So Cal Real Estate News

Los Alamitos, the second smallest city in Orange County, sits just east of Long Beach on the Orange County/Los Angeles County line.  Because most of the city is in the 562 area code, many people think its in Los Angeles County.  It shares it’s zip code and post office with Rossmoor,  a large, upscale unincorporated trac.  Los Al shares its highly-regarded school district with Rossmoor and Seal Beach.

Los Alamitos has been my home town for twenty years.  It’s a great place to live.  In many ways ranging from location to schools to climate it may be one of the best places in Southern California for someone with a middle class income to buy a home.  (In fact, I just happen to have a beautiful 5 bedroom pool home on a cul de sac that we recently listed–details and virtual tour at LosAlDreamHome.com.)

Like any town, Los Alamitos isn’t perfect.  Two things about it bother me the most.   Although Los Alamitos has fewer than 7,000 registered voters, it’s in the big leagues when it comes to traffic congestion and hostility on it’s City Council. It’s a case of periodic gridlock on the streets and at city hall.

As a Realtor, my job for the last 28 years has involved getting buyers and sellers to work together for their mutual benefit.  I’m a big believer in “win-win” negotiating.  So I decided to toss my hat in the ring for this year’s Los Alamitos City Council election, to see if I could get our divided City Council to work as one team instead of two.  In a town this small, we have more things that unite us than that divide us.

I recently started a blog, LetsFixLosAl.com, for several reasons:

• To promote a greater spirit of teamwork on Los Alamitos’ City Council.
• To suggest and promote strategies to reduce the occasional gridlock on Los Alamitos’ streets.
• As a 21st century town hall meeting in cyberspace where citizens can discuss these issues 24/7/365.

Oh yeah.  The blog seemed like an inexpensive way for a political neophyte to compete for two council seats against three former mayors and another neophyte.

LetsFixLosAl.com is less than a week old, and only has a few posts up, but I plan to add to it several times a week, chronicling first-hand the adventures of a newbie small town politician.   At this point, I’d also appreciate input from both local residents and anyone else with a good idea to share.

Check it out, and let me know what you think.  It should at least provide some interesting insights on politics from a front-line perspective.  Pretty much what we try to do with Southern California real estate on this site.

Friday update: The DataQuick OC median numbers discussed below came in this morning, and my predictions yesterday (see post below) came out real close to the actual numbers. Wish I could say the same for my predictions for the Duck in the playoffs. Oh well.

The interesting news is that in every category, DQs actual numbers were stronger than I predicted. What’s that mean? Read on. . . .

OK, here’s my call for tomorrow’s “DataSlow” OC house sales update, which I should be for the 4 weeks ended about 4/21. (We’re still a week away from “DataQuick’s April Median numbers, one of the “Two problems with DataQuick’s median prices.”)

Sales (closings) will be up a decent amount from the prior 4-week period but way down from the year before. Right around 1900 total, off about 40% y-t-y. Continued gradual improvement, typical for deals going into escrow in February.

BTW, April closings, when they get released around 5/15, will be up about the normal amount from the very low March closings (but way below last year). It looks like May will do even better on sales.

Price is another matter. Especially median price. Down a small tad below 20% from a year ago, and up a small tad from the last DQ reported median of $506,000. Maybe $508,000.

However, if you look the details, like in the last report, I think you’ll see the new construction pulling down the overall index with both prices and sales down more than for resales. Resale SFRs and even condos aren’t doing as badly as new construction.

What it means is subject to interpretation. I think if long term mortgage rates (not to be confused with short term fed funds rates) started coming down further, we might have passed the bottom, especially with the activity Steve Thomas and I both are seeing in new escrows.

However, rates are already moving up, and instead of passing fiscal restraint issues to push long term rates down, our beloved Congress continues to try to borrow their way out of this mess with massive bailouts from Bear Stearns to folks who lied to get loans on home they never should have bought or refinanced.

With the interest we’re seeing from buyers, I really think if Congress passed long term fiscal reform, we could put the worst behind us. Things like a line item veto for the next president, cancellation of earmarks, a gradual move to a balanced budget with mandatory across the board cuts and tax increases to force discipline on our free borrowing legislators.

That would be a real mortgage relief bill!

