Mission Viejo: $980,000 purchase price, $4,500 monthly rent. The total housing payment and rent for this property are within $100 of each other. After factoring in the tax benefits, it is better to purchase rather than to rent this property despite the approximately $9,900 in tax benefits that will be lost with the new tax plan. Assuming a 2 percent appreciation in the value of the property, the ROE is 6.57 percent. 
  • Aliso Viejo: This property (a condo) sold for $580,000 in 2017 and was leased for $2,850. No tax benefits will be lost through tax reform in this scenario. The analysis shows it is better to purchase this property when tax benefits are applied. The ROE is 5.13 percent. 
  • S. Median-Priced Home. Using the most recent median home price (Source: NAR) as a purchase price and using a rental rate of $1,600 per month (Source: Zillow), this scenario shows that it is better to purchase. No tax benefits will be lost with tax reform; and assuming a 2 percent appreciation rate, the ROE is 13.46 percent. 

Some homeowners with a higher standard deduction (SD) may chose not to itemize; and, as a result, the tax benefits will not matter. In that event, all transactions analyzed except for the U.S. median-priced home show that a potential homeowner would be better off continuing to rent if no tax benefits were applied to the housing payment (Mission Viejo and Aliso Viejo are marginally better). Not all homebuyers base their decision on tax benefits, but it will impact the decision for some. 

Assumptions for These Four Scenarios

Property tax deductions are limited to $10,000, the mortgage interest deduction (MID) is limited to loans up to $500,000, and the standard deduction almost doubles. There is also no opportunity cost factored into the analysis (see Table 1).


 

Conclusions

This analysis confirms some of the conclusions that have been drawn about the possible impact of tax reform on homeownership. Homeowners at the high end will be greatly impacted through the loss of tax benefits. Lower-end buyers who base their decision regarding whether to purchase primarily on the impact of tax benefits may decide not to do so because the higher standard deduction may render the tax benefits unusable. And prices may need to correct (NAR says by as much as 10 percent) as a result of the impact of tax reform and how it affects the decisions to buy or rent. The impact of tax reform will vary for each situation, and it will be important to analyze each situation and the assumptions that are being made. 

 

Headline No. 2: Homeowners Can’t Count on Property Appreciation for Wealth
Faculty at Florida Atlantic University, Florida International University, and the University of Wyoming, November 2017 

According to the authors, “On average, renting and reinvesting wins in terms of wealth creation regardless of property appreciation, because property appreciation is highly correlated with gains in the traditional financial asset classes of stocks and bonds.” 

Conclusions

Some of the follow-up articles that resulted from this study included headlines that prompted some readers to conclude that renting is always better than owning, such as the following: “Homeownership Doesn’t Build Wealth” (CNBC, November 16, 2017). This is an example of where you need to read beyond the headlines. This study is based on the assumption that renters will invest the savings generated by renting rather than buying and, as a result, will create more wealth by renting than by owning a home. The assumption is that the renter will save and reinvest, not consume. Homeownership is a good, forced-savings vehicle and, because most renters are not likely to save to the extent necessary, continues to be a good alternative for wealth building. 

 

Headline No. 3:  58 Percent of Homeowners Think the Housing Market Is Set for a Correction—Are Bubble Fears Founded? 
Forbes, August 15, 2017 

Conclusions

Bubble—No. The conditions that led to the housing crash in 2006 (i.e., easy credit, speculation, etc.) do not exist today. 

Price Correction—Yes. If you believe in housing cycles, a correction is approaching. Depending on how you interpret the graph shown in Figure 1, the previous housing cycle lasted anywhere from ten to seventeen years, flat from 1990 to 1997 but picking up momentum in 1997 until it burst in 2006/2007. Cycles have historically lasted seven to ten years, and we are in the ninth year of the recovery. As a result, a correction may be on the horizon. Other factors, including the potential for increasing interest rates and the lack of affordable housing, also suggest that a correction may be coming.

Figure 1. Depending on how you interpret the numbers, the previous housing cycle lasted anywhere from ten to seventeen years, flat from 1990 to 1997 but picking up momentum in 1997 until it burst in 2006/2007. Historically, housing cycles have lasted seven to ten years, and we are in the ninth year of recovery. 

