San Luis Obispo County Third Quarter Real Estate Update

The San Luis Obispo County Real Estate Update includes data for all cities and surrounding areas of the Central Coast for the first three quarters of the year (January-September) of 2016.

  • 2,170 Total Number of Sales (2016) vs. 2,174 (2015)
  • $555,000 Median Home Price (2016) vs. $520,000 (2015)
  • 98.09% Average Selling Price per a List Price (2016) vs. 97.98% (2015)
  • $341.95 Average Price per a Square Foot (2016) vs. $319.53 (2015)
  • 68 Average Cumulative Days on Market (2016) vs. 72 (2015)

All components of the housing market in San Luis Obispo County improved from the first three quarters of 2015 to the first three quarters of 2016 with the exception of the total number of sales, which was 4 total homes higher in 2015 than 2016. Though, the first three quarters of 2015 had more total number of sales, it had less normal sales and more foreclosures than in 2016, making 2016 a healthier sales mix in the first three quarters than the first three quarters of 2015 when there were 86 foreclosures compared to 61 foreclosures in 2016. All other aspects of the housing market improved from 2015. The median home price increased by $35,000 in San Luis Obispo County. The average selling price compared to the average list price was .11% higher during the first three quarters of this year meaning buyers are willing to pay a higher percentage of the listing price. Average price per a square foot increased by $22.42 on a year on year basis. The average cumulative days a home sits on the market decreased by 4 days from the first three quarters of 2015. All of these elements point to a healthier housing market than that of 2015.

New Listing! Beautiful Vista Del Mar Home

Located in the beautiful development of Vista Del Mar which sits on 104 acres surrounded by approximately 30 acres of beautiful open space. Vista del Mar is located just minutes from the Village of Arroyo Grande, close to the ocean, Lake Lopez, shopping and schools. This well-designed single story home is located on a corner lot in a cul-de-sack. The spacious Kitchen offers stainless appliances, granite tile and loads of storage and counter space. Adjacent to the kitchen is a wine bar and butler’s pantry, again giving you additional storage. The living room has multiple French doors opening out on to the back patio bringing the outside in. All three of the bedrooms have adjoining bathrooms. This home offers some ocean and dune views.
Bernie Davidson 805.878.6967

CCL Market Update

Consumer Price Index

Consumer prices rose a noticeable and as expected 0.3 percent in September with two important areas of strength being: energy surging 2.9 percent on the month and owners’ equivalent rent up 0.4 percent.  The year on year rate for the CPI is up 4 tenths to plus 1.5 percent which is the highest its been since October of 2014. However, when excluding energy and food, the price increase slows to only 0.1 percent which is below the economists’ low forecasts. The core’s year on year rate is down 1 tenth to 2.2 percent. Though the rate is about ½ percentage point above the Fed’s target rate, it’s the direction that matters and the dip does not point to a September increase for the Fed’s gauge. Weak areas in the September report include apparel down 0.7 percent on the month and communications down 0.8 percent.

Housing Market Index

The new home sector picked up steam in the third quarter and looks to end the second half of the year with strength. The housing market index held on to the bulk of its 6 point surge in September coming in at 63 for October, a two point slip. Home builders are optimistic about future sales, the leading component of the report which is up 1 point in the month to a level of 72. Current sales are down 2 points but are very strong at 69. Traffic continues to lag, down 1 point to 46 but with the trend still=l showing slight improvement.  The lack of traffic is a concerning factor, it may perhaps reflect the lack of new homes coming on the market but also a lack of prospective first time buyers many of whom are content to rent.

Mortgage Applications

Purchase applications for home mortgages erased the prior week’s decline and rose a seasonally adjusted 3.0 percent in the week of October 14th. Refinancing applications, however, continued to slow down and were off 1.0 percent after an 8.0 percent decline in the previous week. The unadjusted purchase index fell 7 percent from the previous week to a level that is still 13 percent higher than a year ago.

Housing Starts

Starts are mixed but permits are up in what is a deceptively solid housing starts and permits report. Starts plunged a large 9.0 percent in September to a 1.047 million annualized rate. This drop is tied entirely to t5he volatile multifamily component of the report where starts fell a massive 38 percent in the month to a 264,000 rate. The more important single family component was up sharply rising 8.1 percent higher to a 783,000 rate. Permits for both of these components are up with single family 0.4 percent higher to a 739,000 rate and with multifamily in contrast to the big declines in starts are up 17 percent to 486,000. Together, permits are up 6.3 percent to a 1.225 million rate that far exceeds the top estimate of economists of 1.182 million.

