HOME SALES, PRICES TO PICK UP IN 2008

NAR FORECAST: HOME SALES, PRICES TO PICK UP IN 2008Lower levels of home-building activity throughout the nation will help existing home sales improve later this year and into 2008, according to NAR's most recent forecast. "Buyers now have an overwhelming advantage given the wide selection of homes available in many markets," said NAR Senior Economist Lawrence Yun. "But with profit margins coming under pressure, home builders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state." Existing-home sales are projected to total 6.11 million in 2007 and 6.37 million in 2008, down from last year's total of 6.48 million.According to the report, prices also are expected to pick up in 2008 as inventory levels decrease. The median price of an existing single-family home is expected to drop 1.4 percent to $218,800 this year but increase 1.8 percent to $222,700 in 2008.
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Tighter Lending standards impact market

TIGHTER LENDING STANDARDS CONTINUE TO IMPACT HOUSING ACTIVITY Home sales should remain stable in the months ahead, despite a lack of buyer confidence and the continued impact of tighter lending criteria, NAR today reported. The Association's Pending Home Sales Index (PHSI), a forward-looking indicator that gauges home sales activity for upcoming months, declined for the third consecutive month in May, falling 13.3 percent from a year ago to a reading of 97.9. A PHSI of 100 is equal to the average contract level in 2001, the first of five consecutive years of record home sales. "Better supervised lending will put housing in a fundamentally healthier state of the long term," said NAR Senior Economist Lawrence Yun. "Mortgage purchase applications are trending up, with some of the rise due to buyers reapplying for alternatives to subprime financing. Nonetheless, home sales should stay close to present levels in the months ahead given an accumulating pent-up demand." While the West and Northeast regions both saw modest increases on a month-to-month basis, the PHSI declined across the nation in May compared with the readings a year ago. On a regional basis, the PHSI dropped 15.4 percent to 107.2 in the South; 13.7 percent to 95.4 in the West; 9.6 percent to 93.1 in the Northeast; and 11.7 percent to 89.4 in the Midwest.
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G. Douglas Pemberton

Realtor

949-573-0098

OC Realty Group

www.search-ochomes.com

 

FED HOLDIN STEADY

FED HOLDS FUNDS RATE AT 5.25 PERCENT Citing moderate economic growth during the first six months of the year, the Federal Reserve's Open Market Committee last week decided to leave its short-term interest rate at 5.25 percent, where it has stood since June 2006. The federal funds target rate is the interest rate charged by banks when they borrow funds "overnight" from each other. While the federal funds rate has no direct impact on other rates, such as those for mortgages, it can alter them indirectly. In a prepared statement, the Fed acknowledged that while readings on core inflation have improved in recent months, risk remains that inflation will fail to moderate in the coming months as expected. "A sustained moderation in inflation pressures has yet to be convincingly demonstrated," according to the statement.
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G. Douglas Pemberton

Realtor

949-573-0098

OC Realty Group

www.search-ochomes.com

Think like a Developer

If you understand how residential developers and builders make their buying decisions, you will be likelier to achieve success in buying or selling land. Some builders search for property strictly by geographic area. Others search for parcels that would enable them to reach particular buyer submarkets, such as housing type, price range, lifestyle and age group. Either way, they begin by casting the net into their areas or markets of choice and sifting through potential acquisition candidates. They often have to pick through dozens of properties before they find one they think they can develop profitably and frequently spend varying amounts of time, effort and money collecting information before they even know if the parcel will work. Their due diligence focuses on obtaining answers to five fundamental but critical questions:What can I build?How many can I build?What can I sell them for?How long will it take to sell them?What are the costs?These questions collectively define economic feasibility and influence every decision developers and builders make – from their initial contact with the property, during negotiation of the contract with the seller, through subdivision approval, to the day of closing and beyond. How do you estimate the value of land for residential development? For starters, you should never price it by the acre or even think of it in terms of X$/acre. Raw land value is not derived from the number of acres but rather from what the property could yield, how it can be used, and the projected sale value of the total package end product (the new home on its lot). Its value is also related to the hard costs (i.e., costs for installing “horizontal improvements” to the site, such as streets, curbing, sidewalks, utility lines, and house construction costs or “vertical improvements”) and soft costs (expenses that will be incurred during the approval process). Accordingly, residential builders and developers do their income and expense projections for properties on a per-lot and not a per-acre basis. For all practical purposes, the parcel’s overall size is a meaningless number in the developer’s determination of property value. Here’s an illustration:Suppose there are two vacant 50 acre parcels you’re thinking about buying in the same municipality. Zoning for Parcel A requires a minimum lot size of 40,000 SF and width of 200 feet; Parcel B zoning requires 30,000 SF lots and 150 ft. widths. On average, the new homes would sell for $300,000 on Parcel A and $350,000 on Parcel B. Each parcel is fairly level with no remarkable physical constraints. Suppose per-lot improvement costs are ball parked at $56,000 for A and $43,500 for B. In this scenario, Parcel A would probably be worth around $760,000 (or $19,000 per lot raw) to a builder who was buying fully-contingent. Parcel B, however, would command a price of over $2.3 mil ($44,000/lot). The reason that there’s a big difference in the bottom-line value of these parcels is that there are differences in the lot yield, end product value and horizontal improvement costs. In this example, if Parcel A were for sale at $19,000/acre, it would be for sale for a long time because it was significantly overpriced. On the other hand, if Parcel B were for sale at $44,000/acre, it would sell in a heartbeat because it was greatly underpriced.