 

David Girling completed his undergraduate work at the University of Southern California and earned a Master of Business Administration degree from the Anderson Graduate School of Management at the University of California, Los Angeles. In 2008, he formed Girling Real Estate Investment Group (Girling REIG) with his father, Bing, and has more than thirty years of experience in the financial services industry.  Dave and Bing are affiliated with Villa Real Estate.

 

 

Disclaimer: The opinions expressed and the conclusions reached in this article are based on best-efforts analysis and are offered solely for informational purposes. The accuracy of the information is deemed reliable, but is not guaranteed by the author, who is not responsible for typographic errors or other inadvertent inaccuracies. Any individual or entity intending to rely on this information should seek verification through personal investigation or investigation by qualified individuals. All information is provided “as is,” without any warranty of any kind, either expressed or implied.

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By Bob Hunt
C.A.R. DIRECTOR

 

Effective January 1, 2018, California real estate agents and brokers are subject to a new and different set of rules covering their advertising. The new rules were spelled out in Assembly Bill 1650, which was signed into law by Governor Jerry Brown on August 19, 2016. 

No, that’s not a typo; the law was passed a little over a year ago. The long delay in making it effective was an accommodation in recognition of the costs, planning, and physical changes that would be required. More than a year’s time was given. But now the law is in effect. 

AB 1650 came about in response to what, over the years, had become a hodgepodge of rules covering real estate advertising. Although no actual conflicts existed, different rules covering different types of ads and solicitations had led to confusion. Hence the 2016 legislation, which became known as the “uniform advertising standards.” 

In what follows, we will offer a summary of the changes that became effective January 1, 2018. It should be noted, though, that specific requirements that apply to mortgage loan originators are not discussed here. 

  • A licensee must include his or her name, license identification number, and responsible broker’s identity on all solicitations intended to be a first point of contact with consumers.
  • For the purposes of this section, “solicitation materials” includes
  • Business cards, stationery, and advertising brochures or flyers
  • Advertisements on television, in print, or electronic media
  • “For sale,” “for rent,” “for lease,” “open house," and directional signs, unless an exception applies

The exception that applies to the type of signs referenced in Item (c), above, is that no agent identification is required for those types of signs if either (1) the responsible broker’s identity is included on the sign without any reference to an associate broker or licensee or (2) there is no identification at all on the sign.

Suppose, for example, that a directional or “for sale” sign had the company name (responsible broker identification) on it (e.g., an arrow that contained the following: Open House, ABC Realty). That sign would not also require the name and identification number of an agent. Though, of course, an agent’s name and number could be on it but then the exception would not apply.

Conversely, suppose the directional sign said only Open House. Again, no agent identification would be required.

What you can’t have is a sign with the agent’s name and/or number, but without the responsible broker’s identification. If the agent’s name is there, the broker’s must be also.

While an agent’s name must be accompanied by his or her identification number, that is not the case for the responsible broker or firm. Including the broker’s identification number is optional.

Other items to keep in mind:

  • The font size of the identification number can be no smaller than the smallest size of any other type used in the material.
  • If the name of more than one licensee appears in the material, the license identification number of each must appear also.
  • If team names or nick names are used, the rules that were in place for those instances still apply.

This discussion refers to state regulations. Under the REALTOR® Code of Ethics, there are additional rules that apply to advertising.

 

Bob Hunt is a director of the California Association of REALTORS® and is the author of Real Estate the Ethical Way. His email address is scbhunt@aol.com.

 

View California Association of REALTORS® Announcement on 2018 Advertising Rules

View 2018 Advertising Rules Flyer

 

 

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In Memoriam: Tommy Anderson
(1950-2017)

It is with great sadness that we announce the passing of a beloved member, Tommy Anderson. Tommy, 67, passed away after battling cancer. Tommy grew up in Pennsylvania until his family moved to New Jersey when he was 15. He graduated from high school in Turnersville in 1968. Following high school, Tommy was in the U.S. Navy for four years then worked as a pipefitter at the Philadelphia Naval Shipyard. 

Tommy met his wife, Judy, in the winter of 1976 in New Jersey. About a year later they moved to Southern California where he worked at the Long Beach Naval Shipyard. From 1983 to 1988, Tommy and Judy lived in New Jersey before returning to Southern California. 

