Caruso’s Top 3

 Since starting in real estate years ago I have come to conclusion that buying a home is one of the biggest decisions an individual can make. So it’s understandable that one considering a home purchase may take their time to avoid rushing into such a large financial commitment. However, several factors might leave prospective home buyers who don’t purchase a property now wishing they had taken action sooner.

“Current market conditions have created a perfect storm of sorts that has made it an ideal time to purchase for first-time and trade-up buyers alike,” said James M. Weichert, president and founder of Weichert, Realtors. “Those who have the means and the desire to buy now but don’t, aren’t likely to see such a great opportunity again anytime soon.”

Specifically, Weichert offered three reasons why those who aren’t under contract to purchase a new home by April 30, 2010 might regret it.

1. They won’t receive a sizeable amount of money from Uncle Sam.

For the past two years, the federal government has offered a home buyer tax credit to help stimulate the economy. But that financial incentive is set to expire soon. First-time buyers who aren’t under contract to purchase a home by April 30, 2010 will leave the $8,000 that is available to them through the tax credit on the table. Meanwhile, repeat buyers will miss out on the opportunity to collect up to $6,500 from the government.

2. They might not lock-in on the historically-low interest rates.

Thanks to measures taken by the Federal Reserve including the purchasing of mortgage-backed securities, interest rates have remained historically-low for several years. With the economy beginning to show signs of recovery, it is widely believed that the government will soon put an end to these stimulus efforts.

If that happens, many economists believe we will begin to see a sharp increase in interest rates which could result in a much higher monthly payment for those who wait. For example, an interest rate increase of 1% on a 30-year fixed mortgage of $300,000 could cost a buyer $188 more a month or $67,000 more over the span of the entire loan.

3. They might miss out on record home price affordability.

Home price affordability is at its most optimal level in decades. As a result, those who wait to buy will likely pay more for the home they purchase than what that same home would cost right now. In fact, home prices have already begun to rise slightly in some markets. Instead of getting a better bargain, waiting to buy a home might net buyers a higher purchase price, less appreciation and less house for their buck.

“There is no time to waste for anyone who wants to take advantage of this great buying opportunity. Particularly for those who have a home to sell first,” added Weichert. “If you are prone to saying ‘what if’ and wondering what could have been, you will thank yourself down the road for buying now.”

 And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

 2007 President, Orange County Association of Realtors (949) 753-7900

For more information, visit

Caruso’s Recession Update!

Is the recession finally coming to an end? According to the housing crisis is finally stabilizing in 5 cities, and the job outlook is positive.

In recent weeks business in Washington, D.C. ground to a halt as record snowfalls pummeled the area and a sparring match over national health care reform hijacked the political conversation. But the nation’s capital is getting something right: It is emerging from the recession better than any other major city in the country, according to research by Forbes.

Jobs in Washington are growing quickly, and in 2008 the city produced more in goods and services than almost anywhere in the country.

D.C. and nine other cities (among them: Boston, Los Angeles and a host of metros in Texas) are best surviving the downturn in part because they specialize in industries that are relatively insulated from economic volatility. Federal and state jobs all but guarantee the health of a local economy, and nowhere is there more government-related work than in Washington. The city has one of the lowest unemployment rates in the country, at 6.2%, and its output amounts to $362.3 billion, more than three times the average for the country’s largest cities.

It also saw a more modest slide in home sale prices than many other metros in late 2009. Cities where the recession’s effects are lessening either never felt the full brunt of the housing crisis, or have proven resilient enough that demand is returning sooner than elsewhere in the country. These strong housing markets further enrich the local economy by feeding a host of secondary industries, like construction, lending and household services.

Uncle Sam as a recession shield
Government spending hasn’t hurt Austin, Texas, either. It’s the seat of state government and tied for No. 1 on our list of 10 cities best surviving the recession. Jobs have been lost nearly everywhere in the past three years, but between December 2007 and December 2009 the number of jobs in Austin rose by 0.98%; more than any of the other major cities we looked at. And jobs are expected to grow by 8.09% in the next three years, the second-best job outlook on our list. Third on the list is Dallas, home to a thriving technology and enery sector where jobs are projected to jump 7.19% in three years.

