The Current Home Loan Market

We were talking in the car, the other day and my wife admitted to me that she was glad she listened to me a few years ago. We had refinanced our mortgage, and I wanted a variable loan, and she wanted a fixed rate loan.

The fixed rate seemed conservative, as the rates seemed likely to go back up. Our first loan was at 17%, so 7% seemed rather desirable. Currently our variable loan rate is in the low 4’s.

Speaking to my loan broker, Brian McNamara, -hmbloans @ aol.com- rates may be at an historic low in January. This coupled with the low cost of housing, the best I have seen in 20 years, makes the next few months look like an historic opportunity for buyers.

Brian tells me, “Rates for loans above $417,000k to 729,750k are very close in rate to the conforming loans below 417k”, but he says that qualifying is much tighter then the “bad” old days. “lenders want to see income and taxes, and minimum credit scores are higher”.

Still I wouldn’t own a house today, if I hadn’t taken the plunge, so long ago, i.e. 17%. And variable rate loans and “negative amortization” still hold a fond place in my heart.

San Mateo County Housing Values Stabilizing

Zillow sent me the link below about average housing prices in Moss Beach since 2006. I thought it was interesting, because I had just made a similar chart from MLS statistics for my open house last weekend. http://www.zillow.com/local-info/CA-Moss-Beach-home-value/r_53424/?scid=emm-101110_OctLocalPROClaim-bab

My chart is for the San Mateo Coastside so the data may be a little better; since the sampling is a larger slice of the pie, and I notice both curves show a leveling of values over the last few quarters.

Now I don’t really believe the average value (median) of housing in Moss Beach was ever 900k, which leads to the old notion of Lying with statistics. My data includes condos and places like Pacifica, which don’t always command the highest values. I have noticed over the course of time that often Moss Beach‘s average value is relatively higher then the rest of the Coastside.

I don’t believe that this means that a ‘70‘s build 2000 sq ft house in Moss Beach commands any more money then a similar one in HMB, but rather that since the sample is smaller, Moss Beach’s average values are more readily effected by a couple large ticket sales then other areas of the Coastside. Moss Beach has more cliff side, and acreage properties relative to more normal housing then other places on the Coastside.

I hope you find this interesting, and I want to express again that it appears the value of homes, not just on the Coastside, but throughout San Mateo County have leveled out, and appear to be stable, since early 2009.

Half Moon Bay's Pumpkin Festival

This year’s 40th festival will be held on October 16-17 from 9 a.m. to 5 p.m. Admission is free. For you that don’t know, this is a huge street fair, the largest of the year in Half Moon Bay. This would not be the day you wanted to look at property on the Coastside. The highlight of the fair is a pumpkin weigh off. Individual pumpkins are brought in one at a time on flat bed trucks. These monster pumpkins, weighing in excess of 1,000 lbs, often brought in from Oregon or further, will be carved after they are weighed. They are surreal items, and quite interesting to see. There is also a pie eating contest, and Half Moon Bay winery serves it’s “pumpkin" wine at the event.

The Tunnel at Devil's Slide

I read in the Chronicle June 2010 that the tunnel at Devil’s Slide is on schedule to be complete and open in the fall of 2010. Caltrans is quietly fighting a lot more water then they expected, which may still hold them up. It is not clear to me if the tunnel has been dug completely through at the time of this writing.

People always ask me if the tunnel will bring home pricing up in Montara and the Mid-coast. I believe it will, partly due to timing, and partly due to the increasing cost of the Golden Gate and that commute.

When the Bridge tolls went up to five dollars we saw an increased number of sales and interest in Pacifica, which arguably is the most affordable area on the Peninsula. Since the toll went up, inventory in Pacifica has dropped to about half of it’s historic amount.

Many have always been reluctant to look further south, not wishing to commute on Devil’s Slide. This is partly because the traffic on the Slide is so heavy during the weekends, particularly, the good weather weekends. Also many don’t like driving on the windy road next to the water’s edge. Truth is most days’ commuters travel at the limit off the Coastside, with their cruise control on, as they are so used to the road.

I don’t see the tunnel helping ease the minds of those who don’t like to drive twisty roads, but since San Mateo County is generally in recovery, and Montara tends to lag but follow the County’s trend, I think the opening of the tunnel may serendipitously help Mid-coast look like a real value. The toll again has risen again on the Golden Gate, six dollars. This may make the Mid-coast the new bright value of the Peninsula.