Tommy began his real estate career in 1988 as a part-time agent with Laura Lee at Century 21 Astro in Cerritos, CA.  Within a very short time, he became the top listing agent among all the full-time agents in the office. The broker encouraged and convinced both Tommy and Judy that he should be full-time in the business. That was the end of pipe-fitting and the beginning of what would become a lengthy, successful career in real estate.

After a while Tommy moved to Century 21 A Marketplace near the traffic circle, which is now known as Coldwell Banker.  Because of his success with selling condominiums, he became known as the "Condo King." In early 1990, his then-wife, Judy, got her real estate license and they became known as the "Condo Couple." 

Around 1990, Tommy received the Centurion Agent award. A few years later they relocated to Laguna Niguel where they joined Lakeview Realtors. He had most recently worked for Coastal Castles in San Clemente.

A celebration of life event will be held on Monday, November 20 at 4:30 PM at Laguna Beach United Methodist Church.

Laguna Beach United Methodist Church
21632 Wesley Dr, Laguna Beach, CA 92651

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Artificial intelligence and virtual reality have moved rapidly from entertaining science fiction to useful fact. This issue highlights some of the new apps, tools, and computer simulations that can help REALTORS® make appointments, reimagine space, and sell listings.

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In 2018 C.A.R. will assess you an extra $100 to be a REALTOR®.  Yes, that is a big cost to your already stretched budget.  I would venture to guess, however, that that thinning wallet of yours could use a few more listings.  

While the population of California continues to grow, real estate transactions are at about the same number that they were in the 1970’s.  This is not only a problem for REALTORS®, but for young families trying to stay in Orange County.  The median home price in Orange County is upwards of $700,000.  With 20% down, a family would have to make at least $142,000 a year to afford that home.  What we have is a huge supply shortage and it’s hurting everyone.  

One of the largest factors contributing to our current supply shortage is the nature in which our Proposition 13 tax structure makes it unaffordable for people to leave their homes.  In Orange County, people are staying in their homes an average of 20 years, and for many it’s not by choice.  

C.A.R. has decided to take a significant step towards solving this problem.  The C.A.R. Board of Directors voted to work toward the placement of a ballot initiative on the November 2018 ballot.  This initiative would allow property owners over 55 to move to a home at equal or lesser value, and keep their lower property tax base.   It would also allow them to buy up and create a blended tax rate. 

Should this initiative pass it could free up as many as 40 to 60 thousand transactions a year in the state of California which releases the valve on inventory, lowers prices, and helps your business.  

Unfortunately, between signature gathering and campaigning, the initiative will probably cost between $30 and $50 million to pass.  Hence, the $100 assessment.  While the cost is undoubtedly burdensome. The benefit is well worth it.  

  • $100 Member Assessment
  • Property tax basis transfer ballot measure that will likely cost between $30 & $50 million to pass
  • If passed could free up 40 to 60 thousand California real estate transactions a year. 
  • This is much needed inventory that helps potential homeowners and REALTORS® alike.



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b2ap3_thumbnail_Dick_Lorenz_photo.jpg In Memoriam: Richard "Dick" Dean Lorenz
(1936-2017)

It is with great sadness that we announce the passing of a beloved member, Richard "Dick" Dean Lorenz. Dick, 80, passed away from complications of recently diagnosed lymphoma, at Kindred Hospital in Westminster, California, July 5, 2017, surrounded by his wife and daughters. He earned a BS degree in Finance from California State University, Long Beach in 1970 and his California Real Estate License from the Department of Real Estate in 1976. He continued to be an active and well respected member of the real estate community. 

A celebration of life event will be held on Saturday, October 21, 2017, in the Huntington Beach area. Please RSVP to ShareYourMemories.RLorenz@gmail.com or call/text Blaire Melatti 714-767-0794. His family invites you to email your memories, stories and photos with them. A compilation of these memories will be shared at the celebration of life event.
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b2ap3_thumbnail_Brian_Fraser_photo.jpg In Memoriam: Brian Fraser
(1978-2017)

It is with great sadness that we announce the loss of a beloved member of the real estate community as a result of the horrific mass shooting in Las Vegas on Sunday, October 1. Brian Fraser, 39, was with friends and family at the Route 91 Harvest festival when his life was cut short. Brian most recently was employed as vice president of sales at Greenpath, a Southern California mortgage company.

