A Ladera Ranch Orthodontist is thinking outside the box and I dig it!  Dr. Harold Barkate is hosting a candy buy back program from 3 to 5 p.m. on Monday, November 3rd.  For every pound of candy a child brings in, Dr. Barkate will pay $1.

Go to his Ladera Ranch office at 800 Corporate Drive, Suite #260.  The candy will be donated to military families stationed at Camp Pendleton.  Hopefully it will be spread out so we aren’t destroying their teeth either.

Not sure if I’ll get my kids to bite off on the idea but I’m going to give it a shot.  I may have to do my annual pilfering of their stash before we take it in though. 

There has been much discussion about the big bailout.  But in case anyone with any influence is listening – I have an idea that could make a big contribution to our market recovery.  Just call anytime and I’ll share my insight with you – from the trenches.  I’ll be waiting for your call.

For the rest of you that might be curious about what I have in mind, I’ll share with you some of what happened to me this week.  Brace yourself because I feel a rant coming on….

As I have said countless times on this blog, short sales are a HUGE factor that is driving our market prices and inventory in Orange County.  For example, 64% of the active homes on the market today in Rancho Santa Margarita, under $500,000, are short sales!  In Mission Viejo, 50% of homes active on the market today under $500,000 are short sales. 

These short sales have offers that have been submitted to banks and are just awaiting approval.  They may have multiple offers.  This is buyer demand that is waiting and the last thing we need in this market is pent up buyer demand waiting.

I’d like to share with you a story about one of my short sale listings.  Within 72 hoursof listing the home back in May, I had 4 offers for asking price, and over.  We submitted them to the bank, along with the package from my seller that clearly qualified for a hardship.  The following dialogue is from this week between my short sale coordinator and the the banking institution’s (a very common and well known lender) negotiator.

My Short Sale Coordinator:

“We now had 4 buyer’s who have cancelled, including the last offer we submitted due to the fact that this process has taken almost 6 months.  We just can’t keep buyers around that long and we can’t keep the value the same for that period of time.  Values are dropping.  We do have another offer, but it is lower than any offer we have received.

“At this point we, as long with the seller, are at a loss as to what to do.  Do you have any suggestions, or any time frame that we can tell buyers?”

The Bank Negotiator:

“I will have to cancel this file because the buyers are no longer interested.  I suggest faxing in the new offer.  Because it is a new offer it will be considered a new file.  Anytime you have a new buyer it starts all over.  A short sale can take 4 - 6 months.  When you send in a  new contract the time frame starts all over. ”

The negotiator goes on to say that they are trying to make time frames shorter and the last response time was 30 days.  But in my experience, that response is inconsistent at best and clearly, they aren’t willing to commit to anything better than 4 to 6 months.

So what’s my big idea?  Let’s save a big bailout expense.  Forget giving money to banks with no accountability for how they use it.  Instead, let’s create an efficient, streamlined method of handling the massive number of properties that are in foreclosure and that are short sales. 

In the case of my listing, it may take one year to get a buyer in that property and a closed sale.  In the meantime, values are detrimentally impacted,  inventory remains misleadingly high,  property condition deteriorates, and suffering sellers can’t restart their lives.  If you shorten this process to 90 days, can you imagine the positive impact on our market?  Just think, 6 months ago I had 4 buyers that wanted to pay full or over list price.  Today’s buyers are thinking about 20% less than that.  THAT is a huge reason prices continue to decline in Orange County and in many parts of the country.

Maybe this is too simplistic.  Maybe this addresses only part of the problem.  But, if we are looking at some of the real, on the ground solutions for the much touted ‘Main Street,’ this seems like a great place to start.  Like I said, to those influential individuals and government institutions dying to hear my Bailout alternative, I’ll be standing by waiting for your call.

October 25th, from 2:00 to 5:00, the Orange County Great Park in Irvine will host their first Great Park Pumpkin Harvest.   Bring the whole family for all kinds of fun with a pumpkin patch,  pumpkin decorating, games, petting zoo, and mask making.  At 3:00 there will be a Monster Mash and at 4:00 there will be marching in the Great Halloween Costume Parade.  Click here for directions.

The event is sponsored by the Great Park Neighborhoods, the Second Harvest Food Bank and the Great Park Conservancy.

Second Harvest Food Bank recently opened its new Orange County headquarters at the Great Park.  A food drive will be underway at the Great Park Pumpkin Harvest.  They are looking for canned fruits, vegetables and meat products, dry and packaged goods,  refrigerated and frozen products, prepared and perishable foods, and fresh produce.  They will also accept non-food items such as personal care products, paper products and diapers.

