- San Diego County $649.750
- Ventura County $672.750
- Orange and Los Angeles Counties $679.850
- Riverside, San Bernardino, and Imperial Counties $453,100
Posted at 12:46 PM in FHA Loans, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Mortgage Rates Report, Radio Mortgage, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, VA IRRL Home Loan Refinance, Veterans Admin Home Loans | Permalink | Comments (0)
...and a worse time to be a San Diego buyers' agent.
San Diego is in a housing crisis and the simple explanation for it is that we have a tremendous backlog of new housing--the politicians aren't helping us either. NIMBY-ism, water restrictions, and traffic density are core issues which restrict housing and, while they are legitimate issues, the county has a 65,000 unit backlog of new housing.
Experts believe that San Diego County needs 170,000 housing units built from 2012-2025 to meet demand and population growth- some 15,000 housing units each year. Over the past five years, San Diego County has averaged 2000 new housing units.. We are already 65,000 units behind and, if we continue at this anemic pace, we will end up 120,000 housing units short in 8 years. That is pushing up prices of existing homes.
You might think that rising housing prices, and double digit rent increases, will halt population growth in the County. While it might, SANDAG believes the region will grow by another million people within 25 years. Increased demand for housing and restricted supply means one of two things to your clients: they have to move out of San Diego County or home ownership is now, more than ever, the only defense against this housing shortage. Your role, as a buyer's agent, is now more important than ever to your clients' futures.
We are here to help you--here are three ways we can do that.
1- TBD approvals: this isn't a pre-qualification, this isn't a pre-approval, this is a full underwriting approval for the buyers' credit and income. We take an application, gather up supporting documentation, submit the file to the underwriter, and have a clean approval within 5 business days. What this means is that we can close a transaction in 21 days, giving your buyers a competitive advantage when they make offers.
2- "Selling" the buyer to the listing agent: a lot of the buyer's agents we work with ask us to speak to the listing agent when they make the offer. We communicate to them that we have that underwriting approval and, more importantly, tell them exactly what that means. It means that the only issues for a full loan approval are property related: appraisal, homeowners insurance and title insurance. When we explain the process to the listing agent, and represent the strength of the buyer, more offers get accepted.
3- VA and FHA condo approvals. So many condominium buyers are shut out because the complex lacks an agency approval, The perception is that VA and FHA condominium complex approvals are burdensome and lengthy--nothing could be farther from the truth. Debra and I are experienced experts at VA condo approvals-- we have approved over 130 of them in the past 8 years and we get those purchase transactions closed in 45 days or less. FHA condo approvals are easier for us because we have a HUD-delegated underwriter who has the ability and discretion to approve the complex FHA-eligible
This is a great time to be a real estate agent in San Diego County, especially if you list a lot of properties. Representing buyers however, is difficult. We're here to make that job easier on you.
Posted at 09:26 AM in 92130Realtors.org, Blue Collar Beach Towns, Carmel Valley Realtors, FHA Loans, Jumbo Mortgage Capital, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Oceanside Townhouse For Sale, Real Estate, San Diego Condo Loans, Show me a Good Deal, Solana Beach Real Estate, Value Investing, Veterans Admin Home Loans | Permalink | Comments (0)
Whether you like President Trump or not, his Presidency (like President Obama's) should be positive for San Diego real estate. Two things are driving San Diego real estate prices higher right now:
1- A back log of housing. Population growth in the County created demand for an average of 15,000 new housing units each year, for the past five years. Only an average of 2,000 housing units a year were built in the County during that time. This means that today, we have a housing back log of some 65,000 housing units. The NIMBYs and environmentalists are fighting every new development proposed so that problem will likely become more severe. This means higher rents and home prices are on the horizon.
2- Good paying jobs are being created. A housing back log means nothing id residents can't afford higher prices and/or rents but employment data suggest otherwise. San Diego County is created a (positive) disproportionate amount of well paying jobs. Our base industries are: 1- military 2- technology 3- life sciences and 4-tourism The top three base industries are attracting higher than median income jobs to the County.