Beige Book

The pace of economic growth remains modest to moderate which is also the general outlook. The October edition of the Beige Book does not highlight increases in wage pressure, it does however,  describe labor conditions as remaining “tight” though wage growth is described as “modest.” The report continues to describe consumer spending as no better than mixed.  It said residential real estate expanded further despite the low inventories and that commercial activity improved as well.

Jobless Claims

Initial jobless claims moved higher in the week of October 15th up 13,000 to 260,000. This is also the sample week for the October reemployment report and a comparison with the sSeptember sample week is mixed. The 260,000 level is up 9,000 from the September week but the four week average is 6,500 lower at 251,750 vs 258,250. Continuing claims are looking favorable at 2.057 million in data for the week of October 8th.

Existing home Sales

Existing home sales surged 3.2 percent in September to a 5.470 million annualized rate that exceeds the high end of estimates by economists. The key single family component leads the report up 4.1 percent to a 4.860 million rate while condos, where choices are limited and permits for new building are on the rise, fe4ll 3.2 percent to a 610,000 rate. Home owners are reluctant to put their home on the market though supply did rise in the month to 2.040 million from 2.010 million. But supply on a monthly basis fell to 4.5 months from 4.6 months. Prices have not been firm which helps explain both the lack of supply and also rise in sales. The median fell 2.4 percent in the month to $234,200 though year on year appr4eciation remains on trend at plus 5.6 percent. Other important details of the report include a record low for distr3esssed sales at 4 percent of all transaction and a solid 34 percent showing for first time buyers which point to rising traffic and likely reflect the rising cost of rentals.

New Listing! Move in Ready 2 Bedroom 2 Bath

Casa Bonita. Beautiful Move in Ready 2 Bedroom 2 Bath home! This wonderful home features new Laminate Flooring in Kitchen, Dining and Main Living area and Bedrooms. Split Floor Plan with indoor Laundry Room with front loader Washer and Dryer included. Spacious Kitchen with ample counter space, Gas Stove/Oven and Stainless Steel Refrigerator. Private back yard features Covered Patio, Synthetic Lawn and large Storage Shed. Great Central Location for shopping, restaurants and 101 Freeway access.
Shea Hutchinson 805.260.6322

New Listing! 2 Bedroom 2 Bath Condo

Oakridge Park Condo for sale! This light and bright home features cathedral ceilings, two bedrooms, 1 full bath and 1 bath with shower… The fireplace is the focal point of the family room along with a sliding glass door that accesses a huge patio and yard. The master suite is oversized and includes a nice sitting area with nice views of the yard and trees. There are fabulous views of the open space and lots of privacy. It needs a little lovin’ — sellers are selling as is… Hurry, this one will go fast!
Wendy Teixeira 805.310.3505

Documentation Difficulties

We are in a new time of loan processing. In years past lenders required less documentation, allowed for substitutions of required forms, and readily made exceptions.  Today, we find that lenders are the exact opposite – lenders require fully documented files and rarely make exceptions.

[See the mortgage documentation checklist here]

Following are few tips to avoid documentation troubles.

1)   Remember to provide all pages of a document. Often times, borrowers will provide only the first few pages of an account statement or income document.  Always provide all pages.  This is often overlooked on bank statements, when page 6 and 7 of 7 are intentionally left blank – we still need to see those pages.

2)   Be sure to provide clear copies with legible content.  Often times we receive faxes or scans where part of the document is blurred or cut off and this regularly leads to further conditions.

3)   If you have shared asset accounts with non-borrowing spouse or other individuals not on the loan application, be prepared to get a written explanation from them.

4)   We are required to source any non-payroll deposits on bank statements. This is frequently a frustration for borrowers.  For example, if you receive a tax refund check for $2,000 and deposit it into your bank account, we will need to see proof of the deposit. Proof is usually a copy of the check with a letter explaining why you received this money.

5)   Income documents must be thorough and it can feel like overkill.  For example, if you receive social security income, we will need your most recent award letter, 1099 Benefit statement from the previous 2 years, and bank statements evidencing receipt of deposit.  Why do they need 3 documents to prove the income?  Again, feels like overkill, but that is the lending condition today!

Remember to be thorough.  Provide as much documentation as you can up front to help avoid additional requests and delays later.

