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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 ForumFeb. 4th, 2004

Local Housing Trends &

UC Mortgage Origination Program

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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

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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)

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UC Mortgage Payments by County Volume(Assume: 5% down)(Use CAR Nov. ’03 Median Sales Prices)

  • Riverside $1192/month

  • LA $1500/month

  • San Diego $1739/month

  • Orange County $1934/month

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UC Loan vs. Non-UC Loans $350,000 Price (5% down) Volume

  • 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

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The Not-So-Good News for Local Housing: Seller’s Market Volume

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

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3.8% UC MOP Rate (Variable) – VolumeHow 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

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Other MOP Benefits Volume

  • 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

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Faculty Candidates Volume

  • 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

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Faculty Candidates Volume

  • Can read about the MOP program on my website

    • 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

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Handout – Quarterly MOP Loan Volume & Loan Rate Trends Volume

  • 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

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Call me anytime.. Volume