• OC Housing Report: Is Housing Unaffordable?

• SOLD by Kim and Joanne

• Greenbrook Neighborhood Real Estate Update

• Garage Sale

• Summer Movie Express

• Street Sweeping July 2021

—The City of Fountain Valley is proud to an-

nounce the opening of the newest Ayres Ho-

tel. The hotel is located near the corner of

Brookhurst Street and Slater Avenue on the

former site of Safeco Insurance. The new

Ayres Hotel is a full service, 127 room all

studio suite hotel featuring transitional, up-

scale boutique decor. The hotel offers 87 king

studio suites and 40 two-queen studio suites.

An Asian Fusion restaurant named Fusion

Bites is also located

onsite. Ayres Hotels owns and operates a

collection of custom, European-style boutique

hotels throughout Southern California. The

hotel opened December 16 and will have it’s

ribbon cutting on January 16th.

—The Hyundai building should be completed

June 2021

GOING ON VACATION? HOME PROTECTION TIPS

•

A Monthly Insight Into Our Greenbrook, Fountain Valley, and Surrounding Area Real Estate Market and More!

Orange County Housing Report: Is Housing Unaffordable? from Steven Thomas’ Reports on Housing

As home values rocket upwards, affordability weakens, yet homes are still not too far out of reach for most buyers because of low mortgage rates.

Low Rates Prop Up Affordability—Even with record level home prices, low mortgage rates keep affordability in check.

In 1980, a new car cost around $7,200 and a gallon of gas was $1.19. It was $2.25 for a movie ticket, 15 cents for a first-class stamp, 91 cents for a dozen eggs, and $2.16 for a gallon of milk. Wow! It was cheap living back in 1980. Reminiscing and longing for the good ol’ days leaves out a very important, often overlooked difference, income. The Orange County median household income in 1980 was $22,000, a drop in the bucket compared to today’s $100,000 level.

It boils down to perspective. Looking only at housing prices tells only part of the story. It is important to also consider household in-comes and the prevailing mortgage rates. Naysayers are quick to point out how the median sales price was much lower back in prior years; however, taking into consideration both the median income and the average 30-year mortgage rate illustrates how buyers can afford so much more today. The historically low mortgage rate environment has stoked today’s unsatiable demand and has allowed housing to soar over the past year.

To understand where this heightened demand and buyer’s exuberance is coming from it is necessary to consider where interest rates and income have historically been and their impact on affordability. The chart below highlights how higher interest rates limit the price of a home that a buyer can afford. In 1980, the average mortgage rate was 13.75%, the median income was $22,000, and the median detached sales price was $108,000. That meant that the monthly housing payment was 55% of a homeowner’s income. Rates contin-ued to drop and incomes climbed decade after decade. In 2000, mortgage rates were at 8%, the median income grew to $56,000, and the median detached sales price had blossomed to $317,000. Yet, the monthly payment was only 40% of a homeowner’s in-come. It swelled to 59% in 2007, just prior to the start of the Great Recession, and dropped to 33% in 2012 as housing began to climb once again. Flash forward to today’s 3% mortgage rate, $101,000 median income, and a record setting April median detached sales price of $1,100,000, and the monthly housing payment is 44% of a homeowner’s monthly paycheck.

Mortgage rates reached 17 record lows since the start of the COVID-19 pandemic, which dropped the monthly payment substantially. That meant that a much smaller slice of a homeowner’s monthly paycheck went to paying the mortgage payment. It dropped to 37% last year, prompting buyer demand to escalate. As a result, prices surged and incomes have not kept up; thus, affordability eroded and now stands at 44%. In perspective, today’s level is not yet concerning.

It is important to note that when interest rates do rise down the road, it will impact affordability considerably. At today’s $1,100,000 median de-tached sales price and $101,000 household income, a 3.5% rate would result in a monthly payment that would be 47% of a homeowner’s in-come. At 3.75% it would rise to 49%. Today’s historically low mortgage rates have led to a heightened sensitivity to smaller rises in mortgage rates. As rates rise in the future, the housing market will most certainly downshift.

