According to the article “City Council Delays Decision on Village Courtyard” in the San Clemente Times, the decision on the new Ralphs shopping center located in the Southwest San Clemente real estate market has been delayed until mid-June.  An attorney filed a five page letter requesting that a Environmental Impact Report (EIR) be prepared.  According to this letter, the Mitigating Negative Declaration currently in place from May 2008 does not outline some of the changes in the design of the center, and therefore, does not assess the full environmental impact of this project.  This project as noted in one of our previous blogs, will bring a much needed full-size Ralphs and face lift to this part of town.  In addition to the Ralphs, there will be other infrastructure added, such as new retail and restaurants.  For more information, please visit the city’s website San-Clemente.org.

On the future site of the Avenida La Pata/Vista Hermosa Sports Park and Acquatics Center, the annual San Clemente Carnival Colossal and Expo is returning to the city after a five-year absence.  According to this article in the Orange County Register, the carnival was a Labor Day tradition until the Marblehead Coastal developers started plans to build homes on the site of the yearly carnival.  As the carnival is sponsored by the City of San Clemente and the San Clemente Parks Foundation, the future site of the 42-acre sports park is a perfect setting for the revived carnival as it serves as a fundraiser for city park facilities.

The Carnival Colossal and Expo will be open today thru this weekend and is free to anyone wishing to attend.  Operating hours are 3 to 10pm today and 1 to 10pm on Saturday and Sunday.  Tickets for the rides in the Carnival Colossal may be purchased for full price at the event or at a discounted advance rate at City Hall (100 Avenida Presidio) or the Community Center (100 N. Calle Seville).  Besides the Carnival Colossal, there will be an Earth Day Festival from 10am to 2pm on Saturday at Parque Del Mar (622 Avenida Del Mar) and a Gardenfest at the Community Center on Saturday from 8am to 4pm.  Admission to both of these events is free.

For more information on the Carnival Colossal and Expo, please visit the San Clemente Parks Foundation website.  For a copy of the Carnival’s program of events, please click here.

In addition to the enticing benefit to purchase San Clemente real estate with the $8,000 tax credit for first-time homebuyers (i.e. have not owned in the past three years), the California Association of Realtors recently launched a new program to help ease the nerves of first-time homebuyers who are afraid they may lose their job and be unable to pay their mortgage after they purchase a home.  The program, known as the Housing Affordability Fund Mortgage Protection Program, allows first-time homebuyers who lose their job due to a layoff to receive $1500 per month for up to six months towards their monthly mortgage payment.  In addition, a qualified co-buyer can also participate in the event of being laid off and receive an additional $750 per month.  So if you and your co-buyer both lose your jobs, you could receive up to $2250 per month for up to six months to help pay for your mortgage.  This is a significant supplement on top of severance and/or unemployment benefits to help you get through such a difficult event.  In addition to these benefits, this new program also includes a benefit of $10,000 in the event of dealth and coverage in the event of a disability. 

In order to qualify for the Mortgage Protection Program, you must:

• Be a first-time homebuyer (i.e. someone who has not owned in the past three years)
• Use a California Realtor in the transaction
• Purchase the property in California after April 2, 2009 and close the transaction before December 31, 2009 (i.e. go into escrow no later than November 15 in the event a 30 day escrow is delayed)
• Be an employee that receives a W-2 (self-employed and military unfortunately do not qualify; though military qualifies for a VA loan)

If you are a first-time homebuyers and would like to take advantage of this new program in addition to the $8,000 tax credit offered this year and interest rates at or near all-time lows, please contact us and we will gladly assist you in starting the process by providing you the program’s application.

Why have the prices of San Clemente real estate dropped substantially over the past year and since the top of the market in 2006?

Due to the anomally during the market boom when prices appreciated nearly 100%,  prices are now adjusting for the inconsistent and nonsustainable growth of the first six years of the decade and towards a healthier market of stability where various income ranges can actually afford homes in the market through conventional financing.  Rather than the majority of buyers being financed through exotic mortgages that were high risk, required little due diligence on the part of the lender for approval, and that the average consumer did not understand or could even afford, we are now on the opposite end of the risk spectrum and moving back towards normal markets.  As a rule of thumb, the median income in a housing market should be able to at least afford to purchase an average condo, otherwise you have too few buyers and too many sellers that results in downward pressure on prices.  This is fundamental economics of supply and demand that determine prices!

How do I determine the direction of prices in my market?

While there are no solid rules, months of supply is a solid indicator.  5-6 months of supply indicates a stable market, 7-8 months of supply indicates single digit depreciation, and 9-10 months indicates double digit depreciation.  On the other hand,  3-4 months indicates single digit appreciation and 1-2 months means double digit appreciation as buyers are fighting over a smaller supply of homes, and therefore, pushing home values up.  For April 2009, the inventory of San Clemente real estate cotinues to move back towards a stable market as current homes under contract are up 109% and new listings are down nearly 25%.  A year ago, inventory was above 12 months. 

Why should I buy now?