New Listing! 3 Bedroom 3 Bath in Santa Maria


Welcome to Arbor Walk. This is a great opportunity to own a home in this wonderful gated community with Very low HOA dues $80 per month. The great room opens out to the dining room and the kitchen making a wonderful area to hang out with family and friends. The dining room has a sliding glass door which opens onto a very sunny private side yard. The open floor plan of this home allows the cook to interface with everyone else as it is open to the dining and living room. The large bar area can easily sit 4 people. The master bedroom is located upstairs; this is a split floor plan so the rest of the bedrooms are located on the other side of the house with the laundry room located just off a hall way between the master and the rest of the bedrooms. The home has an attached two car garage. The development has multiple green areas throughout the neighborhood including a BBQ area. The development is centrally located very close to shopping/park/schools and golf.
Bernie Davidson 805.878.6967

When to Pay the Points for a Lower Mortgage Rate

In his weekly column, Central Coast Lending co-owner and broker Jason Grote takes a look at interest rates and expands on the question – should I pay the points for a lower rate?

With interest rates continuing to fall and lower and lower rates becoming available, I often hear the question: should I pay extra points for a lower rate? The issue is this: every interest rate has a cost (points) associated with it.  The lower rates may now be available, but they may have a high cost associated with them.  Today, I will give you an example to help you determine a course of action in this Rate vs. Points debate.

The following scenario is based loosely on interest rates and fees available today, but should be used for illustrative purposes only.  Some numbers are rounded for ease of understanding. This scenario is based on a $400,000 loan amount for a refinance transaction.

First we must understand the third party fees that this and all loans are subject to. They are:


 -Title and Escrow Fees: $1325*

-Bank Fees: $950*

-Appraisal Fees: $450*

*These are averages of major companies based on our loan amount


This means that the third party fees for this loan total $2,725.  We will revisit this number momentarily.

Now, each interest rate has a fee associated with it.  We call this fee “points.”  For example,


3.625% costs 1% (or one point)… in our $400,000 example, 1% is $4,000.

3.75% costs .25% (or a quarter of a point)… in our $400,000 example, .25% is $1,000

3.875% is a -.625% credit for closing cost (negative points to offset closing costs)… in our $400,000 example, -.625% is -$2,500 %


Stay with me here.


If you choose 3.625% on our example $400,000 loan, you will pay third party fees of $2,725 + points of $4,000 for a total cost of $6,725

If you choose 3.75% on our example $400,000 loan, you will pay third party fees of $2,725 + points of $1,000 for a total cost of $3,725

If you choose 3.875% on our example $400,000 loan, you will pay third party fees of $2,725 and receive closing cost credit (negative points) of $-2,500 for a total cost of $225.


Cleaned Up…


3.625% costs $6,725

3.750% costs $3,725

3.875% costs $225



Now we need to take it a step farther.  Which is the right choice?  Is cheapest best?


$400,000 at 3.625% has a monthly payment of $1,824.21

$400,000 at 3.750% has a monthly payment of $1,852.46

$400,000 at 3.875% has a monthly payment of $1,880.95


Now let’s refocus.  This is a refinance.  So now we see the cost options, how do we know which is best?

Let’s say that our hypothetical borrower’s $400,000 loan has a 4.5% interest rate.  If this was originally $440,000 loan, then the monthly payment is $2,229.41.


Refinancing to 3.625% would save $405.20 per month, but the rate cost $6,725.  It will take 16.59 months of saving $405.20 per month to recuperate the $6,725 cost of refinancing.

Refinancing to 3.750% would save $376.95 per month, but the rate cost $3,725.  It will take 9.88 months of saving $376.95 per month to recuperate the $3,725 cost of refinancing.

Refinancing to 3.875% would save $348.46 per month, but the rate cost $225.  It will take less than 1 month of saving $348.46 per month to recuperate the $225 cost of refinancing.


So do you pay points?  You do if you plan being in the house more than 17 months!

Oh and by the way, this example gives us a response to the adage “it is not worth it to refinance if you can’t drop your interest rate a whole point.”  With these savings available, I have proven that you don’t need to save a full point in percentage for it to make sense to refinance. As you can see, the wisdom of refinance depends more on the cost than the rate.

Stay tuned for my next installment, in which I will discuss the opportunity for this borrower to reduce his or her term to 20 or even 15 years.

– Jason Grote (805.441.1016)