Department Chair Forum Feb. 4 th, 2004 Local Housing Trends & UC Mortgage Origination Program
Inland Empire Trends l l l IE is becoming a job center IE is no longer a bedroom community for Orange & LA Counties Houses in Inland Empire remain affordable because l l l 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
First, the Good News: Nov ‘ 03 Housing Prices / Sales Volume l 5, 093 homes sold in Riverside County l l Year to Year Increase of 19. 7% $268, 000 median price Riverside County l l Year to Year Increase of 17. 5% Compare median prices: l l 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)
UC Mortgage Payments by County (Assume: 5% down) (Use CAR Nov. ’ 03 Median Sales Prices) l l Riverside $1192/month LA $1500/month San Diego $1739/month Orange County $1934/month
UC Loan vs. Non-UC Loans $350, 000 Price (5% down) l Non-UC 80/15 loan l l 80% Fixed 1 st at 6. 2% rate, 30 years 15% Fixed 2 nd at 7. 0% rate, 15 years $2368/month l Includes $182/month PMI UC MOP 90/5 loan l l 90% Variable MOP 1 st at 3. 8% rate, 30 years 5% Fixed 2 nd at 6. 35% rate, 15 years $1618/month l No PMI $1428/month if 40 year MOP
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— l l l Sales go quickly / scarce supply / top dollar prices High Demand l LA & Orange County buyers are buying here due to price l Sometimes competing offers by buyers for one property Buyers may renegotiate the price downward because l Inspection show many repairs are needed, or l Appraisal may not reach the sales price l l Which can mean smaller loan & larger down payment Realtors impose short deadlines for appraisal/loan approvals
3. 8% UC MOP Rate (Variable) – How Long Will It Last? l l l 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
Other MOP Benefits l l l l 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
Faculty Candidates l l l 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 l l l 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
Faculty Candidates l Can read about the MOP program on my website http: //edres. ucr. edu/mort. html l Several non-UC lenders are listed Comparison of UC vs. non-UC lender benefits List of Riverside resources for new homebuyers l l Utilities, realtors, school information, city directory Background info on buying a house
Handout – Quarterly MOP Loan Volume & Loan Rate Trends l l I’ve included a chart which compares rates (Fixed, ARM, MOP) from 1984 - 2003 Chart also shows UC program demand l l l 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
Call me anytime. . l l l Mike Wicke 909 -787 -3323 mike. wicke@ucr. edu
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