In 2011, President Obama shifted American foreign policy towards the Asia-Pacific Rim. This makes sense because most world wide growth is coming from that region rather than Old Europe. Obama believed that trade opportunities and foreign threats are more likely to come from Asia rather than the Middle East and/or Europe. This shifted defense spending from East Coast military facilities to West Coast military installations.
President Trump has not hidden that he thinks the military needs to be rebuilt. He gave a speech on the deck of the USS Gerald Ford where he announced his request for a $54 .billion increase in military spending. He also signaled that he wants to Navy to have more ships, specifically 2 more aircraft carriers.
Trump will likely succeed, too. Republicans control both chambers of Congress (and the budget).
Politics does play a role on local real estate and federal spending will likely favor San Diego County so demand should increase. State and local politics are anti-growth so supply will be limited.
Do the math. If supply is restricted and demand is increasing, higher prices are on the way.
If you have an FHA loan in process this month. you were "given a gift" only to have it "taken away" nine days later. It was a political stunt by past HUD Chairman Julian Castro and it's a darned shame it happened to you. Let me break it down for you:
The FHA charges borrowers money to insure their loan against default. It adds 1.75% to your loan and charges a monthly mortgage insurance premium in addition to that added 1.75%. You can avoid this by having at least a 20% down payment and getting a conventional loan (although FHA rates are lower than conventional rates)
The FHA monthly mortgage insurance premium WAS based on an annual charge of .5% of the loan amount prior to the Obama Administration taking office. During the housing crash, the FHA insurance pool (the money collected from the premiums) was depleted because of all the foreclosures. The first term Obama HUD Secretary (Shaun Donovan ) started to increase the monthly mortgage insurance premium cost, from the annual charge of .5%, to an annual charge of 1.4%. This increased the monthly cost of a new $400,000 FHA loan from $166/month to $466/month.
This was a bummer for new FHA borrowers because they were essentially paying for the failures of the past borrowers. Still, if FHA was going to be sustainable, it had to do something so they opted this approach. It worked. The FHA insurance pool grew from being depleted to sustainable. As the size of the FHA reserve pool increased, the HUD Secretary during Obama's second term (Julian Castro) started reducing the monthly mortgage premium from an annual charge of 1.4% to its current annual charge of .8%. This reduced those monthly mortgage costs (on a $400,000 loan) from $466 to $266.
A few months ago, HUD Secretary Julian Castro floated another premium cut from its current .80% annual cost to .55% annual cost. This would reduce the monthly cost (on a $400,000 loan) from $266 to $183. This move was met with vocal opposition from career HUD bureaucrats and the Republicans in Congress. The prevailing thought was to leave the annual FHA mortgage premium be for now and let the reserve fund grow more.
HUD Secretary Castro ignored the advice of career HUD bureaucrats and issued the order to cut the FHA monthly mortgage cost anyway. He issued this order on January 11, 2017 to take effect for loans FUNDED after January 27, 2017. I thought this was suspicious when he issued it because all previous HUD orders were effective for loans STARTED after the effective date. This seemed "too good to be true".
If it looks too good to be true, it usually is untrue. HUD Secretary Castro's order, breaking with normal HUD policy on effective dates, was a legitimate HUD order anyway. We (like other lenders and REALTORS) delayed closings so that borrowers would benefit from the monthly cost reduction. Here's what you need to know:
Castro's FHA order to reduce costs was never gonna happen and Castro knew it when he issued it on January 11, 2017.
Castro was playing politics with borrowers' money. His intention was to put the new HUD Secretary (Dr. Ben Carson) and the new President into the tough spot of saying "Sorry. This was never a good idea". As such, Castro timed the repeal of the January 11, 2017 FHA order to come out just an hour before the new President was inaugurated. Castro was quick to release this repeal order to the media so that it could run with the story that "The New President RAISED FHA monthly mortgage costs".
