If You Buy From Lennar, You Donate to Charity

Lennar Corp., a Southern California housing group, is requiring new-home buyers to pay $50 for every $100,000 of the home price as an endowment fee for their charitable housing foundation. This fee must be paid by future buyers as well when the residence is resold. Lennar is currently seeking to build a new project in downtown Long Beach. Read more about the charity fee.

Calif. Median Home Prices Still Rises

Statewide home resale activity is up 3.6 percent from the 633,660 recorded in June 2004, as reflected in records from MLS systems. The median home price, statewide, is $542,720, up 16 percent from a year ago. Interest rates are lower than this time last year, and the inventory is greater, which help to increase the pace of sales; the number of days to sell a single family home was a few days longer than in June 2004. In cities covered by DataQuick, which uses county records, 396 of 406 cities showed an increase in their median home prices from a year ago. June 05 sales/price report

30-year fixed rate vs. HELOC

The 30-year fixed mortgage rate is still under 6%, while the average home-equity loan is over 7%, which makes this still a good time to cashout.

Alan Greenspan and Loans

The West Coast market has been identified numerous times as a market of faster and greater appreciation than other national markets. Alan Greenspan has once again stated his concerns about some banks taking risks on unsafe lending practices in order to make loans in extreme markets which may be part of a local market bubble. Elsewhere, this market is not considered a bubble that will "burst" but one that will slow with lower appreciation over a longer period of time than seen in the recent past.

30-year Fixed Rate Still Lower

Compared to this time last year when the 30-year fixed rate mortgage averaged 6 percent, interest rates are still lower, according to ALTA's Industry News article.

MBA's Economic Forecast

Find the Mortgage Bankers Association's forecast on their site, saying 2005 will be the third biggest year in mortgage production behind 2002 and 2003. Long-term interest rates are predicted to increase to 6.25 percent for 30-year fixed interest rates by 2007, still low compared to more recent history. Home prices are expected to increase in the more moderate ranges of 5-7% compared to much higher gains in 2004.

Southern California Economy vs. The Bubble

Another Chapter: The FDIC tells us California grew to 1.7 percent in job growth this year. But their state profile chart also shows Southern California has much lower job growth than other parts of California--excluding the Bay Area--and is also lower than the rest of the nation. However, home price growth in So Cal outpaced income growth.

"Piggyback" Loans have increased 20% since 2001

Second mortgages, also known as lender seconds, have made the West coast prices more affordable by allowing a buyer to put down a lower down payment. Another advantage is that the interest on a second mortgage, like the first, is tax deductible. Not so with PMI when the down is less than 20%. 42 percent of loans involved seconds in early 2004. PMI carriers are critical of these loans, not surprisingly, however the cost to the consumer is ultimately more using PMI. Click here for C.A.R's article.

30-year fixed rate mortgage still down

As of June 23, the 30-year rate was down again from last week when it averaged 5.63 percent, to 5.57 percent. At this time last year it averaged 6.25 percent. Existing homes sales, nationwide, in May were at the second highest lever ever recorded, fueled by low mortgage rates, and this pattern may well continue into the foreseeable future, according to Freddie Mac's vice president Frank Nothaft.

The Upside of Higher Prices

California property taxes are based on the current home selling price, starting at approximately 1.25 percent. The counties's collections have profited from the increase in prices, the low interest rates, and the current turnover rate. Property tax collections are up 9 percent in Los Angeles County, meaning an extra $223 million in revenue which will be used for more sheriff's deputies and hopital system improvements. Property taxes account for 70 percent of LA County's revenue. In a market downturn, property owners can request reassessment of their properties at the current market value--many owners did this in the 1990's recession to reduce their tax payments.