Real Estate Information Archive


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Get Ready for higher mortgage rates!

by Ashlie DuCros

Get ready for higher mortgage rates


The difference between rates on a 30-year fixed mortgage and

NEW YORK ( -- Even though signs of a housing recovery are uneven at best, the Federal Reserve is about to take off the training wheels it has had in place for more than a year to help the battered market.

The Fed has been buying mortgage-backed securities, the bundling of home loans that are used to fund mortgage lending, since late 2008. But next month it plans to complete its purchase of $1.25 trillion in mortgages


That could be bad news. There is wide agreement that the removal of this support will mean higher mortgage rates, which could hit housing prices and sales hard. Some even worry that this could cause the broader economic recovery to stall.

The program was the largest single injection of cash into the economy by the Fed during the financial crisis, and it will be the longest-lasting source of funds as well. Even though the Fed intends to stop buying mortgages, few expect the central bank will start selling them to private investors any time in the next few years.

Higher rates on the way. But even if the Fed holds onto the mortgages it has already purchased, the act of no longer buying additional mortgages is likely to raise mortgage rates in the coming weeks. Experts say a jump of at least a quarter to a half percentage point is likely.

San Francisco Federal Reserve President Janet Yellen warned of higher rates in a speech Monday. Fed Chairman Ben Bernanke is likely to take questions about the Fed's mortgage program when he testifies about economic conditions on Capitol Hill Wednesday and Thursday.

The spread between the interest on 30-year fixed rate mortgages and the benchmark 10-year Treasury note now stands at about 1.2 percentage points. Before the financial crisis, this spread was typically closer to 1.5 percentage points.

The worry is that high foreclosure rates and a still struggling economy will make investors demand a bigger spread than "normal", since mortgages carry far greater risk in the current market.

Before the Fed started buying mortgages, the spread had climbed to about 2.5 percentage points. A return to that spread is unlikely, but there is uncertainty about how high it could go.

Paul Kasriel, director of economic research at Northern Trust, said he "wouldn't be surprised" if the spread widened by half a percentage point from current levels.

That can have a significant impact on prices by limiting what a buyer can pay for a home. Take the $178,000 median home price of existing homes sold in January. A buyer with a 20% down payment will pay just over $750 a month in mortgage payments for a 30-year fixed loan at today's rate.

Raise that rate by a half point, and the same buyer will only be able to afford a home worth $170,000 to keep payments near the $750 a month level.

The other concern is that even if the spread doesn't increase that much, mortgage rates could still shoot up simply if Treasury yields start to rise. That's possible if the debt problems in Greece and other weaker European countries is resolved in the new few months and investors who moved to U.S. government debt in a flight to quality move out of Treasurys.

End of tax credit to add to problems. The worries about the Fed pulling back support for housing are compounded by the end of up to $8,000 in tax credits for home buyers. To qualify, buyers face an April 30 deadline to sign a sales contract.

Dean Baker, co-director of the Center for Economic and Policy Research, argues that the Fed's program and tax credit for home buyers "ended the free fall in home prices."

But he thinks that the removal of this support could mean that home prices could start to drop by as much as 1% a month again. He also thinks mortgage rates could climb by as much as a percentage point in the coming months.

Jay Brinkman, chief economist for the Mortgage Bankers Association, said even if there isn't a big impact on home sales and prices, higher rates will lead to a plunge in mortgage refinancings.

The MBA now forecasts refinancings will fall to a range of $500 billion to $600 billion this year from $1.4 trillion last year. That will mean even less cash available for homeowners to spend on other goods or to reduce debt.

But Brinkman said the Fed is right to do what it is doing, even if the housing market is still in tenuous condition.

"It's kind of like a pain killer. If you stay on it too long, the withdrawal pains may be worse than the pain you were trying to deal with," he said.

But David Wyss, chief economist with Standard & Poor's, said he isn't sure that the Fed will even follow through and stop buying mortgages. If home sales and prices start to tumble sharply once again, the central bank could be back buying mortgages fairly quickly.

