If you want to know what happened 30 to 60 days ago in real estate read the newspaper.

The OC Register last week garnished the front page with a giant “O.C. Housing Market Red-Hot” headline. I think this columnist is late to the party, or maybe I don’t understand her definition. Since the interest rates increase started on “black Wednesday” June 19th, rates have risen over one point the market has “cooled” substantially. I do understand that the columnists are reacting to housing reports produced by NAR and released after the fact.

“Robust supply of homes leads to 42% sales increase” the article says. Actually supply was LOW until the rates went up and NOW supply is increasing as escrows drop. Those in the trenches realize that it was the low interest rates and more importantly the loss of the supply of “distressed listings” that has created the increase number of sales and higher prices.

We are now headed to a more normal market because of two things. The interest rate increase means the borrowers can only qualify for 90% of the house that they could qualify for two months ago. In addition many sellers have come late to the party and have built into their pricing additional increases which are NOT now occurring due to the interest rate hike. Many homeowners that have been underwater or who bought at the peak of the market are hoping that they can now sell at previous peak prices which may not happen.

My observation is that we have recovered a 70 to 90% of peak pricing in Laguna Niguel and Dana Point areas. I have also observed that many well qualified buyers who were unable to buy or could not compete with the cash buyers this spring are now somewhat disgruntled and are in a wait and see mode. Some are starting to put in lowball offers which now creates the buyer/seller standoff.

Ron Buck, Realtor®

Ron Buck has been a real estate broker for 16 years with over 450 successfully completed transactions. He is a 11-year resident of Laguna Niguel and is an expert in south Orange County real estate. You can contact him at Ron@JonRonRealEstate.com or 949.456.0505.