Distressed Sales: Foreclosures and short sales combined only account for 4% of the active listing inventory.

Foreclosures and short sales have a much smaller roll in today’s Orange County housing market. In February 2012 they made up 47% of all closed sales, 29% were short sales and 18% were foreclosures. Flash forward to today and they are only 15% of the market, 11% short sales and 4% foreclosures.

The market has been in transition since the first quarter of last year. There was a palpable shift away from distressed properties. Instead, standard sales, regular homeowners with equity in their homes, entered the mix. They chipped away at the distressed inventories grip on the market, and properties began to appreciate.

Banks had been in control of the market until the shift. They sold foreclosures, controlling the pace and price of these bank owned homes. Short sales, where the homeowner owed more to the bank than their homes were worth, relied upon the approval of the bank to allow the sale to even take place. They had to agree to take less than the full loan amount in order for sales to close. Again, they controlled the pace and price of these homes. That is no longer the case, as standard sales have made a very strong comeback.

Do not get me wrong, there are still many homeowners who have not paid their mortgages in a very long time. Loan modifications, short sales, and foreclosures will still play a role in the Orange County housing market for the next two to three years, but they will no longer define housing. They have gone from the “best actor” to “best supporting actor” in the OC housing drama.

The data illustrates the evolution in the market. One year ago, distressed accounted for 19% of the active inventory, 206 foreclosures and 912 short sales. Today they represent only 4% of the market, 50 foreclosures and 119 short sales. That’s an 85% drop in a year.

Demand, the number of new pending sales over the prior month, is currently at 3,056 and only 422 are distressed, 14%. For buyers waiting around for a short sale “deal,” or better yet, a foreclosure “deal,” they are in for tremendous competition and a very high probability of coming up empty handed. Multiple offers are the norm and they fly off the market in what feels like an auction where the winner goes to the highest bidder.

Within the past two weeks, the distressed inventory dropped substantially by 19%, matching the largest drop of the year back in February. There are 40 fewer distressed sales on the market and it now totals 169 foreclosures and short sales in all of Orange County.

In the past two weeks, the foreclosure inventory decreased by 19 homes and now totals 50. With 35 incorporated cities in Orange County, that’s roughly 1.5 foreclosures per city, a far cry from an average of 40 foreclosures per city back in November 2008. The expected market time for foreclosures is 15 days. The short sale inventory decreased by 21 homes in the past two weeks, totaling 119, and has an expected market time of 11 days. The distressed market remains THE hottest segment of the Orange County housing market.

Active Inventory: The inventory continues its unabated rise, adding an additional 123 homes in just two weeks.

Since mid-March, the inventory has put on a little weight, adding an additional 716 homes, a 22% increase. In just the past two weeks alone, the market has expanded by 123 homes and now sits at 3,899, knocking on the door of 4,000, a level last seen in November 2012. The increase is an about face after falling for 18 months straight, dating back to June 2011. It bounced along the bottom for a few months before starting its continuous ascent in March.

Last year at this time, there were 1,928 additional homes on the market, totaling 5,827. The current level remains extremely anemic; however, it is finally moving in the right direction. Unfortunately, it is on the backs of overpriced, unrealistic “knuckleheads” who think their homes are worth way more than the market reality. This is very common in a rapidly appreciating marketplace. The mass appreciation has invited many homeowners to the banquet where pricing is based more upon a whim or what a seller needs than the correct fair market value.

From here, expect the inventory to continue to blossom as more and more unrealistic homeowners test the market. When summer is over, these sellers will have a decision to make, reduce their asking prices or throw in the towel and stop wasting everybody’s time.

Demand: Demand remained nearly the same, adding only 18 pending sales in two weeks.

The distractions of graduation and wrapping up the school year have stalled any increase in demand, the number of new pending sales over the prior month. In the past two weeks, demand has increased by 18 pending sales and now totals 3,056, a 1% increase.

With so many more standard sales, there is another major difference in the housing market today compared to the past several years: standard sales close and they close a lot faster than distressed homes. There are far fewer obstacles to closing standard sales, in comparison. On average, only 50% of pending short sales were closing and they had made up a large part of demand. Even though there were willing and able buyers and sellers, they simply could not close the sale with too many hurdles in the way. It is hard to compare today’s demand reading to last year where there were 645 additional pending sales, because there were just too many short sales in the mix. Demand may have been at 3,701, but 1,274 were short sales, many of which never closed. Today’s demand reading is a closer reflection of the number of sellers who are able to actually successfully close a transaction.

If you're looking for a way to celebrate Memorial Day, check out these events!