Let me give you a simple analogy:
I am the principal of a school and you are taking my job next Friday. Last month. I asked all the teachers if we could cut the dismissal time from 3PM to 2PM, The teachers said "this is a bad idea" and you (the new principal) agreed with the teachers. Last week, I ignored the teachers advice and sent an email to all of the pupils saying that the new dismissal time would be 2PM, effective the Monday after you become the new principal. My last act as principal, before I hand you the keys to the school, will be to send an email to the pupils saying "Sorry, the new principal might be a meanie so I can't keep that 2PM promise to you". Guess who won't be popular with his new pupils next Monday? You.
It's political scheming and it's garbage. The Obama Administration took a parting shot at the incoming Trump Administration and, if you have an FHA loan in process, you are the loser in this political game. In my opinion, the incoming Administration should honor the reduction for 30 days and restore the (higher) premium for loans funded after February 28, 2017. They might not have time to do that and I don't make policy so, if you have an FHA loan in process, expect to pay the original (higher) amount.
Posted at 10:27 AM in Carmel Valley Realtors, Carmle Valley Realtors, FHA Loans, Jumbo Mortgage Capital, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Mortgage Rates Report, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, Triple Crown Condos | Permalink | Comments (0)
Seven years ago, I said this about our ability to get condominiums added to the VA Approved condominium list in California:
I've probably funded 40 VA home loans in 2009, many of them for unapproved condominium complexes. In Southern California, it's quite common along the coastal communities for buyers to look at condos, townhomes, or PUDs as lower-cost alternatives to single-family homes. Declining prices, along with higher VA loan limits have afforded many active duty and former service members the opportunity to scoop up a piece of the California coastal lifestyle by purchasing one of those properties.
Sellers often cringe when they receive an offer using VA home loan financing. The general thought is that the VA condominum complex approval process is time-consuming, onerous, and difficult...
Nothing could be further from the truth.
All loan types, including FHA and conventional vet the condominium association's organizational documents, finances, and residency mix. In fact, the VA guidelines tend to be the least restrictive of all three loan types.
Over a year ago, we started getting the complexes VA approved without the use of an attorney opinion letter, saving our clients thousands of dollars in legal fees. Here are some comments from happy customers:
Air Force veteran, Marina del Rey:
Brian and Debra helped us through the loan approval process for a townhouse in Marina del Rey. My husband was trying to use his VA loan benefit, but in this hot real estate market, a lot of the seller's don't understand or care to understand the VA loan process. There's just a big misconception that the process is unduly difficult, or the VA loan is not as good, which is not the case at all!
Brian went above and beyond and talked repeatedly to our seller's agent to assure her that the VA loan process would be fine. Anytime she had a question, she would call him. When we closed, she went on and on about what a professional he was throughout.
Brian and Debra helped us to get our townhouse a VA condo association approval. It was daunting for us, since we didn't know how to get through it, but they started our paperwork as soon as we got an accepted offer, and made sure all the proper documents were gathered and sent to the VA. The VA is notorious for being slow, but they managed to get our condo association VA approved by the closing date. We could not have done it without them
USMC Officer, Los Angeles, CA:
I, like many other of Brian and Debra's clients, wanted to use my VA loan and wanted someone with expertise with VA loans. My situation was also complicated by the fact that condominiums / townhouse complexes must be VA approved for the VA loan to be used. Fortunately, Brian and Debra have done over a hundred VA condo complex approvals and are experts with the VA loan process. Working with them made my life very easy. Brian was able to educate my real estate agent and the seller's real estate agent on the pros and cons of the VA loan and let them know what he would need to facilitate the home purchase. He was always reachable, whether at 7 am in the morning or 9:30 pm at night, Brian always responded within an hour.