Based upon the number of homes available to purchase today and cur-rent, red-hot buyer demand, the Expected Market Time (the time be-

tween hammering in the FOR-SALE sign and opening escrow), a snapshot of the speed of the local housing market, has remained at the ultra-low level of 22 days, a scorching Hot Seller’s Market. It is technically a “Hot Seller’s Market” when the market time falls be-low 60 days. Today’s 22-day level is far below that threshold, indicative of a market with rapid price appreciation, multiple offers, and an auction like atmosphere that results in most homes selling above their asking prices. The current market time levels reveal that there is still room for home values to climb in spite of the erosion in home affordability. The Bottom Line: In considering today’s ultra-low mortgage rate and rising median household income, the monthly payment for the record level median detached sales price is still affordable. There is not enough emphasis on the importance of looking at the monthly payment of a home and the impact on a family’s budget; instead, way too much weight is placed on where prices stand today.

2124 Main St, Ste 220, HB 92648

Kim Loiacano 714-318-4800 kimloiacano@verizon.net DRE #01447927

Joanne Kennedy 714-296-3340

jfksellshomes@gmail.com DRE #01332936

Greenbrook Neighborhood Realtors & Resident

With over 35 years of combined experience, let us assist you with all of your real estate needs.

Call us today for a free market evaluation of your home, or any real estate questions you may have. We are here to help!

*Based on information from the Assoc. of REALTORS® MLS. Data obtained as of 4/10/21 thru 6/10/21 and/or other sources. MLS does not guarantee, nor is in any way responsible for it’s accuracy. The report of residential home sales is not meant to imply that sales activity shown is that of the Broker/Agents providing the

information. Broker/Agents may or may not have been the listing and/or selling agents. If your property is currently on the market, please disregard. This is not meant as a solicitation.

Street Sweeping Dates: July 2021

Friday, July 2nd Friday, July 16

Reminder: street sweeping is the 1st and 3rd Friday from

10:30 am to 2:30 pm

SOLD $1,450,000 by Kim and Joanne

8728 Frazer River Circle

5 Bdrms, 4 Baths, 3407 Sq. Ft., Spacemaker 2

Multiple offers received

Sold for $50,000 over

list price!

$40,000 over last sale

On 5/5, just one month earlier, this same Spacemaker 2 floorplan sold in Greenbrook:

18208 Santa Sophia Cir*, 5 bdrms, 4 Baths, 3407 Sq. Ft. (per tax assessor), upgraded home. SOLD FOR $1,410,000

Why did Kim & Joanne’s listing sell for more?

1—The fast pace of the market 2—Differences in marketing strategy

*Kim and Joanne were the listing agents for the Frazer River house. A First Team agent represented the seller & the buyer on the

Santa Sophia sale in May.

Greenbrook Neighborhood Real Estate Update*

IN ESCROW—18487 Santa Alberta—Seville, 3 Bdrm 2 Bath,

1539 Sq. Ft. Remodeled. List Price: $1,050,000

SOLD—8728 Frazer River Cir—Spacemaker 2,

5 Bdrm 4 Bath, 3407 Sq. Ft. Sold Price $1,450,000

SOLD—18414 Santa Belinda—Spacemaker 1,

5 Bdrm 2.5 Bath, 2710 Sq. Ft. Sold Price: $1,255,000

GARAGE SALE—Coming this fall

No date scheduled yet so if you have a preference, September or October, contact us through text, phone or email and let us know. Watch for

further details!

KIDS SUMMER MOVIE EXPRESS 2021

Edwards Metro Pointe Stadium 12

901 South Coast Drive—Costa Mesa, California, 92626

ALL MOVIES START AT 10:00 AM

(BOTH MOVIES PLAY BOTH DAYS)

June 22/23 Cloudy with a Chance of Meatballs / The Emoji Movie June 29/30 Pokemon Detective Pikachu / The Lego Batman Movie

July 06/07 The Croods: A New Age / Muppet Movie

July 13/14 The Lego Ninjago Movie / Trolls World Tour

July 20/21 Sonic The Hedgehog / Sing

July 27/28 Spider-Man: Into the Spider-Verse / Angry Birds Movie 2

Aug 03/04 The Lego Movie 2: The Second Part / Minions

Aug 10/11 Kung Fu Panda / Despicable Me

Aug 17/18 How to Train our Dragon: The Hidden World / Madagascar Aug 24/25 Goosebumps / Dora and the Lost City of Gold

Aug31/Sep1 The Secret Life of Pets / Dolittle

(Admission is $1.00 with a part of the proceeds going to Will Rogers Institute)