Dana Point

Sunday, 5/26/2013 - Memorial Day Fine Arts Show 2013 - 9:30 AM - 5:00 PM

Location:Dana Point Harbor

34624 Golden Lantern

Dana Point, California 92629

Click HERE for more info on the Dana Point Memorial Day Fine Arts Show

Monday, 5/27/2013 - Memorial Day Services - 10:00 AM - 11:30 AM

Location: Pines Park

34941 Camino Capistrano

Dana Point, California 92672

Click HERE for more info on Memorial Day Services in Dana Point

Mission Viejo

Sunday, 5/26/2013 - KSBR Birthday Bash - More than 25 Jazz All-Stars, more than 20 restaurants, breweries, and wineries

Village Green of Oso Viejo Park in Mission Viejo, Gates open at 3:30pm. Taste: 3:30-5:00pm. Concert: 5-9pm

You may purchase general admission tickets in person at the Norman P. Murray Community Center in Mission Viejo. The Center is open Friday until 9pm and Saturday from 10am to 11pm.

You may purchase General Admission Tickets in person at the Saddleback College Box Office 949-582-4656. It's open until 4pm Friday afternoon and noon to 4 Saturday

Click HERE for more info on the KSBR Birthday Bash

Monday, 5/27/2013 - City of Mission Viejo Memorial Day Ceremony - The community is invited to commemorate Memorial Day with a special ceremony at 8:30 a.m. on Monday, May 27 at the Mission Viejo Civic Center, 200 Civic Center.

Click HERE for more info on Mission Viejo's Memorial Day Ceremony

Laguna Hills

Monday, 5/27/2013 - Laguna Hills Memorial Day Run

The 15th annual City of Laguna Hills Memorial Day Half Marathon, 5k, and 10K, Honoring the United States Marine Corps Dark Horse Battalion. This favorite Memorial Day running event takes place in the beautiful Orange County cities of Laguna Hills, Aliso Viejo, Laguna Woods, and Laguna Niguel. Runners and walkers of all experience levels are invited to come out and enjoy the Memorial Day festivities! With a half marathon (13.1 miles), 5K Run/Walk (3.1 miles), 10K Run/Walk (6.2 miles) and a Kid's Run (1/2 Mile), there is something for everyone! All events and the Finish Line Expo will take place on Memorial Day, Monday, May 27, 2013.

The half marathon, 5K and 10K both start in front of the Saddleback Memorial Medical Center and finish at the Laguna Hills Community Center.

Click HERE for more info on the Laguna Hills Memorial Day Run and EVENT SCHEDULE

First in our six part Coastal Living series, focusing on the beautiful coastal communities of Southern Orange County, California

Sometimes the kids need a little more than just a day at the beach to run off energy. So where can you go to feel some of those ocean breezes without sacrificing playtime? Here are five of our favorite parks located along the coast of Southern Orange County, California. Take a look to see which offers the right mix of sun and fun for your family. For more kid-themed info visit www.FunOrangeCountyParks.com

1) Aliso Creek Beach Park 31131 S. Pacific Coast Hwy. Laguna Beach, CA 92652. Located right on the water in Southern Laguna Beach, Aliso Creek Park offers a fantastic backdrop for their ample playground.

• Ship-themed playground provides a great opportunity for pretend play, with a large flat area for running as well.
• Soft composite ground throughout

Views: Direct ocean views steps away from play area

For the Parents: Concession building called “Sands”, located on opposite side of parking lot.

Other Info

• Fire pits available on first-come, first-served basis
• Parking is paid, unless you have an OC Parks sticker
• Restrooms available

2) Lantern Bay Park 25111 Park Lantern Road, Dana Point, CA 92629. If you’re looking for an inspiring picnic spot, Lantern Bay Park will not disappoint! This bluff-top park offers incredible 240 degree views of Dana Point, and the coast.

• Good-sized playground tucked in behind the trees.
• Long series of sidewalks that span the entire bluff, could be great for bike riding practice.

Views: Expansive coastal and marina views throughout

For the Parents: Great location to attend a Yoga in the Park session! Kids are welcome too!

Other info

• Restrooms available
• Popular event rental space. Contact the City of Dana Point for more info.

3) Bluebird Canyon Park 798 Blue Bird Canyon Drive, Laguna Beach, 92651. Well known throughout the area as a top park for several decades now, Bluebird Park in Laguna Beach is perfect for kids of all ages.

• Separate play areas for younger and older kids
• Completely fenced in, so you can let older kids run free

Views: This park is nestled between a couple of Laguna’s beautiful hills, and is quite secluded. No ocean views, but close enough to feel the breeze.