Behind the numbers
To find the cities where the recession was easing, Forbes looked for a relatively low unemployment rate, using December 2009 figures, the most recent available, and the rate of job growth between December 2007 and December 2009, both from the Bureau of Labor statistics. We sought cities where economists expected that jobs would keep growing, based on the three-year job-growth forecast from; we also looked for metros with the highest positive change in median sale price for single family homes between the third and fourth quarter of 2009, according to the National Association of Realtors. Finally, we factored in Metropolitan Gross Domestic Product – the dollar amount of goods and services produced within a metro area – provided for 2008, the most recent available, by Moody’s.

Forbes ranked the 40 largest Metropolitan Statistical Areas for which it had comprehensive data (that excludes Nashville, Tenn. and Detroit) on all these measures, then averaged the rankings for a final score.

Good fortune in the Lone Star State
If one state is a poster child for economic recovery, it’s Texas, home to four of the 10 cities on our list. There’s more to why Austin, Dallas, San Antonio and Houston are faring well than just the state’s energy industry. The tech, government and education industries supplement the oil state’s riches. As for housing, cities in Texas didn’t see the same run-up in home prices and rampant speculation that led to the spectacular bubble burst elsewhere in the country.

 “The housing market got lucky, if you want to look at it that way,” says James P. Gaines, research economist at the Real Estate Center at Texas A&M University. “We didn’t have excessive overbuilding, so we don’t have a big overhang of unsold new homes, and because Texas has among most affordable housing in the country, the demand sustained.”

Like Austin and Dallas, Houston, tied for No. 4 on the list, is expected to experience a three-year 7.03% rise in jobs. But nowhere are jobs projected to grow more than in San Antonio, where four military bases should help drive its expected 8.32% increase.

Hope where housing markets stay afloat
California was perhaps hit hardest by the housing crisis. In spite of that, Los Angeles rises above the rest of the state, and other big cities in the country, to No. 9 on our list. Although the Golden State’s real estate woes began earlier and were more pronounced than in large parts of the country, they began easing sooner.

Los Angeles has strong banking and finance industries and a housing market that, while it suffered from a major pricing bubble and bust, has seen a resurgence of demand. After falling to a median $311,100 in the second quarter of 2009, home sale prices there jumped 11% in the third quarter and another 2% between the third and fourth quarter of 2009 to a median $342,700, according to the National Association of Realtors, making No. 4 in sales-price improvement out of our 40 cities.

Although it’s across the country, Boston, No. 8 on the list, has some of the same characteristics that make Los Angeles recession-resistant. Like the City of Angels, it is a cosmopolitan city and an educational center, chock full of amenities and jobs. Unemployment is below the 9.7% national average, at 8.2%, and the city pumped out a healthy $284.3 billion GDP in 2008.

Bright lights in the Midwest
Many former manufacturing centers in the Midwest suffer from pronounced economic troubles that began before – and will likely extend beyond – the country’s recession. But that’s not the case in two Midwest cities, Minneapolis and Kansas City, Nos. 4 and 10 on our list, respectively. Incidentally, Kansas City has extra cause to celebrate its appearance on this list: it’s also No. 13 on Forbes’ list of the 20 most miserable cities. High taxes, crime rates and poorly performing sports teams landed it on that list, which ranked cities on nine metrics, most of them non-economic (for example, pollution, government corruption and commute times). A promising economic outlook should give Kansas City residents reason to feel less miserable.

In Minneapolis, unemployment is a relatively low 7.2%. The Twin Cities have moved away from their manufacturing roots and are headquarters to major companies that include Cargill and General Mills. Although Kansas City, Missouri’s largest city, has lost jobs in the past three years, it has done so at a slower rate than most other cities, only dropping 2.7%, thanks in part to a strong education sector and a diversity of industry.

The cities quickest to emerge from the recession benefit from evergreen industries like government, defense, education and technology – sectors that will always provide work, even in a national slump. In addition, these five cities are diverse; their fortunes aren’t invested solely in one industry, giving them good prospects for the future.

But what do you think???

And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

As seen in For more information visit

Caruso’s Facts

As seen in The New York Times, David Streitfeld goes into detail on the program that will pay homeowners to sell at a loss.

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

Taking effect on April 5, the program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to shed their houses through a process known as a short sale, in which property is sold for less than the balance of the mortgage. Lenders will be compelled to accept that arrangement, forgiving the difference between the market price of the property and what they are owed.

“We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury senior adviser.

The problem is highlighted by a routine case in Phoenix. Chris Paul, a real estate agent, has a house he is trying to sell on behalf of its owner, who owes $150,000. Mr. Paul has an offer for $48,000, but the bank holding the mortgage says it wants at least $90,000. The frustrated owner is now contemplating foreclosure.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance.

