Today’s Microscope on the Market focuses on Coto de Caza.

If you aren’t from Orange County – yes this is the home of the infamous Real Housewives of Orange County, although I can’t say that the friends that I have living in Coto are anything like the woman as depicted on that show.  It’s really a beautiful gated community with homes in a wide variety of prices ranges.  But I won’t kid you – some of the highest priced homes in Orange County are behind these gates.

I toyed with varying the breakdown that I usually do (Under $500k, $500 to $750, and over $750), but I’ve decided for a number of reasons to leave them.  More later….

Homes Under $500,000

Although clearly, there is not a lot in Coto in the under $500 market, the buying behavior is similar to other parts of the county – all 5 that are in escrow and the 1 closed sale are all either bank owned properties or short sales.

Homes $500,001 to $750,000

This was one of the rare instances where current equity sellers in escrow actually exceeded the active listings that were equity sellers. I’m not ready to ready too much into it – we are only talking about 6 sellers.

Homes Over $750,001

Given the wide range of values in the upper end of the market in Coto, I think it’s important to take note of just a few things in the over $750,000 segment:

• The highest priced home currently in escrow is $1,099,000.
• The highest sale in the last 30 days is $1.6 million.
• The highest sale in the last 6 months per SocalMLS was $2.9 million.
• The only sale over $2.9 in the last 12 months was the record sale on Violeta for $19.5 million.  There have been no sales other sales over $2.9.
• In the preceding 12 months there were 7 sales over $2.9 million ranging from $3.2 million to as high as $6,643,750.  (Where did that buyer profile go?)
• Currently, there are 24 homes over $2.9 in Coto de Caza – 16% of the active inventory.

While the residents of Coto de Caza may be used to having a longer time on the market given the price point, there is no question that they are certainly feeling the shift in the market at the higher end as well.  We have seen the high end somewhat insulated until recently, but when you seen see such a significant drop in purchases at the highest end, you know that no one (not even the ‘Real OC Housewives’) is protected.

Then the announcement came regarding an $8,000 tax credit.  Forgive me, but whoop-dee-do.

While this may be meaningful in the lower price points, we aren’t having trouble there these days.  Market time in the under 500,000 range is running around 4 months, and 30 days if it’s not a short sale.  Clearly, that is a strong seller’s market.

Where do we need help?  The higher price points are hit hard by tight financing, consumer confidence, and high inventory.  And frankly, in those price points, the value of a home could potential fall $8,000 while you are in escrow.  Not to mention, first time buyers that qualify for the tax credit, aren’t generally buying in that price point – so I guess that doesn’t excite me much.

Most recently, plans were announced to cut mortgage deductions for those in the higher income tax bracket.   Now, if you live in Orange County and you are making $208,850 or more, you are living a lifestyle that is a far cry from someone living in the Midwest on the same income.

Example:

You may have purchased a home in 2006 that you are affording (barely because your bonus didn’t come through this year), and you may have lost 30% of the value since you purchased.  Since you are considered part of the ‘wealthy’ in the country, you are now on the verge of loosing some of your mortgage deduction.  You know – the mortgage you’ve been trying to hang onto, even though you owe more than the house is worth….

I’m waiting for the part of this plan that impacts California.  Maybe I wasn’t clear last time I mentioned this – one that impacts California in a positive way.