For Parents: Every summer there are concerts held in Bluebird Park. Great for the whole family!

Other Info

• Full bathrooms offered
• No dogs allowed (for more info on where to take dogs in Orange County visit www.ocdogfriendly.com )

4) Main Beach Park Broadway & PCH Cross Streets, Laguna Beach. The city has recently redone this busy park located at Main Beach to reflect a more nautical theme. A day at the beach + brand new playground = family day success!

• Brand new facilities opening Spring 2013
• Ideally located within walking distance to Broadway, Forest Ave. & shopping

Views: Doesn’t get much better than this! Located directly on Main Beach!

For Parents: Keep a close eye on the kids. This park can get very busy especially in the summer.

Other Info: Beach bathrooms available

5) Creekside Park 25743 Stonehill Dr Dana Point, CA 92629. If you’re looking for a park that will really impress, this is it! The kids will definitely be asking to go back!

• Large space and unique features like rock climbing
• Tot area separate for little ones

Views: No direct views

For Parents: Great place for a birthday party with plenty of greenspace

Other Info

• Bathrooms available
• Bike trail goes all the way to the ocean

New neighborhoods are going up, and builder confidence hits 6-year highs

New homebuilders had a pretty good run during the early 2000’s. Beautifully planned communities were sprouting up everywhere throughout Southern California, with many selling out months before they even broke ground. It seemed like the buyers would always keep coming, and that the well of home equity would never run dry.

Of course we all know what happened in 2005, and by early 2007 the housing market was in freefall. This abrupt market collapse caused new construction to come to a screeching halt throughout the United States. Builders were left with unsold lots, and in some cases, entire planned communities sat undeveloped and were eventually abandoned when the builders declared bankruptcy.

Needless to say, the crash didn’t do much to spur new construction development, and builder confidence.

So after all of the ups and downs in the housing market during the last decade, what does it mean now that new construction has started up again?

Well, new construction has long been considered one of the primary economic indicators along with others like unemployment and the stock market. While many of the other indicators have yet to turn around, it seems that the new construction market has rallied and is poised to make a comeback in 2013. Low inventory combined with outrageously low interest rates has set the stage for this resurgence, and builder confidence has reached six year highs.

Orange County in particular is seeing a notable increase. Several new communities that were thought to have been shelved have reemerged, and to overwhelming demand. Developments like Valinda in San Juan Capistrano, have months long waiting lists, and strict requirements for prospective buyers.

In addition to smaller developments like Valinda, large master-planned areas like Rancho Mission Viejo are set to start selling later this summer in the Village of Sendero. This picturesque pocket of land nestled between Ladera Ranch and San Juan Capistrano will offer property options built to suit just about everyone, including the grandparents. With inventory at record lows, there is no doubt that frustrated buyers will jump at the chance to reserve a piece of this new community.

While it still remains to be seen if this resurgence of the housing market will be a long lasting trend, one thing is for certain: this summer is promising to be a banner year for new construciton in Orange County.

With very few homes for sale, the market has been extremely challenging so far this year.

A Tight Market: Just about everything placed on the market is flying into escrow; there just are not enough homes coming on the market.

Everybody is frustrated. Buyers write offer after offer after multiple instances where they did not have the “winning bid.” Many wonder if they will ever be able to secure a home. Frustrating. REALTORS® representing buyers have to work ten times harder than a normal, balanced market, showing every home that appears on the market, analyzing the data and writing offers that are one of 20 submitted. Frustrating. REALTORS® representing sellers have to keep their clients from getting too far ahead of themselves and grossly overpricing their homes. Frustrating.

What is going on? Quite simply demand, the number of homes placed into escrow in the past month, is about equal to the number of homes on the market. The chart below illustrates the issue. When supply, the housing inventory, is much larger than demand, it takes a lot longer to sell a home. As they get further apart, it becomes much easier to purchase. Take a look back in mid-2007 when there were close to 18,000 homes on the market with demand at about 1,200 homes. Buyers had their choice of homes and it there was no competition. Last year at this time, the active inventory sat at 7,597 homes and demand was at 3,569. The lines were much closer, but the difference was still 4,028 homes. Today, the active listing inventory sits at 3,272 homes and demand is at 2,887, that is a difference of only 385homes. The last time this occurred in Orange County dates back to 2005.

Demand is much less today than back in 2005 when there were 4,549 pending sales in a month. But, back then there were 5,146 homes on the market, a lot more than today. Since demand is based upon the number of recent escrows, it is currently heavily muted because there are simply not enough homes that have entered the fray. If there was a surge in the inventory tomorrow, there would be a surge in demand as well. There are throngs of buyers waiting in the wings for a fresh supply of homes.