A GoFundMe page has been created to help with family with this unexpected loss. If you wish to donate, click here.
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b2ap3_thumbnail_JanWitheeBobst_photo.jpg In Memoriam: Jan Withee Bobst

It is with great sadness that we announce the passing of a beloved member, Jan Withee Bobst. Jan was in the Escrow Industry from 1970 to 1994, and was involved in OCEA, AEA, OCAR and RIAOC.  She owned Jan Withee Escrows (later, JW Escrows) from 1980 until her retirement. Daughters Karen Withee and Tari Coleman followed her into the industry, where they continue to work. Jan was predeceased by her daughter Debbie Withee Fielden, a Certified Escrow Officer who served as OCEA’s 1995 President. 

Viewing:                    
Friday, October 6, 2017                               
2:00 – 3:00 PM                                   
Heritage-Dilday Memorial Services
17911 Beach Blvd., Huntington Beach, CA 92647
 

Celebration of Life:  
Sunday, October 15, 2017                           
12:00 – 4:00 PM
El Bekal Shrine Center
1320 S. Sanderson Ave., Anaheim, CA 92806 

  • Color scheme
    • Scarlet and Gold – the U.S. Marine Corps and Shriners International colors
  • Lunch buffet will be served. *
    • Please RSVP prior to Oct. 12 for the catering head count, either through “Messenger,” or via email: taricoleman1@gmail.com 

Burial:                       
Friday, October 20, 2017                             
12:00 – 12:30PM *
Riverside National Cemetery
22495 Van Buren Blvd., Riverside, CA 92518 

* Please arrive in time to line up at noon for the caravan to the burial site, where the service will take place from precisely 12:15 – 12:30 PM


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If you were unable to attend our most recent MLS Forum or just want a refresher on the topics. You can view a video recording of the event below.

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We are delighted to announce that the Leadership Development Committee has selected twenty outstanding candidates to participate in the Orange County REALTORS® 2nd Annual Leadership Academy. Competition for these limited spots was strong, and we congratulate the following people for their successful application and acceptance.  It is the mission of the academy to give participants the confidence to embrace the responsibility to serve as a leader in the real estate industry and beyond. The eight-month program begins on September 12, 2017.

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Cassandra Amos

RE/MAX Fine Homes Inc

Edward Arce

Berkshire Hathaway HomeService

Matt Cortex

First Team Real Estate

Olesya Drozdova

Keller Williams Realty Irvine

Leslie Eskildsen

Realty One Group Inc

Spencer Hoo

Re/Max Premier Realty

Laurie Johnson

Keller Williams Realty

Sherrie LeVan

Prime OC Properties, Inc.

Jonathan Leonhardt

Keller Williams Realty

Yami Martinez

Altamar Real Estate

Larry Paul

Thrive Financial/Lawrence D. Paul, Broker

Joyce Purvis

Coldwell Banker Mission Viejo

Hanz Radlein

Berkshire Hathaway Home Services

Mary Rampone

Regency Real Estate Brokers

Tamara Romano

Summit Funding

Jessica Siguenza

Finance of America Mortgage

Kevin Smith

First Team Real Estate

Lynne Suzanski

Coast to Canyon Real Estate

Tina Vo

Realty One Group Inc.

Lisa Yi

NextHome Coastal

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RealSatisfied is a customer satisfaction platform designed exclusively for the real estate industry. The platform allows you to send customer satisfaction surveys to both buyer and seller clients at the close of each transaction, allowing you to collect valuable client feedback and testimonials to help generate new business.

When you close a transaction, RealSatisfied will send you an automated reminder that a survey is ready to send. At that point, you can opt-in and create your account (one-time) to easily send client surveys, or you can choose not to participate and opt-out entirely.

Your RealSatisfied AgentPRO account includes:

  • unlimited surveys and feedback
  • syndication to Realtor.com
  • automated social media publishing to Facebook & Twitter
  • widgets for sharing your client feedback

You control 100% of what gets communicated anywhere!

Quick Video Tutorial


Click Here to Sign up for your RealSatisfied account!

 

 

 

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Because September is REALTOR® Safety Month, we have devoted a special section in this issue to provide you with some tips about how to guard your online presence, how to use smartphone apps for personal safety, how to avoid several of the most common scams, and how to “sell at the safest speed.”

Featured articles:

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Familiarity with these ten factors will enable you to address questions your clients may ask about the real estate market, especially about real estate values and where they may be headed. 

