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16
Feb

CCL Market Update: Jobs, Retail Sales, Mortgage Rates, and a Comparison of Coastal CA Real Estate

The jobs report shows an increase in job openings for the end of 2014, which went from 4.847 million in in November to 5.028 million in December. Similarly, the number of hires in December totaled 5.148 million, up from 5.054 million in November, and the highest number of hires since November 2007. The rise in job openings and hires portrays a slowly improving job market in the U.S.
Retail sales in January fell more than expected, down 0.8%, after declining 0.9% in December. Analysts had previously predicted a fall of only 0.5%. Retail sales are continuing to be impacted by lower gas prices, as well as consumer hesitation to put higher discretionary income into spending.
Consumer sentiment in the U.S. declined in February for the first time in 7 months. According to the University of Michigan, the final sentiment reading for January was 98.1, the highest in nearly 11 years, but that number decreased to 93.6 in February. One explanation for the curbed consumer optimism is the fact that gas prices began to rise this month from a 6-year low. The concern about job losses among energy workers may have also impacted consumer sentiment.

 

Coastal Real Estate

Have you ever wondered how real estate on the Central Coast compares to other coastal areas in California? We have compared the 2014 real estate data for the North Coast, the Bay Area, the Central Coast, and the South Coast.

median home price between coastal regions

The Bay Area contains the four most expensive coastal counties, making it the most expensive region by an average of $353,000. The Central Coast ranks #3 out of 4 for the highest median home price, putting it comfortably in the middle of the spectrum.
Within each region, home values can differ drastically from city to city. Below we have chosen three coastal cities from each region and compared their median home values.

coastal cities home value

When comparing the cities of the Central Coast to the other three regions, home values appear to be moderate—not the highest, not the lowest.

Click HERE to read the complete article!

Mortgage Rates

This week brought a bump up in rates for some of the loan programs, while others remained unchanged. Despite the slight rise, rates continue at low levels.
The programs whose rates increased rose 1/8-points; the 30-year fixed rose from 3.625% (3.663% APR) to 3.750 (3.788% APR), and the FHA 203k, high balance, manufactured conventional, and manufactured FHA programs followed a similar suit. We saw little to no movement this week from the 15-year fixed, FHA, VA and USDA loan programs, and the 30-year jumbo displayed a slight decrease compared to the previous week.

Give us a call at 805.543.LOAN to receive your personalized rate quote!

13
Feb

2014 Real Estate Comparison- Coastal Areas of California

If you are wondering how real estate on the Central Coast compares to other coastal areas in California, you are in the right place!

In this post, we will measure the December 2014 real estate data for the following California coastal regions:

  • The Central Coast (Monterey, San Luis Obispo, and Santa Barbara counties)
  • The North Coast (Humboldt, Mendocino and Sonoma counties)
  • The Bay Area (Santa Cruz, San Mateo, San Francisco and Marin counties)
  • The South Coast (Los Angeles, Orange, and San Diego counties)

 

Median Home Price

 

median home price between coastal regions

 

median home price between coastal counties

The Bay Area contains the four most expensive coastal counties, making it the most expensive region by an average of $353,000. The Central Coast ranks #3 out of 4 for the highest median home price, putting it comfortably in the middle of the spectrum.

Similarly, when comparing the median home price of the coastal counties, San Luis Obispo County ranks #9 out of 13 with a median home price of $488,130. Marin County has the highest median price at $990,130, and Humboldt County has the lowest median price at $263,000.

Within each region, home values can differ drastically from city to city. Below we have chosen three coastal cities from each region and compared their median home values.

 

coastal cities home value

 

Although the Bay Area has the highest median home price, the city with the highest median home value is Malibu, located on the South Coast. The city with the lowest median home value is Eureka, which is incidentally located in the least expensive region, the North Coast. When comparing the cities of the Central Coast to the other three regions, home values appear to be moderate—not the highest, not the lowest.

 

Average Days on Market

 

Avg days on market for coastal regions

 

Avg days on market for coastal counties

Although the North Coast has the lowest home prices, its homes tend to stay on the market for significantly longer than the other coastal regions. The Central Coast is 2nd in this category, as its homes stay on the market for an average of 52.5 days, 14.1 days less than the North Coast, and 15.2 days longer than the Bay area.