US Navy Officer, San Diego, CA:
OUTSTANDING experience during my first time condo purchase working with Brian and Debra. Brian came referred by 2 of my co-workers, and I could not be happier that I decided to use him. From start to finish, Brian and Debra handled my purchase as if they were buying it for themselves. They continuously kept me in the loop, and answered emails promptly. Brian went out of his way to work with the VA to get my condo approved in record time, and watched the market closely to get me the best possible VA rate. I was impressed with their professionalism during the entire process
US Navy Officer, Oxnard, CA:
We were told by our agents and their lender that the condo we were buying was on the VA Approved list, and all was good to go. Once into escrow, we learn it was not. Our agents said "we are sorry" and basically gave up. So we quickly figured out if we wanted this home, that we needed to get it on the VA Approved list of condos and quick. Google search. Up comes Brian. We call, and he calls back immediately even though it was quite late that night. We met the next day, and he took control of the process guiding both agents (buyer and seller) through the process. We closed and have the home we always wanted. He is a pit bull kind of guy who gets it done.
US Navy Officer, San Diego, CA:
I started the home buying process while still on deployment, and Brian graciously worked with me across 13 time zones to begin explaining the ins and outs of home buying. The building we had looked at was not VA approved, which is crucial to securing a VA loan. I googled VA home approval, and his was the first name to pop up. Brian is an absolute master at working with the VA, within 5 weeks from putting in an offer on the home, the complex was VA approved, and we closed within six
We can help you with this process. Call ,e at 858-777-9751
It's been a great run. Back in late 2011, we were pounding the table for investors to buy a single-family home in San Diego County, especially in what we called "Blue Collar Beach Towns". Then, you could purchase a single-family detached property for $250,000. We were nervous so we advised investors to put at least 25% down and only buy a property where the rent could cover the pre-tax housing expenses (mortgage, taxes, insurance, estimated maintenance). If you were one of our investors, you are probably sitting on over $100,000 of profit today. That means you will have almost tripled your investment in a period of about 5 years or earned an internal rate of return in excess of 27%.
It's been a great run but it looks like the party is over. We think the first half of 2017 is going to be a good time for investors to take some money off of the table, especially if they have a plan for that money in the next 3-4 years. This doesn't mean we think the market is going to crash, like it did in 2008-2012 but we think the prices are going to soften and perhaps decline 10-15%.
The three reasons we loved San Diego single-family homes, as an investment in 2012, are the same reasons we don't love them today: median price and median income, price-to-rent-ratio, and mortgage rates direction. We still like single-family homes for owner occupants but we just don't love them as investments.
The 2016 median income in San Diego County is $73, 500 for a family of five. This translates to a maximum monthly mortgage of approximately $2050 (PITI) or a $344,000 mortgage. Add a 20% down payment and the family of five, earning the median income in San Diego county, can afford to purchase a home for $430,000. A median-priced home, in San Diego county, was $495,000 this past summer. That's a 15% premium.
Keep in mind that. back in late 2011/early 2012, a veteran could purchase a single-family home, in Oceanside CA, for zero down payment and her mortgage payment would be cheaper than rent. Today, if that same veteran purchased a median priced home in San Diego County, the mortgage payment would be $2800. There are tax benefits to owning versus renting so let's make the after-tax costs of owning a home $2500. That same home can be rented for $2200; this is after a rental shortage in San Diego County spiked rents these past few years.
Look at 3792 Atlas Street as an example. It is being offered for rent at $2200 and the Zillow Zestimate is for a $528,100 value. Even if a home buyer had 20% down payment, their after-tax mortgage cost would be about $2300; $100 month more than they could rent the property. It still makes sense to own that property, if you intend to live in it for 7-10 years but it just isn't a compelling investment when looking at the price-to rent ratio anymore.
Finally, we think the carrying costs for real estate (aka mortgage rates) can only go up from here. Interest rates may start climbing in a couple of months or it could take as much as a year for mortgage rates to rise. Eventually, mortgage rates are going to be 1-2% higher than they are today. More importantly, the threat of higher mortgage rates is starting to affect pricing now. Back in 2014, people still thought rates could come down so they weren't too particular about paying 5% more than last year's prices; they figured they could refinance into a lower rate soon enough. Today, the opposite is true.