Cypress Point Road

This tastefully updated Ocean Colony home overlooking the golf course is highlighted by elegant style and superior attention to detail. Welcoming entry opens to bright formal living room with French doors leading to professionally landscaped backyard. Spacious separate dining room adjacent to beautifully remodeled kitchen with breakfast nook. Ground floor master bedroom has; a fireplace, and marble bath with spa tub.

Frustration About Short Sales

The trend lines for this week continue to suggest that the Active inventory is declining while demand is increasing. Prices may have bottomed out and some factors are in place to see a potential reversal of the downward pricing spiral. As stated in this blog frequently, it is important to note that the pricing and subsequent market value of homes varies dramatically from neighborhood to neighborhood and the condition and amenities of each home.

This week the number of homes in Active status is lower by 1.7% than last week and is 10.62% lower than last year at this same time period. The number of homes in the Pending status is 58.64% higher than last year at this time. Closed sales for April 2010 are 10.53% higher than last April. The number of Closed sales skew the number for Pending sales because longer escrows are required for, including but not limited to; the short sales, tighter lending requirements for buyers and tougher lender requirements for the home.

Below are the numbers by cities and the count of short sales and bank owned properties:

City Active Status Pending Status Closed Escrows

Short Sale/REO Short Sale/REO Short Sale/REO

Belmont 1/2 1/1 7/3

Burlingame 6/0 8/0 2/0

Foster City 2/1 3/0 4/0

Hillsborough 2/1 4/10 0/0

Redwood Shores 1/1 1/2 0/1

San Mateo 26/5 57/10 4/0


Pay particular attention the statistics for the City of San Mateo. 57 Pending sales are short sales, yet there were only 4 of the 44 Closed sales that were reported as Short sales. 10 in San Mateo’s Pending sales were REO and no REO’s were reported as Closed in San Mateo in April. tThese figures would clearly indicate to me that I would pay a nominal premium in price to purchase a home that is not a short sale because once I remove my contingencies, I know the home is mine. But it is unlikely that most buyers will take this advice as everyone is out of the “deal”. And many times they will be missing out of other opportunities while waiting for the bank short pay approval. It will be interesting to see which markets, if any, will be negatively impacted by unemployment, short sales, bank-owned properties, and most likely, interest rates.

Lawrence Yun, Chief Economist of the National Association of Realtors stated in their May 2010 issue; “Mortgage interest rates have been historically low for a long time, but expect them to start climbing soon. Thirty-year fixed rates may rise to 6 percent by December and to about 6.5 percent at the end of 2011; rates were about 5 percent in early April.

It’s tempting to think the Federal Reserve’s recent pullback from mortgage-backed securities purchases will drive interest rates higher.

But since it ended those purchases at the end of March, as it had planned to do, the impact on rates has been negligible. By all appearances, private investors have filled the void and are absorbing the MBS supply, keeping rates down. Predictable macro-economic factors – the continuing high U.S. budget deficit and the recovering economy – are the main reasons rates are likely to climb.”

I have been told that historically, but I haven’t verified, that the market activity increases just as rates start to go up because people want to lock in the low rates before they go higher. The tax credits have been attributed to the surge in first time home buyers along with the affordability factor. Will an increase in rates fuel the market as our economy improves?

Pinehurst Lane, Ocean Colony

Great value in this approximately 2300 square foot home on the 2nd fairway of Ocean Colony gated community. Spacious 3 bedroom, 2 and a half bath home. Remodeled, ground floor master suite; includes master bath with spa tub, and separate stall shower. Sunken living room; with gas starting fireplace, and vaulted ceilings. Large eat-in kitchen. Bathroom includes tub with jets.

Remodel Tips

Here are five tips for planning a successful home remodel that you can enjoy for many years to come.

1. Compile a list of home remodeling ideas and draft a budget for the work.
Look through magazines and tear out pictures that attract your attention. Make up a poster board and glue the pictures on it to empower your vision.

2. Look for a professional remodeler to help plan the project.
Get referrals from friends who have had work done in the area, consider friends, also, if you have a contractor’s leaning, but your artistic side admittedly is a little stilted, chat with or hire an interior designer. Designers should have some kind of portfolio. Treat them as you would a builder.

3. Check the references and background of the remodeler.
Don’t work with any contractors who can’t give you proof of errors and omissions insurance. (Known as E&O)

4. Agree on a contract.
Many contractors will try to get an open ended contract for time and material. You need a lot of trust or experience with these contractors for this to make sense. Still if you’re opening up the walls of an older house, be prepared for surprises, and don’t expect your contractor to take the brunt of the surprise.