San Luis Obispo County homes stay on the market an average of 55.9 days, which makes it #5 out of 13 in this category. The county with homes on the market for the longest amount of time is Mendocino County, with an average of 72.6 days; the county with homes on the market for the least amount of time is San Mateo County, with an average of 20.6 days.

 

Median Household Income

 

It is also relevant to take a look at the median household income of each county within the different coastal regions:

North Coast

  • Humboldt County: $41,426 /year
  • Mendocino County: $43, 469 /year
  • Sonoma County: $63,356 /year

Bay Area

  • Marin County: $90,839 /year
  • San Francisco County: $75,604 /year
  • San Mateo County: $88,202 /year
  • Santa Cruz County: $66,519 /year

Central Coast

  • Monterey County: $59,168 /year
  • San Luis Obispo County: $58,697 /year
  • Santa Barbara County: $62,779 /year

South Coast

  • Los Angeles County: $55,909 /year
  • Orange County: $75,422 /year
  • San Diego County: $62,962 /year

The top 3 counties with the highest income—Marin, San Mateo, and San Francisco—are within the Bay Area, which is consistent with the region’s steep home prices. The county with a median household income most similar to San Luis Obispo County is Monterey County, and both counties lay within the Central Coast region. San Luis Obispo County has the 10th highest median household income out of 13 counties, meaning that homebuyers here have to do more with less.

For more detailed real estate data for San Luis Obispo County, read our 2014 Fourth Quarter Real Estate Overview.

11
Feb

Central Coast Real Estate (Part 1): 2014 Fourth Quarter Overview

While the Central Coast real estate market continued to show signs of improvement in 2014, sales and price gains are beginning to level off.  This isn’t to say a significant slowdown or even the dreaded “double-dip” is on the horizon.  The slowdown is actually bringing home price appreciation back down from unsustainable double-digit growth to “normal” levels.

 

San Luis Obispo County in 2014 Compared to 2013:

  • 2,586 total sales (2014) vs. 2,771 (2013)
  • 76 average cumulative days on market (2014) vs. 71 (2013)
  • 97.71% list price/sales price (2014) vs 98.23% (2013)
  • $479,000 median home price (2014) vs. $450,000 (2013)

Median Home Price Graph up to 2014

SLO county home sales up to 2014

 

Background

After falling nearly 37% between 2006 and 2011, home prices rebounded substantially through 2014, although the pace of appreciation has normalized in that past 12 months.  The economy, which was propped up for so long with various forms of government stimulus programs, started to register slow (but steady) growth in 2013, and the employment situation was beginning to stabilize.  The Federal Reserve Quantitative Easing programs coinciding with European and Asian economic slowdown drove investors to the safety of US bonds, promoting a sustained low interest rate environment.

On October 29th, Fed Chairman Janet Yellen’s announcement of the year-end conclusion of the QE programs sent the US equities markets to all-time highs.  Job losses eased to pre-recession levels, job growth spiked, and consumer spending and confidence surged, validating this long-anticipated policy change.  In spite of the robust outlook for the US economy, mortgage rates surprisingly fell in the 4th quarter to the lowest levels since May 2013, when Yellen’s predecessor, Ben Bernanke, announced “tapering”.

Both on the Central Coast and nationwide, real estate activity in 2014 slowed from the frenzied pace of 2013.  However, overall supply of existing homes for sale remains low, and new home developments are slow to make their way to market.  Will the 4th quarter resurgence of historically low interest rates provide yet another jolt for the local real estate market?  Consider these key points:

 

Point 1: Distressed Sales

The percentage of REOs and Short Sales, otherwise known as “distressed sales,” has significantly decreased since 2012. In 2012, 29% of total sales were distressed. In 2013, distressed sales only occupied 14% of total sales. By 2014, the percentage of distressed sales dropped to 6%.

Short Sales and REOs are significantly discounted from normal properties:

  • 2014 Normal Median: $485,000
  • 2014 REO Median: $340,650
  • 2014 Short Sale Median: $380,000

During the rebound in the real estate market since 2011, distressed sales provided a significant opportunity for first time homebuyers to own affordable homes on the Central Coast.  Competition with investors was fierce, with many sellers favoring cash buyers (often investors) over buyer who required financing in a tight credit market, and sales prices were pushed higher as the low-end supply diminished.

