San Luis Obispo County Real Estate Update

Central Coast Lending Newsletter | August 2014
San Luis Obispo County Real Estate Update
Read the full reports for Northern, Southern, and Coastal regions of SLO County on www.CentralCoastLending.com
1. Median Home Price.
The median home price for SLO County single-­‐family homes sold in 2014 was $485,000 through July compared to $393,000 for the state. Still, relative to cities like San Francisco ($935,500), Los Angeles ($540,000), and Santa Barbara ($865,000), SLO County looks like a bargain. Buyers on the mid-­‐ to low-­‐end are especially finding a supply squeeze. “We are having a really hard time finding buyers in the $250,000 to $350,000 range suitable housing,” said realtor Michele Ratkay. “I have quite a few buyers in the lower price range, and they are on emergency watch. If something goes on the market, they have to go in immediately.” 2. Home Sales.
Hurt by higher prices and lower inventory, home sales have slowed year-­‐over-­‐year. “We don’t have enough inventory for demand,” said Ratkay. Put simply, folks want to buy homes but there aren’t enough options out there for everybody, which means bidding wars, a lot of waiting… and fewer sales. 4. Time on Market.
“Back at the beginning of the year, Paso Robles houses were on the market for about 85 days on average, and by June that number dropped to 60 days,” said realtor Len Loff. 3. Foreclosures.
What a difference three years makes! Distressed supply has almost completely d ried up, accounting for just 6% of all listings through July. Foreclosures are priced lower than normal properties. In 2011, the foreclosure discount was 55.5% compared to normal properties ($275,000 vs. $427,500). Fewer foreclosures on the market means fewer bargain basement deals. Still, this is a positive sign for the recovery of the housing market. Foreclosures add instability to neighborhoods and bring down values. As homeowners see property values increase, more homes will go on the market. Successful buyers are paying closer to list price. According to Loff, Paso Robles homes were selling at around 92% of the list price in January, and 95% in July. 1
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Central Coast Lending Newsletter | August 2014
Mortgage Report: Making Home Purchases More Affordable
FHA Hawk Program
Mortgage Credit Certificate
Homebuyers who have not owned a home in the past three years are eligible to claim the Mortgage Credit Certificate and receive a dollar-­‐for-­‐dollar reduction against their federal tax liability for 20% of their yearly mortgage interest payments. The MCC program saves first-­‐time buyers thousands of dollars off their tax bill over the life of the loan. Let’s say John Buyer borrowed $200,000 to buy a home at an interest rate of 5.000%. Through the first year of the loan, John Buyer’s paid $10,000 worth of mortgage interest. The MCC program covers 20% of the mortgage interest, and that $2,000 goes to reducing taxable income. The MCC works in tandem with the popular Mortgage Interest Deduction (MID) to increase homebuyer tax savings. Another perk: during mortgage qualification, the $1,700 tax savings can be added back into the buyer’s gross monthly income. Joe Buyer can now afford more home! Over the life of a 30-­‐year FHA loan for $400,000, the lower fees could result in up to $20,000 savings for borrowers. MCC qualification is restricted by location, buyer income, and purchase price. Give us a call to learn more! The Federal Housing Administration (FHA) has proposed the HAWK program to support the housing market in two key ways: CA Homebuyer’s Downpayment Assistance Program
Central Coast Lending offers first-­‐time homebuyers loans for up to 3% of the purchase price to assist with completion of down payment and closing costs. The low-­‐interest rate loan is placed in junior position and repayment is “deferred” until the first loan is repaid, the home is sold, or the home’s title is transferred. The CHDAP (California Homebuyer’s The proposed FHA “HAWK” program would give first-­‐time home buyers the opportunity to take housing counseling classes in exchange for lower mortgage insurance fees on an FHA home loan. Downpayment Assistant Program) loan requires a small amount of cash down up-­‐front. For borrowers w ith a FICO credit score between 640-­‐679, the minimum investment is $1,500, and for 680+ the minimum investment is $1,000. CHDAP qualification is restricted by location, buyer income, and purchase price. Give us a call to learn more! 1) Make housing more affordable for first-­‐time buyers. 2) Improve the likelihood that borrowers w ill repay their loans. The FHA estimates that delinquency rates for borrowers who have received counseling are 29% lower for first-­‐time buyers. Implementation of the HAWK program is not expected until the fall of 2014. Give us a call to learn about your options! Subscriptions:
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DRE #01839608 NMLS#328358 CA DBO #6054783
San Luis Obispo
Paso Robles
Morro Bay
805.543.LOAN
601 Morro Bay Blvd. 1319 Marsh Street 1921 Spring Street
www.CentralCoastLending.com