An investment no matter what, follows a typical nine stage cycle.  Lets start in the middle of the cycle with optimism that turns into excitement and eventually becomes euphoria with all the hype.  Euphoria (i.e. irrational excuberance) we have seen in the dot-com era of the late 90’s and then in the real estate era of the early 2000’s.  We should all know by now that euphoria eventually results in a market downturn causing denial, then fear, panic, and ultimately despondency and depression (where we are in today’s market).  Nevertheless, this cycle returns back to optimism in the end and we begin the market cycle all over again.  As a comparison to the real estate market and to illustrate our example of market cycles, lets look at Bank of America stock.  Earlier this year with all the negative news about the market and in particular bank stocks, this stock hit a 52 week low of nearly $2.50 per share.  While Bank of America represents one of the most solid banks in our country (after taking into account the subprime mess), there was complete panic about what was going on with the banking sector and the fundamentals of what makes a solid company or solid investment were forgotten by investors.  Today, the same stock after some positive news in the market, is trading near $9 per share or up over 300% from its low (its 52 week high is in the $40 range).  While you may be thinking I should have invested (this is not a stock recommendation), the point we are making is that the point of greatest opportunity to capitalize on investments is in the despondency and depression stage (i.e. today’s market).  Since this is today’s market, the  buyers who understand where we are in the cycle know now is the best time to invest in real estate.  These buyers know if they retain a long-term investment focus they will realize great returns in the end, especially given the long-term outlook for California real estate of projected statewide population growth of nearly 12 million or 30% by 2030 with little coastal real estate left to develop.  In the end this means a growth in demand for real estate and less supply that ultimately drives values up.  Again, this is basic fundamental economics!

Is homeownership really a good way to build wealth?

Real estate on average has appreciated 8-9 percent per year in California or 4-5 nationally.  While this is a decent return, the better way to evaluate your real estate investment is based on the amount of cash you put into your home and the return on this, also known as a return on equity or return on investment.  For example, a buyer that puts $50,000 into a $500,000 home that appreciates conservatively 5% per year in California will see their home being valued at $525,000 over one year or an increase of $25,000 on their $50,000 invested.  This represents a 50% return on equity in just one year.  Stocks and bonds as a comparative on average generate returns of 7-12%, and therefore, this is why real estate is a great investment as it can be leveraged (i.e. financed).  While transaction costs can be much higher for real estate and it is not as liquid (i.e. cannot be sold as quickly as stocks and bonds), a long-term focus on real estate investing will ultimately provide a well balanced portfolio with other investments in order to hedge your risks.  In addition, owning real estate is one of the greatest tax savings that one can realize each and every year.

For more information on San Clemente real estate, please contact us for a free consultation.

While getting pre-approved is a must in today’s market in order to purchase San Clemente real estate, buyers need to be particulary careful not to alter their credit until the purchase is final.  Making the wrong move after getting pre-approved could result in your entire purchase falling apart.  In order to ensure your loan gets funded during the purchase process, follow these tips:

• Do not change jobs.  One factor mortgage companies consider is the length of present employment as part of your risk profile and job stability is a key factor.  Even if the new job may be higher paying, try and wait if possible until you move into your new San Clemente home.
• Continue making your payments on time.  Do not be late on any payments and if you are, contact your creditor and ask if they can remove the late payment.  Often times creditors will grant this on a one-time basis.  Keeping your credit report clean during the process is crucial.
• Keep credit card balances low.  If you push your credit limits to their max during the process of funding your loan, this will seriously impact your credit score.  If you fail to keep your credit limits low, this may come up during the final review of your file before funding your loan.
• Do not take on new debt.  While it may be tempting to start taking on some of the big purchases for your new home, do not  do so until after you close your sale.  Taking on new debt during this time may drastically effect your debt-to-income ratio and result in a failure to obtain financing for your purchase.
• Communicate with your lender.  Always be available during the loan process as the processing staff may need to contact you for additional information, so be sure to inform your lender if you will be out of town or unavailable.
• Tell your financial story upfront.  Tell your lender about any past issues with finances, such as late payments and exactly what assets you have. Lenders understand that life events happen that can result in financial issues.  Not being honest up front will result in the lender finding out about issues down the road when your credit report and assets are reviewed.

For more information on financing for your San Clemente real estate purchase, please contact your exclusive San Clemente realtors today.

In this article on CNN “Signs of Life in California Real Estate,” there are signs across the state that the California real estate market is beginning to pick up steam in terms of home sales.  Across the state, home sales have risen during the first few months of the year and in many locations, including in the San Clemente real estate market as noted in our previous blog, there are fewer listings coming on the market.  Increased sales and fewer homes coming on the market means a reduction of inventory which in turn means home prices stabilizing as supply and demand come back into balance.  Granted the market still has some correcting to do, the worst may be over and there could be a sign of the bottom sometime this year making it a good time to begin the home search process that can often take 6-18 months.

Please feel free to contact your exclusive San Clemente real estate agent for more information.

With the end of the first quarter of 2009, San Clemente real estate, including Talega real estate, continued to show signs of life.  At the end of March, 113 units sold as compared to 109 prior year, a slight increase of nearly 4%.  More impressive, there are currently a combination of 46 San Clemente homes and condos for sale that are under contract, representing an increase of 109% compared to prior year.  These are good signs of life for April sales in the San Clemente real estate market as we begin to enter the busy spring and summer buying season. 

Much of this increase in sales can be attributed to the fact that the average San Clemente home or condo is now selling for approximately 20% less than prior year.  This is making housing much more affordable, especially with interest rates hovering near all time lows that is allowing buyers to afford more home.

Inventory, on the hand, is still hovering above a six month target that historically indicates a stable market, however, the number of new homes coming on the market in March fell nearly 25% compared to prior year.  With increased sales activity and fewer homes coming on the market, we should see inventory continue to retreat back to levels that represent a stable market. 

For the month of March, the average days on market for San Clemente real estate fell to 93 as compared to 109 prior year.  Traditionally for a stable market, average days on market should be in the 60-90 day range.  San Clemente homes and condos on average sold for approximately 85.6% of the original listing price and 93.4% of the adjusted listing price for the month of March.

 For more information on San Clemente real estate, please feel free to contact us for free information.