Now, with distressed sales all but absent from the Central Coast marketplace, where will young families and first time buyers turn for the coveted entry-level housing?

 

Point 2: Positives for Today’s Buyers and Sellers

Home prices are at their highest levels since 2008. As you saw earlier, the median home price in San Luis Obispo County has risen nicely from $369,900 in 2011 to $479,000 in 2014. This is great news for those looking to sell their home!

For buyers, one advantage is the fact that homes are staying on the market for longer. 2013 saw a significant drop in the average cumulative days homes were on the market, but that number rose slightly in 2014:

  • 2011: 127 average days on market
  • 2012: 112 average days on market
  • 2013: 71 average days on market
  • 2014: 76 average days on market

 

Get a City-by-City breakdown in Part 2 of our Fourth Quarter Real Estate Report (coming soon!)

 

11
Feb

Mortgage Rate Update (February 11, 2015)

For the week of February 9 through February 13

Conv. Rates 2.11

Government Loan Programs

Spec. Rates 2.11

This week brought a bump up in rates for some of the loan programs, while others remained unchanged. Those whose rates increased rose 1/8-points; the 30-year fixed rose from 3.625% (3.663% APR) to 3.750 (3.788% APR), the FHA 203k rose from 3.875% (3.903% APR), and high balance, manufactured conventional, and manufactured FHA programs followed a similar suit. We saw little to no movement this week from the 15-year fixed, FHA, VA and USDA loan programs, and the 30-year jumbo displayed a slight decrease.

Take a look at the 30-year fixed rate movement below, as updated by the Freddie Mac rate survey:

Freddie Mac Yearly 2.11 30-Year Fixed (History)

 

Take advantage of these rates while they remain low! Give us a call at 805.543.LOAN for a free, customized rate quote!

Calculation Notes

  • Mortgage rates assume purchase of a singe-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%. Rates for conventional loan programs assume a loan-to-value of 60%.
  • Loan amount is $417,000 for all programs (appraised value of $522,000), except for the high balance ($561,200 loan and $722,000 value), and Jumbo ($700,000 loan and $1,000,000 value)
  • Mortgage rates and APR subject to change
  • 30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo
  • FHA, FHA 203k, Manufactured, USDA, VA
9
Feb

CCL Market Update: Jobs Report, Home Prices, Loan Programs, Mortgage Rates

The jobs report for January exceeded expectations, making U.S. economists thrilled about the strengthening labor market. Payrolls advanced by 257,000 in January, after significant upward revisions in both December and November. After the revisions, the three month-average of 336,000 new jobs added represented the biggest gain in 17 years. Similarly, the number of people who switched from a status of “not in the labor force” to “employed” displayed the largest jump since 1990.

In spite of the large numbers of jobs added in recent months, the unemployment rate edged higher from 5.6% to 5.7% as more and more Americans return to the labor force to look for jobs. While the unemployment rate has fallen dramatically from 10% in autumn 2009, the number of persons employed is barely 2 million higher than it was before the Great Recession began in January 2008.

Another positive from the employment report was that wage growth in the U.S. is picking up. Average hourly earnings increased 0.5% last month for the largest monthly gain since November 2008. That’s a big jump!

A little closer to home, the jobless rate for San Luis Obispo County dropped to 5% in December, down from 5.8% in December 2013 and below the 5.5% reading in November. Gains in leisure and hospitality led job growth followed by the educational and health services industry. Atascadero reported the lowest jobless rate in the county at 4.1%.

January also brought gains in the oil industry. Crude oil displayed the biggest two-week rally in nearly 17 years, jumping 18% in the past 10 trading days. Additionally, the price volatility rose to the highest in approximately 6 years. Companies such as BP and Shell reduced investments, and U.S. drillers pulled more rigs off the oil fields, contributing to the oil rebound.

Home prices are still 13.4% below the April 2006 level across the U.S. Home price increases slowed their pace in December of 2014, rising only 5% from the previous year. However, this slowdown could benefit the housing market this year. Smaller price increases and lower mortgage rates could likely prompt a rebound in home sales for 2015. Although pending home sales fell 3.7% in December, the index experienced its highest year-over-year gain since June 2013, coming in at 11.7%. Economists expect a boost in sales for 2015 due to lower mortgage rates and lower down-payment requirements on mortgages from Fannie Mae and Freddie Mac.