By David Girling
GIRLING REAL ESTATE INVESTMENT GROUP 

Rising home prices and rents, reduced housing affordability, and limited inventories dominate the headlines. Home prices, rents, affordability, and home ownership are all interrelated, and each will be examined separately. Inventories are still constrained, and although not on the current Dave’s Top 100 list, the Dow Jones Industrial Average is again at all-time highs, in large part because of the still-low yields in the bond markets. 

As with previous editions of Dave’s Top 10, these ten factors convey different messages about real estate. Some are positive for the housing market, others are negative, and still others fall somewhere in between. As REALTORS®, we need to read past the headlines and make sense of the facts for our clients. The goal of Dave’s Top 10 is to give you some tools to address questions that may arise because of economic and other factors mentioned in the news. 

  1. Tax Reform

The effect of Trump policies on the housing market has been minimal thus far, but housing tax benefits are under close review at both federal and state levels. Suggested changes include doubling, as part of the Trump plan, the standard deduction and eliminating state and local tax deductions. “The mortgage interest deduction and the state and local tax deduction make homeownership more affordable,” commented Bill Brown, president of the National Association of REALTORS® (NAR). “By doubling the standard deduction and repealing the state and local tax deduction, the plan would effectively nullify the current tax benefits of owning a home for the vast majority of tax filers.” 

Other initiatives include State Assembly Bill 71 (Chiu), which would disallow the mortgage interest deduction for second homes and create split tax rolls (residential versus commercial). 

Takeaway: Some lawmakers view housing tax benefits as subsidizing the wealthy. Tax changes are coming, and the impact of these changes on home values and on the potential home buyer’s decision-making process could be significant. 

  1. Interest Rates

For the past three or four years, the Federal Reserve has employed a monetary policy that has kept interest rates low (see Figure 1). Rates have climbed since the election but are still near historical lows. The expectation was that Trump policies would lead to higher rates, but that has failed to materialize because so little has been accomplished in Washington. Although the Fed has embarked on a tapering program, many economists do not expect a “shock” so long as incomes are not outpaced by any increase in rates.

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Figure 1. For the past three or four years, the Federal Reserve’s monetary policy has kept mortgage interest rates at historical lows; however, rates have increased slightly since the 2016 presidential election. 

Takeaway: One of the effects of increasing mortgage interest rates is a loss of purchasing power. The rule of thumb is that a one percent change in rates equals a 10 percent loss or gain in purchasing power. As REALTORS®, we should be able to convey to our clients exactly how an increase in rates may impact them financially. 

  1. Housing Inventories

Continued low housing inventories have added support to home values. According to Attom Data Solutions, homeowners are staying put longer, an average of 9.2 years in California and 10.3 years in Orange County. Historically, the average has been 6 to 7 years. I believe that inventory levels will not improve significantly and that turnover will remain low for several reasons. Some homeowners were affected by the 2007 crisis and may still have negative equity. Other homeowners are reluctant to give up low mortgage rates, do not want to pay higher property taxes, or fear they will not find an adequate replacement home if they sell the one they currently own. Also, homebuilders are underperforming, which means that the home supply is inadequate. And many single-family homes that might be listing candidates were purchased by investors during the past few years and have become part of the rental pool. 

Takeaway: Low supplies and high demand will continue to support home prices for the foreseeable future. This is a basic economic principle. 

  1. Housing Affordability

According to the California Association of REALTORS® (C.A.R. ) Housing Affordability Index (HAI), the percentage of California home buyers who could afford to purchase a median-priced, existing, single-family home as of the second quarter of 2017 was 29 percent. The number was even lower for Orange County at 21 percent. Assuming a conventional, 30-year fixed-rate mortgage with a 20 percent down payment, typical home buyers would need to earn $110,000 and $158,000 per year to afford a median-priced home in California and Orange County, respectively. The corresponding housing payments (including principal, interest, and taxes) would be $2,770 and $3,950 per month. 

The HAI peaked at 56 percent at the beginning of 2012 and has dropped since home prices started to appreciate, with the median price in California more than doubling since February 2009 (see Figure 2). The median price for a home in Orange County has risen more than 80 percent in that same period.  

Takeaway: Affordability is a big concern for most economists, and the situation does not appear to be improving. Ironically, higher interest rates made affordability levels even lower before the mortgage “meltdown”; however, affordability was not an issue then because of the ease of obtaining credit. Recall, for example, low teaser rates, no money down, and negative amortization loans.