For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

If short sales are about to have their moment, it has been a long time coming. At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor-intensive process and were suspicious of it.

The lenders’ thinking, said the economist Thomas Lawler, went like this: “I lend someone $200,000 to buy a house. Then he says, ‘Look, I have someone willing to pay $150,000 for it; otherwise I think I’m going to default.’ Do I really believe the borrower can’t pay it back? And is $150,000 a reasonable offer for the property?”

Short sales are “tailor-made for fraud,” said Mr. Lawler, a former executive at the mortgage finance company Fannie Mae.

Last year, short sales started to increase, although they remain relatively uncommon. Fannie Mae said preforeclosure deals on loans in its portfolio more than tripled in 2009, to 36,968. But real estate agents say many lenders still seem to disapprove of short sales.

Under the new federal program, a lender will use real estate agents to determine the value of a home and thus the minimum to accept. This figure will not be shared with the owner, but if an offer comes in that is equal to or higher than this amount, the lender must take it.

Mr. Paul, the Phoenix agent, was skeptical. “In a perfect world, this would work,” he said. “But because estimates of value are inherently subjective, it won’t. The banks don’t want to sell at a discount.”

There are myriad other potential conflicts over short sales that may not be solved by the program, which was announced on Nov. 30 but whose details are still being fine-tuned. Many would-be short sellers have second and even third mortgages on their houses. Banks that own these loans are in a position to block any sale unless they get a piece of the deal.

“You have one loan, it’s no sweat to get a short sale,” said Howard Chase, a Miami Beach agent who says he does around 20 short sales a month. “But the second mortgage often is the obstacle.”

Major lenders seem to be taking a cautious approach to the new initiative. In many cases, big banks do not actually own the mortgages; they simply administer them and collect payments. J. K. Huey, a Wells Fargo vice president, said a short sale, like a loan modification, would have to meet the requirements of the investor who owns the loan.

“This is not an opportunity for the customer to just walk away,” Ms. Huey said. “If someone doesn’t come to us saying, ‘I’ve done everything I can, I used all my savings, I borrowed money and, by the way, I’m losing my job and moving to another city, and have all the documentation,’ we’re not going to do a short sale.”

But even if lenders want to treat short sales as a last resort for desperate borrowers, in reality the standards seem to be looser.

Sree Reddy, a lawyer and commercial real estate investor who lives in Miami Beach, bought a one-bedroom condominium in 2005, spent about $30,000 on improvements and ended up owing $540,000. Three years later, the value had fallen by 40 percent.

Mr. Reddy wanted to get out from under his crushing monthly payments. He lost a lot of money in the crash but was not in default. Nevertheless, his bank let him sell the place for $360,000 last summer.

“A short sale provides peace of mind,” said Mr. Reddy, 32. “If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

Mr. Reddy still lives in the apartment complex where he bought that condo, but is now a renter paying about half of his old mortgage payment. Another benefit, he said: “The place I’m in now is nicer and a little bigger.”

And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

For more information visit

Caruso’s Mortgage Update

As seen in The Wall Street Journal, James R Hagerty explores mortgage rates and the fear that even a small increase could hurt a still-fragile housing market.  

As the Federal Reserve winds down its intervention in the mortgage market, rates on home loans are generally expected to rise at least modestly during the rest of this year from today’s unusually low levels. Some analysts believe mortgage rates will jump to around 6% by year end from 5% in recent weeks, while others see only a slight increase.

Meanwhile, federal tax credits available for some home buyers are due to expire at the end of April, adding to the sense of urgency many shoppers feel.

“I’d hate to miss out on really low [mortgage] rates” or the tax credit, says Jennifer Hale, a veterinarian who is looking for a new home near Minneapolis with her fiance, Lawrence Nystrom.

If rates do go up sharply, that will have a big effect on home buyers. Richard Redmond, a mortgage adviser at All California Mortgage in Larkspur, Calif., offers the example of a couple with combined pretax income of $100,000 a year and debt obligations (excluding mortgage) of $500 a month. At a 5% mortgage rate, he figures, the couple could qualify for a loan big enough to buy a $590,000 house, assuming a 20% down payment. At 6%, that would fall to $540,000.

