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Monday Morning Mortgages>
Monday Morning Mortgages
September 14, 2009
Highlights from Sonoma County EDB 2nd Quarter Report
The Sonoma County Economic Development Board releases quarterly local economic data. Statistical reports can be found at http://www.sonoma-county.org/edb/reports.htm. Here some highlights from the most recent report for Sonoma County.
• Sonoma County’s median home price decreased in June by $85,000 (23.1%) on a year-over basis to $300,000. This price is down $275,000 (47.8%) from its June peak of $575,000 in 2006.
• The average number of property listings decreased as closed sales rose over the quarter. 69.2% of listed properties sold in June 2009, a roughly 23% decrease from the 92.0% December 2008 rate. So far, 2009 home sales peaked in April, when 536 sales closed.
• Notices of default increased 10.3% over the quarter, from 1,241 defaults in Q1 ‘09 to 1,370 in Q2. ’09.
• Homes in Sonoma County that sold in Q2 2009 spent an average of 107 days on the market. June’s average is ten days longer than a year ago and 56 days longer than that of June 2005.
• The average home sold for 96.85% of its list price in June 2009. The ratio is 3.25% less than that of June 2005 and is roughly half a percentage above June 2008’s 9.2%.
• There were 1,528 total units sold for an average price of $373,486 in Q2 2009 in Sonoma County. The area with the greatest number of homes sold was Northwest Santa Rosa with 229 units, followed by 165 in both Northeast and Southwest Santa Rosa.
• Fair Market Rents (FMR), as calculated by the Department of Housing and Urban Development, increased 14% in 2009 after a five-year plateau. FMR for 2009 are $1,026, $1,296, $1,839, and $2,150 for one, two, three and four bedroom residences, respectively. FMR has increased by roughly 50% since 2000.
• The office vacancy rate for Q2 2009 in Sonoma County was 21.7%, a year-over increase of 7.4%. Petaluma recorded the highest vacancy rate at 35.7%, while the lowest vacancy rate was 14.7% in the North Corridor region, which encompasses the airport area, Windsor and Healdsburg.
• The local industrial vacancy rate rose 3.0% year- over to 14.4%, continuing its steady upward trend from its Q1 2006 low of 6.1%. Santa Rosa had the highest rate in the area with 16%, while the North Corridor region reported the lowest rate at 12.3%.
• The 8.8% retail vacancy rate is well above the Q2 2008 mark of 4.2%. The “Other” designation of areas including Sonoma, Sebastopol, Cloverdale reported a 5.4% vacancy rate, the lowest in the region.
Termite Reports
Conventional and FHA lending does not automatically require a pest report. One major lender released policy change requiring pest report clearance it the report is included in the purchase contract. This has been the case off and on, but this may indicate a move back to the conservative blanket requirement of cleared pest items if the report is on the contract. Leaving the report off the contract or waiving the report are options to avoid termite clearance issues. Here are the details for one lender.
1. A termite report and clearance is required on Conventional, FHA, CalHFA and USDA transactions if the Purchase contract indicates in section 4a, item 1, that the buyer or
seller shall pay for an inspection.
If the contract is not marked and the buyer does not sign the Wood Destroying Pest Inspection and Allocation of Cost Addendum, the termite report and/or clearance will not be required or requested by the lender.
However, if the purchase contract is marked yes and both the buyer and seller agree that they wish to waive the termite report and have done so by executing either a purchase contract addendum or an escrow amendment the lender will allow it to be waived as long as a termite report has not been provided to the lender or a termite report fee does not appear on the estimated HUD 1 or Final.
Please keep in mind a termite report cannot be waived once the lender has seen the report regardless if the contract calls for it or not. A termite clearance will be required and the
lender may request that all of section 1 and II items be corrected depending on what the
items require.
The following are examples of items that the lender will require to be corrected regardless if they are section I or II:
a. Major infestation, dry rot, fungus or termites that affect the soundness of the security of the property will be required to be corrected regardless if it is a section I or II item.
b. All section I items will be required to be completed. Please note the lender may require a section II item to be completed if it has to do with plumbing, roof leaks or health and safety issues.
c. If the report calls for a licensed contractor to further review and or correct. The
lender will require the item to be reviewed and corrected by a licensed contractor via a roof and/or plumbing cert and the bill must be provided to the lender.
Repairs may be paid by buyer or seller. If buyer agrees to pay for repairs, additional monies must be verified to cover the additional repairs.
Termite reports are good for six months from the date of initial inspection for Conventional loans and three months for a VA or FHA loans.
VA Termite Reports
2. VA still requires a termite report and clearance to be completed on all transactions
regardless of what the purchase contract states. Please remember VA requires both
sections I and II items to be corrected no matter what the corrections are. The Veteran must sign the report and the following verbiage must be typed on both the 1st page of the report and the clearance. “I have received, read, & approved a copy of this report and hereby certify that all work required has been completed, however, the termite report and clearance was performed at no cost to me.”
The Borrower (Veteran) cannot pay for the termite report; however the veteran isable to pay for the required repairs.
Rates
Last week gave us some incredible rate pricing, below 5% for 30 year fixed. This was due to the strong gov’t debt sales of Treasury bonds throughout the week. This morning rates are still excellent.
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