What does this all mean to you?
If you are a real estate investor, it might make sense to sell that San Diego County investment property, especially if you plan to use the money in the next 4-5 years. If you don't plan to use the money, and want to avoid paying capital gain taxes, I have two ideas for you:
1- Consider the Greater Phoenix area. You will increase your income (the capitalization rates are better) and there is still some upside appreciation to be gotten there (not a ton but better than San Diego County). We refer our clients to Greg Swann of Bloodhound Realty.
2- Consider placing the proceeds from the investment property sale into a Delaware Statutory Trust. This is a security so we don't handle these transactions but we refer our clients to investment adviser Tony Krvaric of Krvaric Capital.
What if you just want to buy a home to live in?
There is no greater place to live (in my opinion) than San Diego County. We have beaches, mountains and deserts. Our climate is second to none and our business environment is relatively robust. Unemployment, in San Diego County, is less than the rest of California and the rest of the country. San Diego County is a great place to own a home.... BUT....
...we think the short-term prospects of higher prices are unlikely. Even with the Great Recession, if you bought and held a home fir ten years, you made money in San Diego County. Our advice then is to be judicious when buying an owner-occupied home in 2017. We suggest that you do three things:
1- Establish your holding period. If you plan to move in less than 7 years, you could lose money. If you plan to live in the property for at least ten years, you should make money.
2- Call us to run a rent v. own scenario for you. This is where we analyze the price-rent-ratio. For traditional, 20% down payment transactions, it can still make sense to own for the long-term in San Diego County.
3- Negotiate, be patient, and shop around. You don't have to get a home at 15% under list price to get a good deal but we don't' think you have to pay list price to get a home in 2017. Sales have slowed in San Diego County, ever so slightly, but they have slowed.
Inventory is still under three months which suggests that this is a seller's market, That could all change once prices start softening (they are showing signs of that now). If you are an current investment property owner, the first six months of 2017 will be an excellent time to sell and realize your profits. If you are a potential home buyer, we think you are going to have more options next year than you do today.
Jill was a good client of mine. I funded an FHA loan for her when she bought her condo back in 2010. She was sitting on $100,000 in profit in just five years. Her original real estate agent left the business so she found an agent who advertised on Zillow (Jill is pretty tech savvy). She listed the property with this agent instead of calling me for advice. The condo didn't sell, Jill called me to ask why, and I had to tell her the truth:
"Your agent was the reason why your condo didn't sell, Jill"
I told Jill of the tale of two real estate agents: Barbara and Mike.
Mike listed lots of properties...LOTS of them. He was constantly on listing appointments, advertised those listings heavily online, and had things down to a "system". His signs were all over her heighborhood and each listing was prominently displayed on his website; he was a tech savvy property seller's dream agent...BUT...
Mike didn't know a darned thing about condos and condo loans. Thus, Mike was always presenting offers which Jill had to decline because Mike assumed that, because the condo didn't have an FHA or VA approval, only cash or conventional offers would be funded. Naturally, Jill was shown a lot of "low-ball, all cash" offers from investors and Mike told Jill "I guess the market has shifted". Jill's $100,000 profit looked more like $50,000 when Mike was finished presenting the offers. Naturally, Jill declined those offers and the listing eventually expired.
I had Jill speak with my friend Barbara, an agent who worked condo listings all over town. Barbara spent a good bit of time with me after I funded a loan for one of her VA buyers (way back in 2009). Since then, Barbara has done one thing...just one thing..which helped her take less listings but sell each and every condo listing she DID take, for full price.
Barbara insisted that the seller order the condo docs before it went into the MLS.
Barbara explained to her sellers that they would eventually have to order those condo docs when they were in escrow. Unlike Mike, who "shotgunned" his listings approach by saying "don't pay for them before you have a contract", Barbara explained that the couple of hundred bucks investment (in the condo docs), could add tens of thousands to the sales price, if the property qualified for FHA or VA financing. Barbara would order those docs immedialtely and send them over to me. I would take one look at them and say one of three things:
1- Barbara, I can get that complex both FHA and VA-approved
2- Barbara, I can get the complex VA-approved but you'll only be able to accept 20% down conventional, VA, or cash offers.
