Real Estate Notes and Observations

Greetings friends and neighbors,

As we meet the New Year, many thoughts come to mind, first and foremost, when the heck is the housing market going to pull out of it's nosedive?

I was reminded by my brother of a basic fact; what people perceive as real, is real.

So I can't help but get a bit frustrated when the financial Guru's predict that the market will not get better until 2010, or worse yet, that we are headed into a full scale recession.

Yes times are tough, but here are the facts as of 12/30/07

Gas prices*
National
Current: $2.94 Last Week: $2.96 Last Year: $2.30
California
Current: $3.26 Last Week: $3.29 Last Year: $2.61

*Based on average price per gallon for Regular-grade retail Gasoline, figures released weekly on Monday

Mortgage Rates*
30 Year Fixed
Current 6.17% Last Week: 6.14% Last Year 6.22%
15 Year Fixed
Current 5.79% Last Week: 5.79% Last Year 5.93%
5/1 ARM
Current 5.90% Last Week: 5.90% Last Year 5.98%
1 year ARM
Current 5.53% Last Week: 5.51% Last Year 5.47%

*Based on Freddie Mac national average. Figures released weekly on Thursday.

Financial Markets and Info
US 10 Year Treasury
Current 4.08% Last Week: 4.17% Last Year 4.62%
This index is a good indicator for fixed mortgage rates. Generally, a decrease in bond yield is good for interest rates.
Prime Index
Current 7.25% Last Week: 7.25% Last Year 8.25%
This index is what home equity lines are based on.
Dow Index
Current 13,359.61 Last Week: 13,245.64 Last Year 12,501.52
Nasdaq*
Current 2,676.79 Last Week: 2,640.86 Last Year 2,425.57

*"current" stock index values based on prior day's close

Unemployment*
National
November 2007: 4.5% October 2007: 4.4% November 2006: 4.3%
Orange County
November 2007: 4.2% October 2007: 4.2% November 2006: 3.1%

*Not seasonally adjusted. Figures released monthly. National typically gets released earlier than OC

C.A.R. Home Affordability Index*
California
Q3 2007: 24% Q2 2007: 24% Q3 2006: 24%
Orange County
Q3 2007: 24% Q2 2007: 23% Q3 2006: 22%
Los Angeles County
Q3 2007: 20% Q2 2007: 20% Q3 2006: 19%

*This is the percentage of California households that can afford to purchase an median-priced home.

Real Estate Stats
Median Home Price*
California
October 2007: $424,000 September 2007: $430,000 October 2006: $467,000
Orange County
November 2007: $582,750 October 2007: $573,750 November 2006: $623,000

(thank you to Russell Foster russell@goEMF.com for the information)

What does this all mean? If you are looking to purchase a new home and can qualify for a conforming loan, it is a great time to buy; if you are looking to purchase a second income property, it's a great time; If you are looking to get out of an apartment, now is the time.

On a pessimistic note, if you are thinking of selling your house, and you can't wait the five to eight years for the market to return, do it now: because you are not gong to see the prices you we being quoted only two years ago any time soon, and things will probably get worse before they get better.