This should be a fairly quiet week with very few economic reports of significance due out. We have Retail Sales and a pair of consumer confidence reports due out later in the week.

Loan Program News

Applications for government-backed loans increased significantly after the FHA announced that annual insurance premiums were being cut by 0.5%. According to the Mortgage Bankers Association, the total volume of mortgage applications increased 1.3% last week compared to the previous week. It is clear that many more people are considering mortgages to purchase or refinance a home due to the drop in insurance premiums, along with down-payments as low as 3.5% on FHA loans and 3% through Fannie Mae.

You should consider refinancing if you have an interest rate above 4%, if you have a loan with mortgage insurance, or if you are interested in getting into a shorter term.

 

Mortgage Rates

Rates continue to be at the lowest levels in more than 20 months! The average interest rate for a 30-year Conventional Conforming loan declined -4 bps to 3.79%, compared to 4.47% one year ago, according to Freddie Mac. Take advantage of these rates while they’re still low! Call us at 805.534.LOAN for your free customized rate quote!

Central Coast Lending’s current rates for San Luis Obispo County include a 30-year Conventional loan at 3.625% (3.663% APR) and a 30-year FHA loan at 3.25% (4.823% APR). For a more in-depth look at the rates we offer, visit our Mortgage Rates page!

9
Feb

Mortgage Matters Radio: February 7 (’15)

Guest: None

Central Coast Lending SoundCloud (full episode downloads). February 7, 2015 (link to full episode).

4
Feb

Mortgage Rate Update (February 4, 2015)

For the week of February 2 through February 6

Conv. Rates 2.4

Government Loan Programs

Spec. Rates 2.4

There is not much movement in the mortgage rates this week. Although we’ve seen a slight increase in rates for 30-year Manufactured, Jumbo, and 30-year FHA 203k loans, most of the rate programs are keeping at levels similar to last week. Buyers can afford more homes, and existing owners may be able to refinance, lower their monthly payment, and / or save thousands of interest. Take advantage of these rates while they remain low! Give us a call at 805.543.LOAN for a free, customized rate quote!

Freddie Mac Yearly 2.4 30-Year Fixed (History)

 

Calculation Notes

  • Mortgage rates assume purchase of a singe-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%. Rates for conventional loan programs assume a loan-to-value of 80%.
  • Loan amount is $417,000 for all programs (appraised value of $522,000), except for the high balance ($561,200 loan and $722,000 value), and Jumbo ($700,000 loan and $1,000,000 value)
  • Mortgage rates and APR subject to change
  • 30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo
  • FHA, FHA 203k, Manufactured, USDA, VA
2
Feb

Mortgage Matters Radio: January 31 (’15)

Guest: Lenny Grant, RRM Design

Central Coast Lending SoundCloud (full episode downloads). January 31, 2015 (link to full episode).

2
Feb

CCL Market Update: Unemployment, Consumer Spending, Housing Market, Mortgage Rates

Last week saw a significant drop in the number of Americans filing jobless claims, falling to the lowest level in almost 15 years. American claims for unemployment benefits dropped by 43,000 to 265,000 for the week of January 24. This is the biggest weekly decline since November 2012, and lowest level since April 2000.

The improvement in the labor market led to a notable rise in consumer confidence for January, its highest level since August 2007. Americans were much more optimistic about the economic outlook this month thanks to money saved purchasing gas, as well as the possibility of better employment prospects due to an improving job market. This is demonstrated by the 4.3% increase in consumer spending in the fourth quarter of 2014, which is the most since 2006. A survey at the University of Michigan showed that more consumers were likely to buy a car than in the last 10 years, and consumers were also more inclined to buy larger household items such as washing machines and vacuum cleaners.

On Wednesday, the Federal Reserve left policy rates unchanged as expected with the fed funds target at a range of zero to 0.25 percent. In their policy statement, they said wage growth continues to disappoint and inflation remains below the 2% target and “is anticipated to decline further in the near term”, suggesting “that it can be patient in beginning to normalize the stance on monetary policy.” The Fed is essentially watching economic developments to see what happens.