Know the Zoning

After location, zoning is probably the most important characteristic of any type of real estate. It is the obvious starting point for evaluating a parcel’s potential for development because it spells out what you can do with the property. Zoning is a critical piece of the puzzle particularly if you want to be a land developer, an investor or work with a builder in some way. Save yourself much time, energy and frustration by checking out the zoning first, not last.Local governments enact zoning ordinances and adopt the maps that show the physical boundaries of the zoning districts, and these are modified periodically. To determine the current zoning of a particular property, you would first look at the zoning map to see what district it falls in and then consult the current zoning ordinance. Both of these documents are available for review or purchase at the municipal building. What will you find in the ordinance?It tells you what land uses are permitted in each district or classification. These classifications generally include residential, mixed residential, mobile home, commercial, shopping center industrial, office, and conservation. The ordinance also lays out other standards and requirements, such as the minimum lot size, minimum lot width, dimension of setbacks, height restrictions and building coverage. It contains definitions that help you understand the terminology used throughout the ordinance. There are general provisions that apply to every zoning district, and these deal with issues like non-conforming properties and uses, accessory structures and uses, flag lots, fencing, signage and minimum lot frontage requirements.Provisions for a specific zoning district can often include both “by right” and “conditional” uses. For example, single-family detached dwellings, agricultural uses and governmental recreation areas may be permitted in a district. A privately-owned riding academy, stable for horses, public or private day schools, 18 hole golf courses, places of worship and day care facilities are permitted in that district only when authorized by the municipal Zoning Hearing Board as a special exception. This latter group of uses is not permitted automatically, and to get a special exception, you would have to demonstrate that your use falls within those defined in the ordinance and also complies with any requirements, such as minimum site area, building and paving coverage, and buffering, specific to that conditional use.It would be helpful to remember some key points about zoning. Land use and regulation laws vary from state to state. Terminology and nomenclature vary from municipality to municipality, even within the same county in the same state. For instance, the “R-2” zoning classification in one municipality may mean that single-family detached housing is permitted on a minimum lot area of 35,000 sq. ft., with a lot width of at least 125 feet, and front, side and rear setbacks (yards measured from the parcel boundaries to define the area where a structure can be built) of 60, 20 and 80 feet, respectively. Go to another municipality, and you could find that the R-2 District permits single-family detached housing on 43,560 sq. ft. lots 150 ft. wide with front, side and rear setbacks of 60, 25 and 80 feet. You should not assume that the same name used for a classification in different municipalties means the same thing and when marketing land to potential buyers, be sure to include information on the permitted use and requirements for minimum lot size and width. Describing the zoning of the property only as “R-5”, “MR-1” or “C-2” is meaningless.Finally, some words of caution. Zoning and other types of ordinances are available online. Do not, I repeat, do not rely exclusively on online ordinance information. Go to the primary source (the municipality that enacted the ordinance) and check it out to be sure you have the most current and accurate information. Always page through the entire ordinance because municipalities often enact amendments that can be printed in the back of the original ordinance (without cross-referencing the original provisions that have been amended). If the provision is somewhere in the ordinance, it applied. Just because you didn’t see it doesn’t mean that it doesn’t apply.

Whats happening in San Clemente

Wednesday 07/04/2007San Clemente Hosts Independence Day Celebration
At 9:00 p.m. the City continues its annual tradition and will present a spectacular fireworks display from the Municipal Pier. The end of the Pier, opposite the entrance, will close at 4 a.m. on July 3rd for preliminary preparation and the entire Pier will close on July 4th at 8:00 a.m. and remain closed for the entire day. The Fisherman’s Restaurant will be accessible to its patrons.

San Clemente Real Estate

San Clemente California Real Estate provides a wide variety of beach close homes. From cozy beach condos to Mediterranean styled luxury estate homes - there is condo or house for every taste and every way of life. San Clemente is located in the southern most portion of Orange County, California, between Los Angeles and San Diego.
Real Estate was first constructed in San Clemente along the beach starting in the mid 1920's. There was a housing boom in the 1950's and again in the 1970's, and construction continues today. The most recent residential real estate development in San Clemente CA, and arguably the most popular is called Talega. Home construction began in 1999 and continues to this day. Talega offers a wide variety of real estate choices. Attached housing range in size from 2 bedroom, 2 bath 1,200 square foot condos, up to 3 bedroom, 2.5 bath, 2.300 square foot, 2 car garage two story townhomes. Detached houses range in size from 3 bedroom, 2.5 bath, 1,700 square foot starter home, on up to 5 bedroom, 5.5 bath, 3 car garage, 5,600 square foot estates with golf course views