This market will remain extremely frustrating until the supply of homes increases. It appears as if that is not going to happen soon and the tight inventory will remain a major issue in 2013 and a stumbling block for many buyers to successfully purchase. The tight inventory will also encourage homeowners to place their homes on the market and aggressively pursue the market by pricing their homes well above the last comparable pending or closed sale. Unfortunately, many will drastically overprice their homes and they will sit on the market and procure no offers. Buyers are willing to pay more for a home, but are not willing to absurdly overpay.

Pricing a home is a delicate balancing act that requires a homeowner to carefully analyze the local market and the rate of appreciation. Remember, homes may increase in value by as much as 10% in a year, but not in a month. Carefully selecting a REALTOR® is a must. Finding one that knows the local data and market dynamics is essential to success. Hiring somebody solely based upon a projected sales price is foolish. Instead, look for somebody that understands the market the best and has a strong command of the data.

Active Inventory: The inventory remained the same.

The inventory started the year at the lowest level since tracking the active listing inventory back in 2004. Since then the inventory has only added an additional 111 homes. In the past two weeks it actually dropped by 4 homes and now sits at 3,272 homes. The inventory sits at an unprecedented anemic level. For proper perspective, just ask any buyer who has seen the few available homes and written several offers to no avail. They will tell you how they are watching the market like a hawk, ready to pounce on the next home that hits the market that closely matches their parameters. The only problem, when there are this few homes, too many other buyers are doing the same thing.

So far this year, there have been 17% fewer homes placed on the market compared to last year, which represents 918 homes. The buyer masses waiting in the wings would appreciate an additional 900-plus homes on the market. The anemic levels are here to stay for the foreseeable future. Last year at this time there were 7,597 homes on the market, 4,325 more than today.

Demand: Demand continued to rise.

In the past two weeks, despite very few homes entering the market, demand increased by 11%, or 291 pending sales, and now totals 2,887. It has grown by 33% in the past month, or 715 pending sales. Compared to last year at this time, there are 682 fewer pending sales today. In 2012, the market was sizzling forward at a breathtaking speed, fueled by a much larger inventory. Today’s demand is strongly dependent on the inventory. As soon as the inventory increases, demand will increase. Until then, you can expect continued, subdued, muted demand.

The Distressed Market: The distressed inventory dropped by 11 homes, a 3% drop.

The distressed inventory continues to drop, shedding an additional 11 homes, which amazingly represents 3% of all foreclosures and shorts sales on the market. There are 339 distressed homes within the active listing inventory, just 10% of the total active listing inventory. There have not been this few distressed listings since April 2007, nearly six years ago.

In the past two weeks, the foreclosure inventory increased by 24 homes, totaling 117, and has an expected market time of 25 days. The short sale inventory decreased by 35 homes in the past two weeks, totaling 222, and has an expected market time of 11 days. Short sales continue to be the hottest segment of the Orange County housing market today.

Do men and women look for different features when purchasing a home?

Happy wife, happy life? Well it turns out that when it comes to choosing a home, a lot of men would prefer a decked-out man cave to making their spouses happy. It’s true, men and women are different, and when it comes to choosing a house our wish lists can often look very different as well.

We’ve all heard the stereotypes concerning women wanting a big beautiful kitchen, while maybe men are expected to rank a big garage as a priority. Now thanks to a recent research study published by Harris Interactive, we can test these old theories to see if there is any truth behind our preconceived notions.

Let’s start with the ladies. A gorgeous gourmet kitchen did rank high on their list of must-haves, but surprisingly only came in at #3 overall. It seems walk-in closets (#2) and a luxurious master bath retreat (#1), have become more important for the female home buyers of today.

Surprisingly, both men and women ranked these three features in exactly the same way! Women tended to be slightly more enthusiastic about each feature. For instance, 72% of women stated that they would fall in love with a property because of a large walk-in closet. While only 55% of men felt the same way, it was still the second highest ranked feature on the guys’ list as well.

There was a break from this trend however, when men were asked about a lavish entertainment center. Also known as the “man cave”, a dedicated entertainment space has become a status symbol for many, and an absolute must-have for the movie or gaming enthusiast. 42% of men asked said that they could be swayed to purchase a home based on the “man cave”, while only 28% of women agreed.

So with Valentine’s Day right around the corner, couples looking to purchase a home may want to focus on the feature that both sexes ranked as the most important, a luxurious master bathroom. “Man caves” and walk-in closets aside, we can all agree that a relaxing master bath retreat is a feature that nobody should have to live without!

