Best Time Ever to Save on a Mortgage Payment in Southern California

30-year mortgage rates since Sept. 2007

Dear Buyers:

Did you know rates are about 3.49% right now? Best time ever to save on a new mortgage payment in the Long Beach, California area!

Rates have trended downward since 2008, and that means you will pay less on your monthly mortgage payment for the same selling price. 

See what your monthly median payment will be at different interest rates and different selling prices.

The lower chart was made up when interest rates were a little higher, but get out your calculator to easily compute a selling price at a lower rate as follows:

Comparisons at higher rates/higher prices

For a home priced at $400,000, with a 20 percent downpayment and a 4 percent mortgage rate, the monthly PITI (principal, interest, insurance and taxes) will be $1,990 for the homebuyer. The monthly PITI jumps to $2,180 at 5 percent and to $2,380 at 6 percent. For each one percentage point increase in the mortgage rate, the payment goes up by almost $200 under these assumptions. Even for a lower priced home at $200,000, the difference in the monthly payment is significant as each percentage point rise in the mortgage rate tacks on $100 to the monthly PITI.  So, for a $400,000 home at today's 3.49 percent mortgage rate, the monthly PITI would be about $1885, and a savings of over $100 at a 4 percent rate.

Pulsenomics, in its latest quarterly survey shows housing prices for the future.
Price appreciation/depreciation expected over the next five years:
2012: -.4%
2013: +1.3%
2014: +2.6%
2015: +3.2%
2016: +3.5%

The average pre-bubble (1987-1999) annual appreciation was 3.6%.
(Thanks to KCM Blog for Pulsenomics data.)

New and Easier Guidelines for FHA Approval of Homeowner Associations

The fallout rate for FHA approved homeowner associations has been huge over the last 2 years. FHA-approved condominiums are often one of the best entry level paths for first time buyers into homeownership.  But the Federal Housing Administration (FHA) just eased some of its restrictive guidelines, bringing their rules into the sphere of the current economic market, and bringing more opportunity to sellers and buyers.

One example of change is the acceptance of FHA loans in complexes which included commercial units--often located on the first floor, such as the Lafayette in downtown Long Beach or one of the newer loft projects in San Pedro.  The revised rules changed from allowing 25% to now allowing 35% of the project to be retail or commercial, and possibly more.

Another difficult requirement concerning the personal legal liability for condo board officers for being responsible for certain knowledge that could be well beyond their actual ability to know, with a penalty up to 30 years in prison, has now been changed to "less scary language."

And, significant in these economic times, the requirements concerning delinquent dues and length of time delinquent has been expanded to 15% of owners may be up to 60 days late (not the previous 30 days) to meet FHA approval for the project. 

While these may not seem like significant changes to some, by checking the list of FHA approved projects in Long Beach, compared to the far greater number that were FHA approved for many years, it's not difficult to see the impact on buyers, sellers, and the lending market.  See the complete article by Kenneth Harney.

Market Update, And More Home Price Directions Are Moving UP

California prices by county

The median price paid for a Southern California home rose to $309,000 in August--that's an overall median for Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties--that's an increase of 10% compared to August 2011, and the highest median price since August 2008's median of $330,000.

Short sales and foreclosures (the distressed property market) are trending downward by 1%-2% from  July and previous months.  That does not mean they are going away, because the distressed property market is predicted to be here for a long time into the future.  The good news is that higher prices mean a lift out of the short sale category for some prospective sellers, or a higher net from a sale to put towards a new purchase. Short sales in the 6-county area were about 17% of sales, but locally, there are specific areas where they are still 50% or more of the market.

Drops in foreclosure inventory,  increases in sales of higher priced properties are part of the increase in home price.  The increase in numbers of properties in escrow is impacted by the lowest interest rates since the 1940s, which are likely to stay that way for some time into the future, this August was the highest August sales in the last 6 years.  The volume of sales however, is still 15% below the average calculated since 1988.

Investors, or "absentee buyers" bought 27% of the homes last month, and buyers paying with cash were 31%, paying a median amount of $235,000, an increased amount from last year.

Credit conditions for buyers, and therefore for sellers, are strict.  Buyers who currently occupy their homes and want to purchase a new one not only must meet all those loan requirements, but satisfy the lender's requirement for at least 30% equity or more in their property. If your property is currently a rental, the property's equity may not be an issue assuming you have satisfied other lender conditions.

Find more local trends for houses and townhouse/condos in Los Angeles and Orange Counties including housing affordability, months of inventory, median sales price (now up at 5.9% at $450,000 for the region covered by this report), and local inventory amounts. Just go to my site for this local regional report that covers cities including Lakewood, Long Beach, Cerritos, Seal Beach, Huntington Beach, Newport Beach down to Aliso Viejo and Rancho Margarita, out to Yorba Linda and Placentia, and many more cities in between.  A more specific report is available by zip code (here is 90713 in Lakewood) or by city--this one is for Long Beach.

For a copy of your local report, please contact me and I will be happy to send it to you.

Some selected prices:  the highest median sales price in the local region:  Corona del Mar at $1,700,000; Cerritos, $499,900; Long Beach, $320,000; Signal Hill, $410,000; Cypress, $422,500.

Click on the link to see Dataquick's Southern California report for August. Do you want to find out your home's current value?

Please go to What is My Home Worth for more information.

When Am I Able to Buy Again?



Seasoning Requirements
 

The distressed property market began some time ago, and some people are beginning to wonder when they will be able to buy again.

Credit scores are important as well, depending on how severe the situation was and how long it will take to recover.

This is meant as a general guide only. 

For instance, if your short sale closed escrow in September of 2009, you could be eligible for an FHA loan, depending on your other loan criteria of course.  IF you have certain extentuating circumstances and were current on your mortgage at throughout the short sale, you may not have any waiting period for a new FHA loan.

To obtain a conventional FNMA loan, your waiting time is as early as 2 years after a short sale closed if you have 20% down payment.  And, for a FNMA loan, IF you can show certain extenuating circumstances, your wait might be only 3 years after a foreclosure.

Bankruptcy is one of the most damaging events to your credit, but if you work diligently to restore your credit as soon as possible, your wait could be much shorter in order to buy.  Paying bills on time and getting new credit established, perhaps by obtaining a secured credit card, are essential to improving your status as a good loan risk, according to John Walsh of Total Risk.

Please contact your lender (or I can refer you to one) for circumstances about your particular situation, because it may vary somewhat from the information here. Please contact me--I want to help you, even if you're not able to buy now.