"It's like the parent who is teaching a child to ride a bike who carefully lets go while running along side," he said. "The Fed thinks the child is able to balance by himself at this point, but it's still going to be running alongside the bike, just in case." 

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High-end home sellers lower their sights

by Ashlie DuCros

High-end home sellers lower their sights...

Here is an interesting article I found in LA times regarding high end market sellers...


LA Times- By Lauren Beale

The housing slump is finally bringing down prices in the luxury property market.

Billionaire tax cheat Leona Helmsley loved a good bargain. So, were she still around, the late hotelier might appreciate recent happenings at her Greenwich, Conn., estate known as Dunnellen Hall.

Luxury-home prices: An article in Business on Saturday about a slump in the high-end housing market referred to Osterville, Maine. Osterville is in Massachusetts. —

The 14-bedroom, 13 1/2 -bathroom mansion, which came on the market priced at $125 million two years ago, has been reduced to $60 million. That's a 52% price chop for the 21,897-square-foot Jacobean manor on 40 rolling acres. The home comes with a 52-foot indoor swimming pool, a walled courtyard featuring a 70-foot reflecting pool and a roof terrace with views of the Long Island Sound.

The Southern California real estate landscape, likewise, has been littered with its share of high-profile price drops.

Nicolas Cage's 11,817-square-foot English Tudor in Bel-Air has been reduced 50% to $17.5 million from $35 million when it first hit the market in 2006.

Les Baux de Palm Springs, home of Suzanne Somers and Alan Hamel, started at $35 million more than two years ago and was eventually slashed to a reported $12.9 million -- a 63% reduction. The 65-acre property remains on the market with the price "available upon request."

When the housing bubble popped, the most dramatic declines hit the mid-priced and low-end markets, where home sellers had to compete with cheap foreclosures. Now, even the wealthy are facing the new reality as some luxury homes' prices have dropped -- and dropped again -- over the last few years and agents are begging sellers to be realistic in setting an asking price.

"The $10-million-plus market is best priced close to the bone," said Michael Eisenberg of Keller Williams Realty, Beverly Hills.

At the peak, Eisenberg said, he had clients who were flipping every two or three years and making so much money they almost didn't need to work anymore. These days he's happy to take a languishing listing.

"It doesn't hurt that the state of the market has helped sellers get a better perception as to what their property is currently worth," he said.

Eisenberg has the listing of a home that tops 14,000 square feet with a 3,500-square-foot detached guesthouse nestled on more than an acre of land -- and an asking price that has been reduced by about half to $10.8 million. Its rooftop tennis court has city-to-ocean views, and the ballroom can hold 200 people.

"I listed it for this seller a few years ago in a different market," said Eisenberg, who has been selling real estate for 15 years. "Quite simply, there was a time that Sunset Strip showplaces were garnering close to $2,000 a foot."

That figure has dropped to probably $800 today, he said.

"The market moved, and so with it did the price," Eisenberg said. "The seller is a smart businessman and a reasonable guy -- he gets it -- and the best part is that he is under no real pressure to sell as the property is owned free and clear of any debt."

Therein lies one reason for more overpricing in the luxury home market, said Gary Painter, director of research at the USC Lusk Center for Real Estate.

"What's different about the high end, compared to the general population, is that people who have substantial resources are able to wait longer" to sell, Painter said. "In the bottom of the market you see negative-equity situations, loans going up, people must sell. Outside forces force them to price to sell. Those sorts of outside forces aren't as present [at the upper end]."

Because luxury homes are often one-of-a-kind and there are fewer sales in such a narrow marketplace, groups that track statistics pick varying points as the cutoff for this market. Homes priced at $2 million and above -- the dividing line at, a San Francisco-based website that tracks the market using Multiple Listing Service feeds -- account for most price drops nationwide. Such homes represent less than 2% of Trulia listings but are responsible for 24% of the dollar volume in asking-price reductions.