I’ll post links to DQs numbers when they’re available, & you can see how we did.

I’d also like to get a more detailed post up about our thoughts about real mortgage relief. Trouble is, I’ve got to get to work on my real job so I can pay my mortgage. Because I really don’t want Barney Frank forcing my grandkids to eventually pay it for me.

Friday 5/9 postscript: DQs actual numbers (click here for OC Register blogger Jon Lansner’s  DQ graphs & comments for today) indicate even greater strengthening than I expected. Still having some optimism left in my troubled soul, I’d like to hope this means we really have reached a bottom.

In fact, I’ll go so far as to say that if long-term mortgage rates dropped 1% instead of continuing to go up, and if lenders adopted more reasonable underwriting standards, I’m pretty sure we could call last winter as the bottom for both prices and sales.

But I doubt either of those will happen soon. Instead, I think rising mortgage rates (not to be confused with the fed’s overnight, short-term rate) will combine with continuing over-reaction by investors and lenders with tougher than necessary standards to cut this party short. The large pool of homes entering foreclosure is also a negative indicator.

It looks to me like we have passed the bottom in terms of sales activity, but the bottom in terms of price probably (or should I say “maybe?”) still lies ahead this coming winter or next.

DataSlow’s lagging and confusing median prices will continue to improve for another 2 - 5 months, but we’ll see price month-over-month price declines kick in later this year, even as the year-over-year percentage drops decrease.

Overall, I’m beginning to become more optimistic, and am willing to admit that the bottom may, indeed, be past. But only if mortgage rates come back down, which I really don’t see happening.

Bottom line: We’re not deviating from our November post, “How low will prices go?” Nobody can really know what’s next.

Disclosure (added 4/2/08) : To fully understand this post, you need to read through to the end. But it’s best to resist the urge to scroll down there now. Begin at the beginning, but if you decide not to read it all, then scroll down to the disclosure near the end before you leave this post.

“Enjoy:”

Sometimes you just get lucky. Or “blessed,” as my mother says.

Maybe this time we all did.

In following up on yesterday’s post, “Pragmatic White House Ready to Help Out?” we stumbled across what could portend, at long last, really good news for the housing and credit markets.

It looks like our leaders may finally be setting aside their egos and personal agendas to work together for the common good.

Behind-the-scenes discussions between Congressional leaders and the Bush administration may be about to bear fruit. And that fruit would be a pragmatic Housing Relief Act of 2008 which combines the best ideas from partisans of all stripes to provide both immediate relief and long term reform.

The comments off the record are almost unbelievable: “The collapse of the American housing and lending markets is an impending crisis that compels us to lay aside partisan differences and work together,” one Senate leader has discovered. “Ultimately, we’re all in the same boat, and if it sinks, we all drown!” she continued.

“We need to recognize that we are all on the same team,” according to a key administration figure. “We need to stop acting like the Shaq and Kobe Lakers and start acting like this year’s UCLA Bruins. You don’t see Collison and Love fighting for the ball!”

The details are still being finalized, but they involve major concessions and some unique innovations from both sides of the aisle.

Both sides apparently understand that runaway federal spending must be controlled. “We can’t borrow our way out of a borrowing crisis,” as one Democrat put it. “The government can’t continue unfettered spending. No more blank checks–not even for Iraq,” said an administration spokesperson.

Amazingly, Democrats have agreed to end Congressional earmarks and authorize a Presidential line-item veto. In return, Republicans are offering deferred automatic increases in some corporate and individual taxes when deficit targets are exceeded.

And the politicians seem to be succeeding in persuading their allied special interest groups to join the bipartisan parade to national unity for the common good!

The AARP has agreed to back an automatic one year suspension of the annual Social Security cost of living increase when budget targets are exceeded by 10% or more. “This will unite our Seniors to control runaway spending.” Meanwhile, the pharmaceutical industry has agreed to back drug imports from Canada. “Competition is the American way,” their spokesperson told us off the record.

Even the presidential candidates seem ready to climb aboard this “Friendship Train.” “There are things more important than me being elected President,” Hillary Clinton is said to have remarked. Talks are underway between the three camps for a “national unity ticket” with Obama running as McCain’s Vice President.

We know. “Wait just a minute!” you’re thinking.