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Figure 2. According to the CAR’s Housing Affordability Index, affordability for California and Orange County peaked at the beginning of 2012 and has dropped since homes started to appreciate. 

Another driver of affordability is rents. They have increased in parallel with housing prices, growing 4.8 percent year over year in Los Angeles according to Apartment List. Rents in Los Angeles are also rising faster than they are in other cities. The yearly increase is higher than the statewide average increase of 4.2 percent. Nationwide, rents are up just 2.9 percent in the same period. 

Takeaway: Renters are future homeowners. Do not overlook them.
 

  1. U.S. and California Homeownership Rates

Across the United States, the homeownership rate stands at 63.6 percent, having peaked at 69.2 percent in 2004 and reached its lowest level of 62.9 percent in the second quarter of 2016 (see Figure 3). According to Lawrence Yun, NAR’s chief economist, “There are fewer homeowners today compared to a decade ago, while renter households have risen by 8 million.” 

Takeaway: California ranks 49th in homeownership according to C.A.R. As a result, state lawmakers are under pressure to find ways to enable homeownership.

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Figure 3.  Across the United States, the homeownership rate peaked at 69.2 percent in 2004 and currently stands at 63.6 percent. 

  1. Millennials

As older generations downsize and sell, millennials (defined as having been born in the early 1980s and the late 1990s through the early 2000s) will fill the void. However, because of the high cost of housing, accumulated student debt, low wage growth, and lifestyle changes (delayed marriage and childbearing), they have yet to purchase homes to the extent that their age segment has done historically. 

Takeaway: Do not overlook members of this important population segment. Putting time into understanding and educating them about the benefits of homeownership will pay dividends for you in the future. 

  1. Foreign Investment

Foreign investment and low interest rates were two of the main reasons that the real estate market recovered. Despite a strong U.S. dollar, which causes U.S. real estate to be viewed as more expensive, foreigners continued to purchase U.S. homes.

Lawrence Yun says, “While the strengthening of the U.S. dollar in relation to other currencies and steadfast home price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work, and invest.”  This observation is borne out in NAR’s recently released 2017 Profile of International Activity in US Residential Real Estate for April 2016 to March 2017.

Foreign buyers purchased $153 billion of residential real estate, up from $102.6 billion, and a 50 percent increase. This volume represents 10 percent of the dollar volume of existing home sales, up 8 percent from the previous period. The top five countries (51 percent of total) to invest in U.S. residential real estate were China (20.7 percent), Canada (12.4 percent), the United Kingdom (6.2 percent), Mexico (6.1 percent), and India (5.1 percent); and the average price for a home purchased by a foreign buyer was $536,9000 versus $277,700 for the average U.S. home. Florida, California, Texas, Arizona, and New Jersey accounted for 54 percent of the total volume by foreign buyers, and 44 percent of these buyers paid all-cash. 

Takeaway: Foreign investors continue to impact the U.S. real estate market, and REALTORS® need to stay focused on this segment of buyers. 

  1. Home Prices and Home Sales

Price appreciation for median-priced homes in California and Orange County, as measured by the year-over-year change for each month, has leveled off in a range of 3 to 6 percent since 2014 (see Figure 4). This trend continues with the latest results of the major home price indices, including the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which showed prices increasing 5.5 percent annually in April.

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Figure 4. Price appreciation for a median-priced home in California and Orange County has leveled off in a range of 3 to 6 percent since 2014. 

Graphs such as the one shown in Figure 5 and indices like the Orange County Home Price Index (OCHPI) can help REALTORS® understand the relationship between current housing prices and peak levels in their focus areas. The OCHPI, which was first introduced in the July/August 2016 issue of OC REALTOR® (see pages 50–53), includes median prices for standard home sales in Orange County since January 1, 2006, in the following ten Orange County cities: Anaheim, Costa Mesa, Fullerton, Huntington Beach, Irvine, Mission Viejo, Newport Beach, Orange, Santa Ana, and Tustin. 

The OCHPI enables REALTORS® to compare housing values in a specific area. In the second quarter of 2017, this index resulted in a value of $750,000 for a standard home in Orange County. For purposes of the OCHPI, a standard home is defined as a single-family detached home that measures between 1,800 and 2,200 square feet and has three bedrooms and two baths. For more information about this index and the associated methodologies, visit http://www.girlingreig.com/blog/category/sc-research-group/.    

