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 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 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)

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

UC Loan vs. Non-UC Loans $350,000 Price (5% down) Non-UC 80/15 loan 80% Fixed 1 st at 6.2% rate, 30 years 15% Fixed 2 nd at 7.0% rate, 15 years $2368/month Includes $182/month PMI UC MOP 90/5 loan 90% Variable MOP 1 st at 3.8% rate, 30 years 5% Fixed 2 nd at 6.35% rate, 15 years $1618/month 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— 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

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

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 years Change loan terms anytime New online application

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

Faculty Candidates 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

Handout – Quarterly MOP Loan Volume & Loan Rate Trends I’ve included a chart which compares rates (Fixed, ARM, MOP) from 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

Call me anytime.. Mike Wicke