Check out our Pinterest board, Battle of the Sexes, created especially to celebrate the property features that men and women love the most.

As of January 1, a new 3.8% tax was placed on high income investments to help generate $210 billion to fund new

national health care and Medicare plans. While the initial announcement was misinterpreted to include all real estate transactions, which it doesn't, the National Association of REALTORS® estimates that 2-3% of home sellers will be affected.

While the tax officially went into effect this year, it's actually the 2014 year that will be taxed, when investors file their 2013 income amounts.

Who Will Be Taxed:

• Individuals with an adjusted gross income (AGI) over $200,000
• Couples filing joint returns with an AGI over $250,000

Just like any tax equation, it's the amount over and above these minimum amounts that will be taxed. For example, if you file a single income return with an AGI of $275,000, you will be taxed 3.8% on the $75,000 that exceeded your basic allowance of $200,000.

What Will Be Taxed:

• Rents (less expenses)
• Capital gains (less capital losses)
• Interest
• Dividends

Capital gains are also subject to their own exemptions of up to $250,000 for individual filers and $500,000 for couple claims. Note that capital gains are profit from a sale, not the value of the sale, and it's easy to see how few people will actually be affected by the tax.

While the 3.8% tax has been negatively received by the media, it's mainly a case of myths and misunderstandings. The real estate investment tax will only be affecting high-income individuals who made substantial profits from investments.

If you're looking at real estate in the South Orange County area and are worried about how the 3.8% investment tax will affect you, give us a call at 877-442-5652! We have more than 50 years' experience with local real estate and specialize in investment properties.

Selling a luxury property goes beyond a regular real estate sale. The most important thing to remember is that your luxury home is an investment and that means you're going to have to put a bit of money in to get a lot out. Luxury property sellers can expect more upfront costs than homes in

1. Clean For The Queen

Pretend you're inviting The Queen of England or the President of the United States to stay at your place for a week and have the home in the appropriate condition. We're talking immaculate landscaping, showroom-worthy closets and not a speck of dust throughout the house. Don't leave anything in a state you wouldn't want the President to personally inspect.

2. Hire A Staging Company

Hire a staging company to make your home stand out. Remove all of your own furniture and allow the expert designers to make decisions. The furniture and plants might not suit your style and that's perfectly fine--it's the buyer's approval you're after and staging companies know exactly how to get it.

3. Invest in a Professional Media

Your property is phenomenal and you want interested buyers to know it too. Luxury buyers are usually looking for homes that instantly grab attention, which is why you have to grab theirs when they are glancing through hundreds of MLS listing. Spend the money on a professional photographer and accommodate their requests for achieving the best photos possible, even if they're a bit of an inconvenience.

You'll also want to consider a video tour and posting the floor plans online. Consider that a lot of luxury buyers view and purchase homes from out of the country, through local representation. The more familiar the actual buyer feels with a home they've never seen, the more likely they are to actually buy it.

4. Advertise With A Pro

Your real estate agent should be doing everything possible to market your luxury home, so make sure they are! Your listing write-up should be perfect, your ad should be in every major real estate source around and your real estate agent should be personally reaching out to their network of luxury contacts. Talk to your agent and ensure they are taking these steps on your behalf. If not, fire them.

5. Be Patient

Luxury homes tend to sit on the market longer, simply because there are significantly fewer buyers who can afford them. It's important to remember that it's not uncommon for luxury homes to have an "average days on market" that spans several months. As long as you're patient and follow the expert tips above, your luxury home will be sold before you know it.

When we say the inventory on the OC market has reached a record low, we aren't kidding. In the past decade, all years have had at least a 16% higher number of homes on the market. Take a look at the following chart to see exactly what that means:

The holiday season normally marks a slowing down in offers, but that hasn't been the case for many of the homes on today's market. Multiple offers and overpriced bids have become the norm, as buyers who need a new property have become almost desperate.

Our advice? Don't buy! Unless you have a reason to buy an Orange County home within the next month or so, we recommend putting your search on hiatus until the second week of January. Enjoy the holidays instead and focus your energy elsewhere.

This market has been completely unpredictable so we can't say for certain, but new homes traditionally start coming on the market again during mid-January. With the holidays over, people then have the time, energy and motivation to sell their home.

If you're considering selling your OC home, or you want to buy in the next few weeks, let us know. We would be happy to assist you during this tumultuous market and help you achieve your goals.

Interested in receiving regular market updates? Let us know and we'll send you our newsletter!