5. Take advantage of the energy efficiency tax credits.
There are many interesting new ideas and opportunities out there today. Some will pay off handsomely when you go to sell the home. If you appreciate the extra quality or energy savings it’s reasonable that a buyer will as well.

Credit Offer Opt-out

My loan broker just sent me this.
"Hi Everyone
As you may know I am in the mortgage brokerage business.
This week, a client complained to me that she received calls from businesses offering her different credit services the very night I ran her credit report. They knew her personal information and her credit score.
I told her I would find out what happened. What I learned was that the credit repository companies Transunion, Equifax etc) regularly sell that information. I discovered that if a person does not "opt-out" they can sell this sensitive information.
I imagine most of you would not like this to occur to you.

To op-out for the next 5 years you should call 888-567-8688."

I tried, it, it is talking to a computer, and as a tad frustrating, but really didn't take too long,
Goodluck Lee

Corporate Controlled Congress

You know in the past, I have preferred to work with loan brokers. The benefit with them was that they could shop the lenders who were hungry and get the best deal currently available to the borrower.

Well welcome to the new corporate America. These independent brokers are finding their hands tied behind their backs by large corporate lenders.

Today a broker told me he could get a loan for a guy with a 680 credit score, with a job and a 400k mortgage, on a 500k home easier then he could get a loan for a millionaire, with no job, who has the money in the bank, and a 770+ credit score, with only 200k owing on his million dollar home.

You know, I hear a lot about the Republican controlled congress, and the Democratic controlled congress, but all I see is the corporate controlled congress. Stand aside little guy, I have all the money.

Quality Schools in Half Moon Bay

Education on the Coastside has always been a mixed bag. The Coastside has tried some innovative programs such as the Spanish immersion program, at Hatch Elementary, which may have been a good concept, but had problems and resistors. The local elementary schools have won awards, including Hatch, El Granada and Farallone View in Montara over the years. The high school has consistently done well in math and science, but has had fallen behind at times in the humanities.

When Apples for students was available, Half Moon Bay was second to none in parent and student participation in acquiring these computers for the schools. Parent participation in the local schools has long been very good. The high school has not been without its controversy’s, like any high school, but overall I would think it would feel good to have attended it.

Half Moon Bay High School is a relatively small school, thus they not always able to offer all the AP courses or students may have a schedule conflict and need other opportunities to take AP courses. Over the past five years, they have established a relationship with the University of California and their teachers to allow students the opportunity to take selected AP courses online; i.e. AP Physics, AP Chemistry, AP Calculus BC, and AP Economics. For a pdf of the HMBHS Advanced Placement Program visit

http://www.cabrillo.k12.ca.us/hmbhs/print_file/HMBHS_AP.pdf

Rehab Day in Half Moon Bay

The Senior Center in Half Moon Bay annually sponsors a home repair day.
Men and women from the coastside and Elsewhere come together and do much needed repairs for seniors who cannot any more. These repairs include gardening, light plumbing, deck repair, stairway or ramp replacement, painting, and a host of other small tasks. Much of the work is done in the Half Moon Bay Senior Park, Canada Cove. Some of the work is done to homes in La Honda, Pescadero, EL Granada, Montara and Moss Beach. Here is what the senior center posts"

"What repairs will be done?
Projects dealing with safety, health and accessibility issues are given priority. In the past we have installed wheelchair ramps, replaced unsafe stairs and porches, fixed plumbing problems, repaired furnaces, painted houses inside and out and cleaned yards.
Who is eligible?
Homeowners must be at least 60 years of age or disabled and unable to do the repairs themselves. Recipients must meet income eligibility requirements.
How do I apply for help?
Call Senior Coastsiders at 726-9056 for an application. Return the application by March 31 with a $10 processing fee.
How do I volunteer?
Anyone fourteen and older can be a volunteer! Volunteers do not need to be skilled at home repairs, but any skills will be utilized. If you would like to volunteer, please call us at 726-9056 or print the Application at the top of this page and send it to us.
Who sponsors the program?
The Home Rehabilitation Program is sponsored by private donations, corporations, local businesses, San Mateo County Aging and Adult Services, and San Mateo County Department of Housing."
This work not only helps those who need a hand, but also brings the coastal citizens a bit closer together.

Wouldn't you like to join in. It is a fun day, and you are welcome to join in.

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