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Orange County Real Estate News December 2006 THIS MARKS THE LAST NEWSLETTER OF 2006 AND WE END WITH POSITIVE HEADLINES… Despite reports that real estate was headed to the dungeon, it may just be a very temporary stall as headlines in all papers finally report the facts, which is we are in a correcting market changing to a moderating market. The exact headlines? The LA Times reported “Region’s Home Prices Hold Firm,” and the OC Register, “A Moderating Market.” Both articles went on to report that after months of price corrections, it did appear that the median home price had stabilized. It is important here to note that the newspapers want to sell newspapers and so sensationalize what really didn’t warrant it. Namely, they reported that sales had plunged and so did prices. Well, that’s not fair. When you have a market that appreciates 200% over 6 years and then falls 5% to 8% over 8 months, “plunging” seems a bit unfair. Likewise, when you have sales topping 4,500 in a month to set an all time high number of sales, “plunging volume” seems a bit untrue as sales numbers hit a normal volume peak for the time of year and the time in the real estate cycle. Late November and early December inventories have done precisely what this newsletter predicted; they’ve shrunk. Sellers who were trying to get more than the market warranted have seen their listings expire and not come back on the market. The sellers entering the market are realistic about current conditions, are listing their homes at market price and are seeing them sell.
WHAT WERE THE ACTUAL STATISTICS… The total number of sales for October (the most current month available) is 2,715. That number is up 1.9% from September and September’s numbers were up from August. The change from a year ago October is down 24.9%, which should be no surprise to anyone. The median price held firm at $625,000 and that was up 3.1% from October ’05. There were 1,685 single-family resale, 655 condominium resale, and 375 new homes. Sales by price range break down as follows: under $400,000 = 339, next is $400,000 - $500,000 = 320, followed by $500,000 - $600,000 = 479, the next level is $600,000 - $700,000 = 506 and finally we have over $700,000 = 955.
EXIT STRATEGIES FOR REAL ESTATE… Historically there have been products such as the 1031 Exchange for income or rental properties and Tenancy-in-Common Exchange, which is the same as the 1031 but for fractional ownership. For the sale of owner occupied, there are Installment Sales, Charitable Remainder Trusts and Private Annuity Trusts. There is a new kid on the block named the Structured Sales Annuity. It is briefly discussed in the OC Register. If you would like a copy of this article, outlining all these options, give me a call and I will email it to you. Certainly you should always check with your professional tax accountant or estate attorney before making any decisions. Also, FYI, there is a rumor that the IRS may soon nix Private Annuity Trusts, so beware.
STAY TUNED FOR MORE UPDATES AND CALL ME FOR THE STATUS ON YOUR PROPERTY…You should always review your mortgage yearly and now is a great time for that. Many people have recently opted for interest only, adjustable rates, or negatively amortized loan products. All products have their usefulness but can either eat up equity, or have high prepayment penalties. Before you refinance, don’t hesitate to call me for clarification on your loan or to discuss your options for selling your property. I’m always available to answer all your questions. HAPPY HOLIDAYS!
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