Since late 2008, 30-year fixed-rate mortgages have been available for people with strong credit records at around 5%, near the lowest levels since the 1950s, thanks to the Federal Reserve’s heavy purchases of mortgage securities. At the end of March, the Fed is due to stop buying the securities. Most mortgage analysts think the immediate effect of the Fed’s withdrawal will be modest.

Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group LP in New York, estimates that the Fed move will add a maximum of about 0.25 percentage point to mortgage rates. “There is a lot of private money on the sidelines,” waiting to buy mortgage securities once the Fed stops gobbling most of them up, Ms. Goodman says. She points to banks, money managers and foreign investors.

What happens to interest rates over the rest of this year depends on many factors that are hard to predict, including the strength of the economy, Fed policies and foreign investors’ willingness to buy U.S. debt.

Projections vary widely. At the lower end of the scale, analysts at Credit Suisse and FTN Financial Capital Markets forecast that mortgage rates will be in a range of roughly 5% to 5.25% at the end of 2010. Moody’s projects about 5.7%, and Barclays Capital 6%. Barclays cites a general rise in interest rates propelled by heavy government borrowing and a strengthening economy as the main factors.

And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

For more information visit

Caruso’s OC Happenings~North County



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This Saturday March 20, 2010 the Brea Community Center will be hosting its annual Spring Craft Boutique from 9 am to 4pm. For more information please visit


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Starting Wednesday March 24, 2010 the Police Department will host a 10 week Citizen Police Academy. Classes will be every Wednesday from 6 to 9pm. You must be at least 21 years of age. For more information call 714-738-6836


Spelling Bee! Wednesday March 24, 2010 Garden Grove Unified School will be hosting a spelling bee at 9am for the school district. For more information call 714-663-6503


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Saturday March 20, 2010 there will be a community graffiti clean-up at 9am to noon at the corner of Western Avenue and Orangewood Avenue. For more information please call 714-558-4400


Starting this Saturday from 9am to 1pm the city’s Housing Division will host its monthly First Time Homebuyer Education Course. For more information please call 714-548-3495


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And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

For more information visit

Caruso’s OC Happenings~Central County



Coming up March 25, 2010 is the 9th annual St. Joachim Golf Classic at Costa Mesa Country Club. There will be a putting contest, cocktail reception and a silent auction. For more information visit or call 949-675-5791


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FREE toddler swim lesion will be given at the Racquet Club on Tuesday March 23, 2010 at 3pm. Class is about 20 minutes. To reserve your spot call 714-641-2636.


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Restaurant week will only be promoted once a year now instead of twice so keep your eyes and ears open for that glorious week.


Author Stephen J. Cannell will be signing his book “the Pallbearers” from 11am to noon this Saturday at Book Carnival located at 348 S. Tustin Ave. For more information please call 714-538-3210


Need help dealing with your teenager? For the rest of the month Santa Ana Unified School District’s Student Achievement Department will host a series of parenting workshops. The workshops will provide conversation techniques parents can use when dealing with teens and preteens. For more information visit or call 714-558-5622.


This Saturday from 10am to 3 pm the Seal Beach Chamber of Commerce will host a health faire at the Shops at Rossmoor. The event will feature health screenings, product samples and free giveaways. For more information visit


Sunday, March 21, 2010 there will be a FREE rainwater harvesting workshop from 1 to 3pm to teach participants how to capture and use rainwater while saving money though water conservation. For more information call 949-677-6097


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And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

For more information visit

Caruso’s OC Happenings~South County

South County 


It’s going to be 4th of July before you know it. Plans for the community’s 2010 July 4th celebration are in the works! So far, The Surftones will be the live entertainment and Pyro Spectaculars will be providing the fireworks.


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A former senior assisted-living facility was recently approved by The Planning Commission to be turned into a group home for developmentally disabled young adults.


Project 999, a fund established for the families of OC peace officers killed or injured in the line of duty will receive $1,000 donation.


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UPDATE! TK Burgers on Chrisanta and La Paz Road is now open for breakfast. The restaurant is now open at 7am.


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The San Clemente Presbyterian Church is collecting medical and hygiene supplies for a hospice in the Baja California village of Valle Bonito. For more information call 949-481-0116


Adventure Day finally returns this Saturday March 13 to Caspers Wilderness Park from 10am-3pm. Music, nature tours, arts & crafts, games and refreshments are all free to families visiting the park. For more information please visit

And thank you for making me Your Orange County Real Estate Connection

Best regards,

Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI

2007 President, Orange County Association of Realtors (949) 753-7900

For more information, please visit