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Figure 5. In June, the California and Orange County median home prices were $555,100 and $795,000, respectively, up 6.9 percent and 5.4 percent from the previous year according to CAR. 

Takeaway: As prices continue to rise, affordability will be negatively impacted, especially if home price appreciation outstrips wage growth. In addition, values in some areas of California are approaching, or have surpassed, peak levels. REALTORS® need to understand the relationship of current prices to peak levels in their focus areas. 

  1. Delinquency Rates

According to CoreLogic’s latest Loan Performance Insights Report, 4.5 percent of U.S. mortgages were in some stage of delinquency in May 2017, representing a 0.8 percentage-point decline from 5.3 percent in May 2016. Delinquency rates continue to decline; however, they are still higher than they were before the “mortgage meltdown.” An alternative measure of delinquency rates is the Delinquency Rate on Single-Family Residential Mortgages, Booked in Domestic Offices of All Commercial Banks (see Figure 6). 

Takeaway: Delinquency rates are worth watching to see if the present downward trend continues.

 b2ap3_thumbnail_Girling_fig6.jpg

Figure 6. The delinquency rate for the first quarter of 2017 was 3.90 percent compared with the peak rate of 11.36 percent, reported for the fourth quarter of 2009.
 

And the Number One economic factor REALTORS® should be following today is—  

  1. Disruptive Technologies

With the advent of Zillow, Trulia, social media, and many other technologies, the real estate industry has been turned upside down in the past few years. These disruptive technologies have forced REALTORS® to reexamine how we do business and, in many instances, to make drastic changes in the way we interact with clients. The latest development is the initial public offering filing by Redfin with its billion-dollar valuation. All brokerages are watching closely because it could have significant implications for our industry. 

Compass Real Estate Group, a luxury real estate brokerage startup with 1,200 agents, is also leveraging technology and recently opened an office in Newport Beach. This company is watching the Redfin IPO closely in anticipation of its own filing. Both Redfin and Compass are examples of the many technology solutions that have surfaced over the past few years. They all warrant examination. 

Takeaway: REALTORS® should keep a watchful eye on these new technologies and adapt their business approach to the changes that result. Otherwise, they may be left behind.

 

David Girling completed his undergraduate work at the University of Southern California and earned the degree of Master of Business Administration from the Anderson Graduate School of Management at the University of California, Los Angeles. In 2008, he formed Girling Real Estate Investment Group (Girling REIG) with his father, Bing, and has more than thirty years of experience in the financial services industry.  Dave and Bing are also affiliated with Villa Real Estate.

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In response to the devastating effects of Hurricane Harvey, I am inspired to send this letter to you and to all 14,000+ OCAR REALTOR® and Affiliate members. It is about the concept of helping and giving, and “paying it forward,” in which so many of us believe.  

As you may know, the Orange County Association of REALTORS® maintains a special fund under the OCAR Cares Foundation, which gives financial aid to our own members during times of extreme financial distress or family crisis. This program is funded largely by the efforts of our members, who sponsor fundraising events such as our annual Palooza and our Golf Tournament. Over the past few years, we have used money from this fund to help many of our members get through their struggles and, with your help, we will continue to do so well into the future.  

Although our OCAR Cares Foundation fund is specifically reserved to help our REALTOR® and Affiliate members, in the past we have contributed money from our General Fund for crisis situations nationwide. For example, we made donations following both the 9/11 and Hurricane Katrina disasters.  

And on August 29, in response to the devastation of Hurricane Harvey, we took swift action to contribute once again. Rather than waiting for the regular September meeting of the Board of Directors, we sought approval of the Board via a rare email vote to donate to the relief effort. Within twelve hours, every one of our Directors had responded, even though some of them were out of town on business or away on family vacations, and their decision was unanimous.

The Association has now contributed $5,000, to be divided equally between the National Association of REALTORS® Relief Fund (in partnership with the American Red Cross) and the Texas Association of REALTORS® Disaster Relief Fund. 

As events continue to unfold in Texas and Louisiana, to help those in need, NAR’s REALTOR® Relief Foundation is collecting donations at www.nar.realtor/programs/realtors-relief-foundation/donate. I hope each of you will consider adding to the $5,000 contribution your Association has already made on your behalf. 