3- Barbara, that complex will only work for 20% down conventional loans and cash
Armed with that information, Barbara entered this into the marketing remarks on the MLS:
"Property may be eligible for VA or FHA financing. Approvals pending through World Wide Credit Corp. Call them at 858-777-9751 for cross approval"
Barbara explained to clients that that representation attracted twice as many buyers to her listings and justified charging a "premium" price--that meant more profit for her clients. You know how the story ends...
Jill listed with Barbara, we ordered those HOA docs, and Jill sold the property to an FHA buyer...for a price which was much closer to what she wanted than the offers she received when Mike had the property listed.
Wanna be like Barbara? Call me today at 858-777-9751. We'll grab a cup of coffee and I'll break it all down for you.
Posted at 11:11 AM in FHA Loans, Jumbo Mortgage Capital, Jumbo Mortgage Rates Report, La Jolla Real Estate , Mission Valley Condo Loans, Mortgage Financing, Real Estate, San Diego Condo Loans, Solana Beach Real Estate, Triple Crown Condos, VA IRRL Home Loan Refinance, Veterans Admin Home Loans | Permalink | Comments (0)
You just listed a new condominium and you're excited; you priced it right and you expect it to sell and close within 45 days. Financing is a big deal for most condo buyers; in San Diego, condos are often bought by first-time home buyers. You might be making these common mistakes which could cause the offers to come in much lower than you want, have deals fall out of escrow, or delay the closing.
1- Not checking to see which financing is available. See if the complex is approved for FHA financing and be careful to see when the expiration date of the approval is. Check to see if the complex is approved for VA financing. If you can't find the complex on these lists, call me at 858-777-9751.
2- Check with the HOA to determine the owner occupancy percentage. If the percentage of homeowners is under 50%, the buyers won't be able to use FHA financing or conventional mortgages with less than 20% down payment. If the percentage is below 50%, consider having us submit the HOA package to VA for a complex approval.
3- Not ordering the HOA documents immediately. Most agents tell owners to wait until you have an accepted offer,then ask the escrow company to order the documents. This is a huge mistake because it delays the process. It's a cost to your seller but the seller has to provide those docs to any buyer; they might has well get it out of the way. Committed sellers will do this up front. You can call me at 858-777-9751, to review those documents, so you are prepared for any offer.
Too often, agents make these mistakes and are chasing their tails in escrow. We can help you to stop chasing your tail, maximize the price your seller gets, and guarantee a quick and successful closing.
Mortgage bonds have steadily strengthened since their August, 2014 levels, causing September mortgage rates in San Diego to drop.
You can follow the national average mortgage rates at Bankrate.com. San Diego mortgage rates tend to be .125% LOWER than the national average. Average rates as of August 1, 2014:
30 Year fixed conventional average= 4.06%
15 Year fixed conventional average= 3.17%
30 year fixed VA/FHA average= 3.65%
30 year fixed VA/FHA jumbo avg.= 4.0%
5/1 adjustable rate conv. average= 3.52%
We told you last month that San Diego home prices up but the price increases are decelerating. While I believe that the long-term trend will track the increases in inflation, prices may soften through 2015. I talked about this on Active Rain today and cited this Redfin article:
The first is a slowdown in home price growth. For the first time in five months, price growth was essentially flat in July. The second is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November
Deals are going to be made this Fall. If you're buying a home, you have some price flexibility. Making offers 15-20% below asking price is almost as nutty as pricing your property $100,000 over recent solds but, without a doubt, buyers will be driving fall sales in San Diego.
We can lock rates up to 60 days so, if you have to be flexibile with a seller who is trying to close on another house, we can cover you. Make sure you get a good price concession for your flexibility.