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Department Chair Forum Feb. 4 th , 2004

Department Chair Forum Feb. 4 th , 2004. Local Housing Trends & UC Mortgage Origination Program. Inland Empire Trends. IE is becoming a job center IE is no longer a bedroom community for Orange & LA Counties Houses in Inland Empire remain affordable because

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Department Chair Forum Feb. 4 th , 2004

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  1. Department Chair ForumFeb. 4th, 2004 Local Housing Trends & UC Mortgage Origination Program

  2. Inland Empire Trends • IE is becoming a job center • IE is no longer a bedroom community for Orange & LA Counties • Houses in Inland Empire remain affordable because • Jobs are still being added in both Riverside/SB counties • Interest rates remain reasonably low • Expect home sales and prices in IE to remain solid at least through this spring and probably through the summer

  3. First, the Good News: Nov ‘03 Housing Prices / Sales Volume • 5,093 homes sold in Riverside County • Year to Year Increase of 19.7% • $268,000 median price Riverside County • Year to Year Increase of 17.5% • Compare median prices: • Orange County - $437,000 • San Diego County - $393,000 • Los Angeles County - $339,000 • Riverside/San Bernardino Counties sales = 30.8% of all So. Calif. homes sold Source: California Association of Realtors (CAR)

  4. UC Mortgage Payments by County(Assume: 5% down)(Use CAR Nov. ’03 Median Sales Prices) • Riverside $1192/month • LA $1500/month • San Diego $1739/month • Orange County $1934/month

  5. UC Loan vs. Non-UC Loans $350,000 Price (5% down) • Non-UC 80/15 loan • 80% Fixed 1st at 6.2% rate, 30 years • 15% Fixed 2nd at 7.0% rate, 15 years • $2368/month • Includes $182/month PMI • UC MOP 90/5 loan • 90% Variable MOP 1st at 3.8% rate, 30 years • 5% Fixed 2nd at 6.35% rate, 15 years • $1618/month • No PMI • $1428/month if 40 year MOP

  6. The Not-So-Good News for Local Housing: Seller’s Market A maturing market with patterns more typical of larger urban areas like LA or San Francisco— • Sales go quickly / scarce supply / top dollar prices • High Demand • LA & Orange County buyers are buying here due to price • Sometimes competing offers by buyers for one property • Buyers may renegotiate the price downward because • Inspection show many repairs are needed, or • Appraisal may not reach the sales price • Which can mean smaller loan & larger down payment • Realtors impose short deadlines for appraisal/loan approvals

  7. 3.8% UC MOP Rate (Variable) – How Long Will It Last? • We anticipate May rate adjustment to be lower than the current 3.8% • Rate will stabilize for rest of 2004 • We’ll probably need several (3-4) years to get back to our usual 6.0% - 6.5% rate • Most Californians refinance every 5-7 years, so we expect the UC rate will be under 6% for at least 3 of those years • As commercial rates go up, fewer buyers will qualify for a loan, which means less competition for UC MOP buyers, who will qualify under a lower UC rate

  8. Other MOP Benefits • No points & no upfront fees • No mortgage insurance (PMI) • No penalties to pay down principal • No margin (but .25% admin fee built into 3.8%) • Easy to qualify for a loan • Flexible repayment of 10-40 years • Change loan terms anytime • New online application

  9. Faculty Candidates • I encourage all candidates to call me so that I can explain the benefits of the program • I can work through sample scenarios • I can pre-qualify people immediately if they have the official offer letter from the Chancellor / EVC • Helpful to new faculty who want to buy a house while visiting Riverside • UC name as a lender is prestigious • This pre-qualification can give the new faculty person an advantage over other competing buyers

  10. Faculty Candidates • Can read about the MOP program on my website http://edres.ucr.edu/mort.html • Several non-UC lenders are listed • Comparison of UC vs. non-UC lender benefits • List of Riverside resources for new homebuyers • Utilities, realtors, school information, city directory • Background info on buying a house

  11. Handout – Quarterly MOP Loan Volume & Loan Rate Trends • I’ve included a chart which compares rates (Fixed, ARM, MOP) from 1984 - 2003 • Chart also shows UC program demand • When MOP rate is within 1% of the current market fixed rate, UC loan demand is low • When the difference between the MOP rate and the current market fixed rate is more than 1%, then UC loan demand is high • Notice that UC rate changes over time are more gradual than either the fixed or ARM rate changes

  12. Call me anytime.. • Mike Wicke • 909-787-3323 • mike.wicke@ucr.edu

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