The act of repeatedly lowering the asking price until a buyer is found is known as "chasing the market," said Michael Gardner, an agent with Prudential Malibu Realty who shares his observations on the beach city market at It can be a time-consuming way to sell a house.

But sellers' thinking has been slow to adjust to the sea change in pricing since the bubble burst. When determining an asking price, a good agent starts by evaluating the prices of comparable recent sales in the area rather than looking at the prices of active listings, Gardner said. "They then take the numbers to the client, where they may have to battle the client's ego."

A frequent refrain of the seller, he said, is "My house is better than that one."

Some agents, fearing they won't get the listing, will go with the higher price the client wants, Gardner said. In this case, he recommends the agent include a caveat: "I'll list it at your price, but if we don't have any offers in 30 days I'll be asking for a price reduction."

These types of sellers, he said, "want to test the water."

But this is a trickier proposition in a market in which values are falling, said Darryl Davis, a real estate agent in Wading River, N.Y., who trains agents across the nation. "You need to price ahead of the market instead of lowering the price every 30 days," he said.

It's one thing for an agent to take an overpriced listing when prices are rising. "It's possible the market will catch up with the price eventually," Davis said. "But the reverse is happening. To take an overpriced listing now is pointless for the agent and the homeowner."

Jack Cotton Jr., who specializes in the Cape Cod luxury market at Sotheby's International Realty in Osterville, Maine, says no to sellers who won't price realistically. He turned down the listing of an 11-acre property overlooking the water that the seller wanted to price at $4 million.

"Now it's bank-owned and it's still not selling," Cotton said. The current asking price is $1.8 million.

This is not to say that homes with stratospheric asking prices don't eventually sell after they've had time to come down to earth. A newly built home on more than two acres in Malibu's Paradise Cove area sold last year for $17.5 million -- 56% off its original $39.5-million asking price less than a year earlier. Terra Bella, an Italianate home of nearly 14,000 square feet on three oceanfront acres in Santa Barbara's Hope Ranch, sold in the fall after first coming on the market at $39.5 million in May 2007. Based on transfer tax information from the Santa Barbara county clerk's office, the property sold in October for $12.8 million, more than 67% off the original asking price.

Last year there were 332 sales of homes for $5 million or more statewide, according to MDA DataQuick, a dramatic drop from 608 such sales in 2008 and 565 in 2007.

More so perhaps than in other parts of the nation, Southland sellers have another reason for overpricing at the onset: the magical belief that a star will happen upon their place and be willing to pay any price.

"The story of celebrities knocking on doors and overpaying for a house they 'have to have' still floats around," Malibu agent Gardner said.

Reinforcing the popular myth, Cotton said, is that "every once in a while the real estate god looks down and someone will buy a place that's overpriced."


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Kerrigan Ranch 2010 Market Report

by Ashlie DuCros

Are we seeing a different trend in the Kerrigan Ranch community? 

We've seen plenty of distressed sales in the Kerrigan Ranch community... However, there seems to be slight change in today's market place. There are total of 7 Active homes available in the Kerrigan Ranch community which are all normal sales. This means  no bank owned or short sales homes on the market at this time.  However, out of the total 3 homes in escrow, only one is short sale home.  For the month of Jan. 2010, 3 homes closed in Kerrigan Ranch. Two homes were short sales.  Looks like we're seeing a new trend in the real estate market... What do you think?

For more information regarding homes in the Kerrigan Ranch community in Yorba Linda, please contact us, or login to

California's Home Inventory Shrinks to 5-Year Low

by Ashlie DuCros

Check out this interesting article I ran across... do you agree?


California's Home Inventory Shrinks to 5-Year Low


SAN FRANCISCO—California's inventory of unsold, previously owned homes shrank to a five-year low in December, in another sign that the state may be coming out of its worst housing slump in decades.