This is but one example of the many ways in which Orange County REALTORS® consistently give back to our communities, not just locally but globally. I am truly proud of our members’ commitment to helping people in distress. 

As always, if any of you have questions, concerns or suggestions about how your Orange County Association of REALTORS® can help you in any way, please feel free to call or text me on my direct cell phone at (949) 291-7250, or email me at craig12@cox.net.  

With thanks,

Craig Borner
President, Orange County Association of REALTORS®

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b2ap3_thumbnail_lori_sm.png In Memoriam: Lori Gee
1963-2017

It is with great sadness that we announce the passing of a beloved REALTOR®, Lori Gee. Lori worked for First Team Laguna Niguel and was a long time Orange County REALTORS® member. There will be a Celebration of Life get together at the Dana Point Yacht Club on Sunday, August 27th from 2pm - 5pm. Beach casual dress preferred.
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Do you know a super REALTOR®, Affiliate, or Volunteer? Each year, at the Annual Installation of Officers and Directors, we recognize one REALTOR® and two Affiliate members who exemplify professional excellence and service to the real estate community.

In addition, we will be honoring one member for exceptional volunteer service to the local community. This honoree also will be recognized at the installation on Wednesday, November 30 at The Center Club in Costa Mesa and will receive $250 for the community organization he or she designates.

Do you know someone—including yourself—who deserves to be honored in one of these ways?  

Download and submit a form:

REALTOR of the Year Nomination Form

Affiliates of the Year Nomination Form

Volunteer of the Year Nomination Form

Completed forms may be emailed, faxed or mailed to either Orange County REALTORS® office. A single nomination ensures consideration. All nominations must be received by Friday, October 20, at 5:00 p.m.

 

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If you don't already know about or use Google Alerts for your business then you are in for a treat!  Google Alerts allow you to keep up on posts all over the internet regarding a specific search phrase. The search phrase can be your individual name, your company name, your favorite celebrity or sports team and even your real estate listings! To track shares or posts about your listings, we recommend you create Google Alerts for each property address.  Below are instructions on how to create a Google Alert.

Create an alert

  1. Go to Google Alerts.
  2. In the box at the top, enter a search phrase you want to follow (e.g. 12345 Main St Laguna Hills, or ABC Realty)
  3. To change your settings, click Show options. You can change:
    • How often you get notifications
    • The types of sites you’ll see
    • Your language
    • The part of the world you want info from
    • How many results you want to see
    • What accounts get the alert
  4. Click Create Alert. You’ll get emails whenever we find matching search results.
  5. You will then be asked to sign into an existing Google account or create a new account.
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When excluding a listing from the MLS, It is required to submit to the MLS an exclusion form within 2 business days of the signed listing. All exclusion forms must be submitted to www.crmls.org/excludelisting.

In order for Days on Market not to accumulate during the exclusion period, no marketing must be occurring AND the CRMLS Exclusion form must be submitted with the no marketing selection being made. The C.A.R SELM form does not give this provision.

Below is the MLS rule that governs Days on Market.

7.9.1 Impact on Days on Market (DOM) As it Pertains to the Exclusion Form DOM stands for Days on Market, not Days on MLS. The DOM calculated in the MLS and reported to the various internet sites will be when marketing begins. As a general rule, the first Day on Market will be the beginning date of the Listing Agreement, which is either the beginning date identified on the agreement, or the date of the last signature required to make the listing agreement valid, whichever is later. The DOM may alternatively begin at a later date as long as no marketing of the Property occurs and the CRMLS Exclusion form is utilized. Marketing is identified as:

(a) Marketing is any communication made to the public containing any information, details, price or terms of any potential sale of the Property, or any communication made to the public in regard to the Brokerage firm or Agent’s representation of the Seller. Marketing includes, but is not limited to: 1) Sign on the property; 2) Internet Website posts; 3) Social Media Posts; 4) Flyers or Advertising; 5) Open Houses.

The CRMLS exclusion form can be found in several locations including the OCAR zipforms library, www.ocar.org/mlsforms , or www.crmls.org/excludelisting

Below is a video that outlines how to use the new exclusion form

https://youtu.be/RSz6xR50hD8

Please note, that Seller and Listing agent must complete the form and be signed by the broker/manager.

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