This is also a neat opportunity to get a peek at the wonderful plans that are being initiated for the park and the upcoming neighborhoods.

There has been some sun peaking through the storm clouds of the Orange County real estate market which is bringing rise to the question, ‘When will we see the real estate market recover?’

There is still tremendous volatility in the banking industry and financial markets but there are some bright spots.  We have already begun to see a slowing of the pricing free fall.  Distressed properties, bank owned inventory, and entry level price points are frequently seeing multiple offers all over Orange County.

Steven Thomas of Alterra Real Estate has released his housing report noting that inventory has dropped to its lowest point in 18 months.  Last year at this time, inventory was 27% higher and two years ago it was 16% higher.   Clearly, the message has been heard by would-be sellers and those that don’t have to sell are opting to stay put.

Thomas says, “This is simple Economics 101, as prices fall demand rises and the number of sales increases as a result.  As the United States government fixes the financial system and money starts to flow again, we can expect rates to drop considerably, including in the Jumbo loan arena, homes about $700,000.  Falling rates lowers monthly payments, which is similar to falling prices.  We can expect demand to increase and the number of sales to increase as well.  This may be six months from today, so right now is probably the most opportunistic time to be a buyer.”

Jonathon Lansner quoted the consultants at Real Estate Economics of Irvine as predicting housing rebounding within 18 months.  REE writes, “Though the index has been trending in positive market territory (an over-correction), the severity of the short term impact of price-slashed distressed properties, tightened credit and extremely low market psychology will continue to hinder market conditions for the balance of 2008.  The over correction will eventually serve to restore buyer confidence.”

William Shopoff, CEO of the land-investment firm the Shopoff Group was recent interviewed by Jeff Collins at the Orange County Register.  Shopoff’s prediction, “I would expect a market bottom to occur in the later half of 2009, possibly extending into 2010 for the Inland Empire.  I think the recovery will take some time once we reach bottom.  I would expect the $700 Billion Government package…will provide the needed liquidity to the markets to provide support but the bigger problem is supply/demand imbalance at present.”

What’s the my prediction?  The Planeta Prediction for the last couple years has been Spring ‘09.  I knew that ‘08 would be a tough year because generally speaking, election years tend to slower.  That in addition to the already poor housing conditions heading into ‘08, I was prepared to buckle my seat belt for a long ride.  I didn’t foresee the financial crisis and that may very well push out my prediction.  We will continue to be plagued with distress sales until we absorb foreclosures that continue to hit the market.  But, I do think that we’ll see a much stronger Spring than we have seen the last couple of years.

I find Shopoff’s comment interesting about inventory imbalances in light of the low inventory reported by Steven Thomas.  That is a big factor and I see it playing out in some of the areas that I most frequently work.  Las Flores and Wagon Wheel markets, in Rancho Santa Margarita and Trabuco Canyon respectively, have the lowest inventory that I can recall seeing in years.

So, if you are watching for recovery, or even stabilization, we may be seeing the first glimpses on the horizon.  Don’t get me wrong, clearly we aren’t there yet, but if you are targeting the bottom, keep your eyes peeled.

This is a great video and a good laugh. I guess after years of begging people to vote, we’ve opted for reverse psychology. If you don’t like what they are saying, good news – you can vote!

Make sure you’re registered. If you need to know where to go. Check this out:

The Orange County Register’s Jonathon Lansner put together his Zippy’s, an analysis of the 83 Orange County zip codes. The chart gives a year over year breakdown of sales volume, price changes, and number of foreclosures in each of the 83 zip codes.

The chart is definitely worth taking a few minutes to look at for the zip you are living in or if you considering a purchase in an Orange County city.

Some of the worst performing zip codes continue to be those in Santa Ana.  In one of its zip codes, 92701, 23.3 of every 1000 homes is in foreclosure ranking it the worst in the county.  Ladera Ranch, the home to much speculative purchases and high loan to value lending, ranked 81 with a 34% fall in sales activity and 26% fall in prices.

Newport Beach is the number 1 zip code with zero foreclosures per 1000 and one of the few places where positive numbers are seen in sales and pricing, but I’ll be interested to see if they continue to remain untouched by these markets.  With the financial and economic woes becoming more widespread, we may see a ‘trickle up’ to this market in the coming months.