“Home sales decreased 24.7 percent in June in California compared with the same period a year ago, while the median price of an existing home increased 3.2 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.” Full article here
As far as median home prices (June 06 vs. June 07), here is what was reported by CAR for our area:
Arroyo Grande: -11.8%
Atascadero: -1.3%
Los Osos: -6.4%
Paso Robles: – 8.4%
San Luis Obispo: -7.8%
Santa Maria: -12.4%
This page lists median home price changes for cities throughout California.
*Because they use only one month comparisons, the figures presented can easily be swayed one way or the other for cities with not that many home sales for the month. That’s why I use Quarterly and Half-year statistics on the http://www.slowatch.com/ median home price comparisons.
Ryan’s Mortgage Blog:
So I wanted to Blog a little later in the week this time because I knew there was a lot going on and I wanted to wait to see what happened. It turns out most rates did come down a bit based on the news I am about to share with you that was emailed to me this morning. I’ve been receiving these daily commentary emails from around the industry for a long time now and this has been one of the more enjoyable ones. I normally don’t get excited over these commentaries because it seems like every day there is a new report coming out or some kind of news that will impact rates that will void the news from the day before. I will admit I did this morning because I saw good news for rates more than once! On the flip side, when rates are forecasted to lower like this usually that means there is something wrong somewhere else, so some people may think the following information is not good news depending on what their profession is or where their investments are. Here it is:
Thursday’s bond market has opened up sharply following a weaker than expected manufacturing report and large stock losses. The stock markets are down significantly with the Dow losing 220 points and the Nasdaq down 47 points. The bond market is currently up 22/32, which should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point.Today’s big news came from the Commerce Department who reported that new orders for big-ticket items rose 1.4% last month, falling short of expectations. The release also revised May’s orders lower by 0.4%, indicating that manufacturing activity was weaker than expected both months. This is good news for bonds and mortgage rates.June’s New Home Sales was also posted this morning, showing a much larger decline in sales than was expected. This is also good news for bonds and mortgage rates.Tomorrow morning brings us the release of the single most important report we see regularly. The quarterly Gross Domestic Product (GDP) is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating to see a 3.2% pace. A larger increase will probably hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.
As always, give me a call if you have any questions or comments…805-540-0866 or RBaker@PeregrineLending.com
PS – Live on the Rocks concert series has started at the Cliff’s Resort in Shell Beach on Sundays.
The SLO Downtown cycling race is back after a few years absence and will be held on Sunday, August 12th. Click here for the website
I didn’t realize it until thinking about my last post more that the car giveaway was another example of inflating the comparable price. The car giveway I blogged previously about also is giving away a car to the Buyers agent as well. If you deduct both car values and the commission off the price, the net price would be about 12% lower. Funny how people get so upset when Zillow reports a “zestimate” of a home that’s 10% off. The problem is that no one will know that a car was given away when someone looks up this home price as a comparable to determine a price for another home.
Also, adding the car price just for the Buyer into the purchase price of the home would mean $650/year increase in property tax (at 1%) for the value of the car in addition to the interest.
Unless I’m missing something, I’d take the $65,000 value of the car off the sale price of the home and let them keep the car so my loan and property tax would be reduced.
I’m starting to see some “bonuses” being offered to try to attract Buyers for resale homes (vs. what the new home builders are doing). With one home, they are giving away brand new car to the Buyer.
I’m not sure of the benefits or drawbacks of this since I’ve never been had experience with this type of giveaway. Here are the questions that come to my mind:
1) Will the lender fund $$$ knowing that part of the home purchase price includes a new car?
2) I calculated the interest for $65,000 (estimate of the car’s price) with a 30-year fixed loan at 6.8% interest. Total payments are $144,074 with $79,075 of interest.
I’ve always been told to not include items like refrigerators, washer/dryer, etc. into the purchase price of a home since the Buyer may end up paying interest well after these appliances are gone plus you end up paying property tax on the value of these items too. It’s always best to seperate these purchases and pay for them outside of escrow. Wouldn’t the same be true of this new car offer??
There are more than a couple things in how this real estate industry operates that are ready for a change. One of these is how the sale price of a home is reported. The Sales price is the piece of information that others use as a comparable to determine market value of a home. The problem is that the Sales price as reported today isn’t an apples-to-apples comparison as the Realtor’s commission is part of this price. In addition, you don’t know if the Seller gave the Buyer a credit at close of escrow. What we really need is the Sellers NET, or how much they actually received (minus commissions and any credits to Buyer).
Some scenarios. Let’s look at a home that sold for $600,000.
Scenario #1 (6% commission, 15K in credit) = $549,000 to Seller
Scenario #2 (4% commission, 15K in credit) = $561,000 to Seller
Scenario #3 (4% commission) = $576,000 to Seller
Scenario #4 (For Sale By Owner) = $600,000 to Seller
Also, if the current MLS co-op method of the Seller paying the commission for both the Listing Agent and Buyers Agent changes and the Buyer pays their agent themselves, it will further muddy the comparable prices.
What homeowners do when they try to do a For Sale By Owner (FSBO) is price their home using comparables. Today, if they used the above comparable they’d think their home was worth $600,000 and think that a Buyer should pay this. If a Buyer did pay this amount, they’d actually be paying over market value, IMO, unless the home they were using as a comparble to establish a price also was a FSBO. As more and more online home valuators are available, you’ll see properties recorded at the County offices that were FSBO, probate sales, private sales, etc. The comparable prices may not be an apples-to-apples comparison. Unfortunately, you don’t know how these properities were sold which makes it even tougher to know what to use as a true comparable price.
Realtors and the MLS Associations can add a field to the MLS listing to report a Sellers Net so when they change the listing to Sold, the info is there. But…don’t hold your breath as something that seems so easy to change won’t be because everyone is set in the way things have always been done.