OK, we don’t really expect to see a McCain/Obama ticket this fall–but we really don’t see why our leaders can’t work together a whole lot more and fight a whole lot less. After all, we’re the ones who pay their salaries!

As we said on our “history lesson” on the mortgage crisis (“How We Got Into This Mess”), stupidity and greed got us into this mess. And selfishness, partisan fighting, and greed sure won’t get us out of it!

Maybe you think we’re the April fools for suggesting that those in power could learn to work together for the good of the nation.

But we think they are the greater fools if they don’t.

And “we, the people” may be the greatest fools if we don’t start insisting they need to begin now, and reinforcing our words by our own unselfish deeds.

Time to lead by example.

“If we don’t hang together, we’ll all hang separately!”

–Benjamin Franklin

“I dream of things that never were, and say, ‘Why not?’”

–J.F.K.

Disclosure # 2: If you briefly scanned this article, or are reading it on or after April 2, make sure you noticed the day it was originally posted.

Then check out “So Maybe It Wasn’t an April Fools Post” to see how much of this is coming to pass, and what we think about it.

Now you may want to scan the postscript to see what we do on “normal” days. (As if there have been any “normal” real estate days in this millennium!)

Postscript: For several reasons we’ve gotten a lot of new visitors today. The above post is sort of a once a year thing, if you get our drift.

What we normally try to do here is to give you our “front line” perspective on what we see taking place in the market. We also try to lend a historical perspective that comes from Dave’s over 30 years involvement in real estate.

Here are a few of our more typical posts:

“How We Got into this Mess:” Our summary of events and human foibles that led to the current mortgage and real estate melt-down.

“How Low Will Prices Go? ” We wrote this last November, & the events since then have pretty much borne out what we said, but it’s probably not the answer you’re expecting.

“Top 5 Ways NOT to Pick a Listing Agent” The most common reasons sellers end up with the wrong agent. Reason #1 is a technique that works for the agent almost every time, if he decides to use it.

“How to Sell Your So Cal Home for Top Dollar in 30 Days:” A course we’ve been teaching for about 20 years, adapted to today’s market, buyers, and technology.

“What to Do When Nobody Knows What’s Next:” Our thoughts on balancing market timing with real life priorities in a turbulent market.

“So Cal’s Real Estate Cycles:” A new post that help you make your own predictions about what’s likely to happen next in So Cal Real Estate. The first in our new “Real Estate 101″ Series, along with “Gentlemen, This Is A Football.“

We also think you might find our direct link to the So Cal M.L.S. useful, located near the top of the column to the right (a fair amount of scrolling at this point). For tips on how to get the most out of your search, check out “A Better Way to Search for Home Listings“

We’re pretty new to this blogging thing, and really appreciate your thoughts and comments, even requests for input. Blair and I both share backgrounds in Education (even Masters’ Degrees, mine being from the school that’s been to the Final 4 3 years in a row), and we consider this an electronic extension of the educating & prognosticating we’ve done for years with our clients, via Newsletters, and through classes.

Pragmatists in the Bush Administration may be gaining the upper hand, according to “Bush Readies Mortgage Aid Plan,” in Saturday’s Washington Post.

According to the article, “The Bush administration is finalizing details of a plan to rescue thousands of homeowners at risk of foreclosure by helping them refinance into more affordable mortgages backed by public funds.”

The proposal targets at least some of America’s estimated 9 million “upside down” homeowners. Under the plan, the FHA “would encourage lenders to forgive a portion of those loans and issue new, smaller mortgages in exchange for the financial backing of the federal government,” according to the article.

This appears to be a modification of a proposal by Massachusetts Democrat Barney Frank, reminding us all that politics, indeed, does “make strange bedfellows.” (I’m available, Mr. Letterman. )

We think it could be a major step in the right direction–or a major disaster. As always, “the devil is in the details.” We just hope & pray that our employees in Washington (yup–we pay their salaries!) will finally put special interests, dogma, and party politics aside long enough to work for the common good.

In the meantime, if nothing else, it’s one more illustration of what we wrote last November in “How Low Will Prices Go?”–we’re in uncharted territory this time, and nobody really knows what will happen next! (If you predicted a Barney Frank/George Bush recovery plan, please let me know so I can get your input on my stocks & the Final Four next weekend!)