There are so many factors influencing the housing market right now it’s like playing a pinball machine. Interest rates, "shadow inventory," seemingly tighter credit, short sale navigation, conflicting statistics, and disinterested sellers. At the same time interest rates, though rising as of late, are still at historic lows. (Are we really complaining about the recent rate increase from the low 4% range to the low 5% range?) And yet Trulia’s recent survey found 70% of Americans view homeownership as part of the personal American Dream. (Harris Interactive conducted this online survey on Trulia’s behalf in January 2011.) What does this mean? According to a recent Trulia press release, "although foreclosures and underwater homes continue to plague the current housing market...three out of four homeowners (78%) say their homes are the best investment they ever made. Conversely, only 20% feel trapped in their ‘underwater’ homes while 14% said they would walk away from their homes in a heartbeat if they could." In other words, the negative is getting all the press. Many people are highly satisfied with their decision to own homes. In fact Trulia reported that 88% of 18-34 year old renters aspire to be homeowners. The next generation of buyers will play a crucial role in stabilizing today’s market and it would appear they are up to the task.

All of So Cal, that being Ventura county down to San Diego and including the Inland Empire, had total sales of 14,458. That number was 5.9% down from a year ago. It may now so much reflect a softer market as the absence of the tax credit. However, price median is a more interesting statistic. The median for So Cal was $270,000, which was only down 0.6% from a year ago. We are hearing in the news right now that prices are softening. This may be true because the "shadow inventory" is not a rumor. It is very real and banks are beginning to "pull the trigger" on many homes that have been languishing in various stages of foreclosure. Expect to see more REO (real estate owned by banks), short sale, and deed in lieu of foreclosure listings this year and next. But waiting for prices to soften to buy may not be a good enough reason if you are a student of interest rates. They appear to be on the rise. After all, at some point inflation has got to be a factor, it cannot be held at bay indefinitely. A discussion with a good lender can bring to light that you may be better off with a lower rate on a loan, than a lower price on the home. ORANGE COUNTY saw its best January in 4 years for home sales. Discounting appears to be a part of that unless you have a premium equity sale. Houses are basically falling into two obvious categories: distressed and premium ready to buy.

"We’re seeing a national resurgence of buyer and seller activity on Trulia.com. In January alone, we experienced an unprecedented level of site traffic including 11 million unique visitors - which is more than 70% year-over-year growth. We’re now experiencing 100,000 property views per minute.

The total number of sales for Orange County was 1,929. (These numbers are January, the last complete month available.) Although that was down almost 30% from December, it was an expected, seasonal drop. Month and year end December always brings about one of the largest closing months of the year. If you compare this January from January of 2010, it was a rise of 3.3% in sales volume, a somewhat weak indicator that even housing may be turning around. The median price rose slightly (1.2%) to $415,000 from December, but did in fact sink 2.4% from January 2010. There was the expected high number of sales in the under $400,000 price range (879) and the smaller than usual 343 (-24.1% from December) in the highest price range, over $700,000. If you’ve been following the headlines, you would have noticed many articles on the anticipated price crunch for luxury homes. True, in fact, as the luxury sales jump 21% as prices slide. The Sunday OC Register highlighted two such homes in San Juan as having price reductions of over $2,000,000 each and each house was listed between$7,000,000 and (originally) $15,000,000. (February 27th, real estate section,) The average down payment continued to hover near 20% and the adjustable loan share is at 10%.

Over 50% of sales right now, and it isn’t going to change anytime soon, are distressed. This includes short sales, and foreclosures of all types. Orange County had a total of 1,534 Notices of Default, which is the beginning of the foreclosure process. That was up 16% over ecember, but down nearly 2% from a year ago. The number isn’t as bad as you may think, as lenders intentionally suspended foreclosures over the holidays, and properties that have been delinquent for months finally get their notices. However, to keep things in perspective, Los Angeles County had 82,931 Notices of Default recorded in 2009 as compared to 48,069 in 2010. Things are getting better. Statewide, the number of January home sales that were bank owned was 32% up 2% from December but down from 37% January 2010. The short sale number was 22%, up from 20% December and up from 19% in January 2010. That last number is significant because it shows an increase in flexibility from the lenders and a willingness to process the short sale rather than foreclose.

It’s hard to believe that there may be compelling reasons to do both at this point in this market. If you want some really interesting food for thought, visit the kcmblog.com site for complete lists, or call me for a copy. The reasons to sell are more complex than can be mentioned here, but buying is succinct: 1) Interest rates are on the rise 2) Your dream home will never be cheaper (and if it is, by waiting, interest rates may make it more expensive) 3) Buyers are out early 4) Inventory increases every spring (and therefore your competition for properties) 5) We are in the eye of the foreclosure storm (take predictability at this point).