Heading into February, we will see a variety of reports important for assessing consumer spending and the direction of the economy. Included are reports on personal consumer income, motor vehicle sales, and construction spending, as well as the always anticipated employment report.

 

Housing Market News

According to sales reports for the first 3 weeks of January, home prices are 7.6% higher this month compared to the same time last year. While higher home prices are good for those looking to sell, the rising prices combined with the lesser supply of low-end listings have put numerous homes out of reach for some entry-level buyers. This has led a drop in the number of U.S. homebuyers making their first home purchase, bringing the 2014 first-time homeownership rate the lowest in almost 3 decades.

According to DataQuick, in California, the median home price increased by 6.3% to $388,000 in December 2014 compared to one year ago.  The number of units sold was up 4.3% year-over-year to more than 36,000.  San Luis Obispo County showed more modest gains during the same time period.  Home prices rose just 1.1% to $470,000 and total sales actually decreased 1.9%.

While things are looking up heading toward the spring market for 2015, consider this: in order to qualify for home loans, borrowers today need higher credit scores and less overall debt than in the past, as well as complete documentation of finances.

 

Mortgage Rates

Rates have leveled out this week compared to the slight increase from last week. Mortgage rates for conventional loan programs such as the 30-year Fixed, 15-year Fixed, Manufactured Conventional, and Jumbo, as well as the 30-year FHA, VA, and USDA all remained relatively unchanged from the previous week. The only increases occurred in the 30-year High Balance, which rose to 3.875% (3.903% APR), and the FHA 203k, which went up to 3.375% (4.957% APR).

As a whole, rates in 2015 remain low, as indicated by Freddie Mac’s weekly survey results:

Freddie Mac Yearly 1.28

 

With rates this low, now is the perfect time to consider a home purchase or refinance! Give us a call at 805.543.LOAN to learn about your specialized options.

30
Jan

Rules for Transferring Property Tax from Old Home to New

Suppose you, a current homeowner, have decided it’s about time to downsize and purchase a new home. You may be nervous because that likely means a higher property-tax assessment than you have with your current home. Luckily, there is a way to transfer your property tax from your old home to your newly-purchased home.

Proposition 60 was designed to help longtime California homeowners who want to downsize but don’t want to give up the low property-tax assessment they enjoy in their existing home. Under Prop. 60, California homeowners aged 55 or older a one-time chance to sell their primary residence and transfer their base-year value to a new primary residence.

However, there are some restrictions with Proposition 60. The market value of the new home must be equal or less than the market value of the original home. The sales price of a home is not always the true market value of that home, so make sure you know the true market value of both properties. This can be especially tricky if the sale price of the original home and the purchase price of the new home are close. For example, you might sell you old home for $700,000 and buy your new home for $695,000. This doesn’t allow for much wiggle room and assessors may challenge whether the sales price equals the market value. If you exceed the cutoff by even a dollar, the entire Prop. 60 transfer will be lost.

Prop. 60 also requires that the new home be in the same county as the old home, or in one of eight counties that accept transfers of base-year value from other counties. As of January 1, 2015, these include Alameda, El Dorado, Los Angeles, Orange, San Diego, San Mateo, Santa Clara, and Ventura counties.

If the new home is purchased before the old home is sold, the market value of the new home on its purchase date cannot exceed 100% of the old home’s market value on the date it is sold. Additionally, the new home must be purchased or built within the two years before or after the sale of the original home.

Suppose you want to sell your current home prior to purchasing a new home. If the new home is purchased within one year of the sale of the original, the value of the replacement house must be 105% or less than the value of the original. If the new home is purchased within 2 years of the original sale, the value of the replacement home must be 110% of the first home’s value.

A sticking point can occur if you are looking to transfer your property tax to a more expensive home. In order qualify for the Prop. 60 transfer, you have the option of holding on to the existing home and the new home concurrently (if you can afford it). During this time, if the existing home appreciates to more than the value of the new house, and the existing home is sold within two years, it is still possible to take advantage of this tax break.


Central Coast Lending is a California mortgage broker and direct lender based on the Central Coast of California in San Luis Obispo County. Call 805.543.LOAN or email us here to set up a free pre qualification.