The supply of unsold single-family homes dropped to 3.8 months from 5.6 months a year ago and 16.6 months in January 2008, when inventories were at a peak, according to estimates released Friday by the California Association of Realtors. The inventory levels are now at their lowest level since 2005, resulting in frenzied sales with multiple offers in some cities.

In Northern California's Santa Clara County, where inventory has dropped to 50 days from 243 a year ago, Amanda Garcia said she and her 62-year-old father Luis Garcia finally gave up a nine-month search for a home last month, after they kept losing out on homes priced in the highly competitive sub-$500,000 market.

"It's more like an auction nowadays," said Ms. Garcia, 26, a medical coordinator from Milpitas, Calif. "They shouldn't call it a house sale."


California's housing market is closely watched because it is the nation's biggest and helps fuel both the state's economy and the national building industry. With California still weighed down by economic problems, including a 12.4% unemployment rate, higher than the 10% rate nationwide, economists are looking at bellwethers like housing to determine when California will rebound.

Of course, any long-term revival in housing will depend on California's ability to shake off its high unemployment and the continuing threat of more foreclosures. Some housing experts cautioned that inventories may be artificially low because many would-be sellers are waiting for the economy to improve before putting their homes on the market.

"I'm convinced that once the general public believes prices have bottomed out and are coming up, more people will put their homes on the market," said Andrew LePage, an analyst at MDA DataQuick, a housing-data provider in La Jolla, Calif. "And that will probably coincide with the economy and job market improving."

Although most home prices remain well below their pre-bust highs of three years ago, California's overall housing market has shown signs of stabilizing since early last year. The median price of an existing, single-family home rose 8.4% from a year ago to $306,820, marking the second consecutive year-over-year increase and the 10th straight month-over-month jump, according to estimates by the state Realtors' association.

Sales rose at a slower year-over-year rate of 1.7%, compared with double-digit gains in recent months. Sales have been powered, in part, by a federal tax credit of $8,000 for first-time buyers, which Congress extended until the end of April.

Some brokers attributed the sales slowdown to lean inventories. "Right now, we need more listings," said Lianne Pinkston, a Coldwell Banker broker in Morgan Hill, Calif., south of San Jose. "I have an all-cash investor, and they've wanted to buy a duplex or four-plex, and they've been making all-cash offers for over the asking price, and they're still not getting anything."

The current inventory rate is running well under California's historical average since the 1980s of about an eight-month supply of existing homes on the market. That's partly because a once huge supply of foreclosures in the state has dwindled. In November, foreclosed properties accounted for 40% of all single-family sales, new and used, in California, compared with 58% in January, according to the most recent estimates by, a market tracker.

In general, California's coastal markets performed better than inland markets. In Orange County, for example, Zillow estimates foreclosures dropped by more than one half to 20.6% of all single-family sales in November from 43.5% in January. In inland Merced County, foreclosures were also down, but to 69.9% of sales from 83.4% in January, according to Zillow.

The return to the kind of bidding wars that marked the state's boom years in some coastal cities hasn't been welcomed by home buyers. In Orange County, graphics designer Scott Butler put in one of 37 offers on a three-bedroom, two-bath home listed for $350,000 in early September. Mr. Butler bid full price for the home in Mission Viejo, Calif., and offered to put 20% down, but the winning bid went over $430,000, said his agent, Michael Caruso.

Mr. Butler, 39, who has since given up his search, said he was outbid on more than 20 other homes since early 2009. "It's very discouraging," he said.

For more information please contact Ashlie Ducros 714-743-9778 or



Active homes on the market Vs. Homes in Escrow

by Ashlie DuCros


Check out Orange County Stats for Febuary 2010!



# of Active Homes on Market

# of Homes in Escrow

Yorba Linda









Anaheim Hills



Newport Coast















Corona Del Mar



Villa Park



North Tustin



Displaying blog entries 1-5 of 5




Contact Information

Ashlie DuCros & Associates
Coldwell Banker Previews Global Luxury
21580 Yorba Linda Blvd.
Yorba Linda CA 92887
Fax: 714-849-5489