January 2020 Newsletter Happy New Year!
The new decade is here and off to a great start! We hope you have been enjoying the sunny winter days and getting rest from the holidays.
This month, we wanted to showcase a few new facts about real estate in California and the Central Coast. We also have added a new section to our newsletter that features our top book selection for the month. The books we feature each month are not sponsored posts; they are books we have read and would like to share with you. We hope you enjoy!
Buyer Beware: Fire-Prone Areas
As one might expect, home sales are slowing in wildfire-prone areas of California, according to the Wall Street Journal. Insurance companies are placing stricter regulations on fire insurance policies and are less likely to insure homes in high-risk regions.
In the last two years, these insurance companies have paid over $24 billion for California wildfire losses. They are not offering renewal options for thousands of homeowners across the state because of these large expenses.
Are you looking at purchasing a home in a wildfire-prone region? You definitely will still be able to, it just may be more challenging to obtain a new fire insurance policy. When looking at homes in these vulnerable areas, please be aware of the following factors:
What the home and nearby homes are made of (avoid neighborhoods with wood-shake roofs and vinyl siding)
The amount of vegetation in the yard
Houses at the top of hills or slopes that may be more vulnerable to wildfires
There are also great ways to make your home safer in these areas, such as maintaining a well kept yard with landscaping accents like stone wall patios or less-flammable hardwood trees. FEMA suggests using fire-resistant materials like cement, plaster, and stucco when protecting the exterior of your home.
You can read more fire protection tips here.
San Luis Obispo County Market Update
The median sales price for a home in San Luis Obispo County for December 2019 was $602,500. This median price is down 0.4% from December 2018. Prices for our region have leveled out since summer 2018, maintaining their value and moving sideways, as can be seen by the infographic pulled from data from our local Multiple Listing Service.
This slower trend shows that the market is not being driven rapidly upward by speculators. This slower growth in pricing demonstrates a return to more stable levels of growth as seen in years past.
According to several economists, the housing market is expected to remain steady continuing into 2020 due to consistent demand and low inventory. Low rates and high buyer demand continue to absorb the listings that hit the market. According to Bankrate.com, rates are currently ranging from 3.20-3.75% right now for a 30 year fixed mortgage. Ever wonder what a difference in an interest rate of 1% can do to your monthly payment?
Here is how interest rates affect your principal and interest payment on a $500,000 home:
10% down with a 30 year fixed loan at 3.5%: $2,020.70/mo
10% down with a 30 year fixed loan at 4.5%: $2,280.08/mo
That 1% difference in interest rates makes about an 11% difference in monthly payment. These historically low rates are helping increase buyer purchasing power, helping buyers to afford more.
Though the buyers continue to purchase the listings that hit the market, the amount of listings available have decreased over the past year. According to the California Association of Realtors, listings available dropped in the double digit percentages for all regions across California.
On the Central Coast, the active listings in November 2018 was 2,542, which was down to 2,159 in November 2019. This is a 15.1% decrease, which means buyers have fewer options to choose from at this point in the market. The low supply and strong demand demonstrated are strong indicators of a robust market for 2020.
This Month’s Top Book Recommendation
Have you made your goals for the new year? Are you looking for inspiration to make this year the best one yet? Well, we have the right book for you! Hal Elrod’s book, The Miracle Morning: The Not-So Obvious Secret Guaranteed to Transform Your Life Before 8am, is a must read.
Through his six-step morning routine, Elrod has inspired hundreds of thousands of people all over the world to change their lives, including ours! Not only will you feel more alert and energized after completing this routine, you will also have a more clear idea of your purpose and goals in life. Whether you have yet to create your goals for the new year or if you have them all detailed out, this book is for you.
As always, if you have any questions about any of these topics or would like to chat about real estate, we are always here to help. Thank you!
Camille and Owen Schwaegerle
Keller Williams Realty Central Coast
The Schwaegerle Team
Credit Scores Demystified
If you've made a resolution this year to get your credit on track, getting started can feel a bit daunting. After all, it can sometimes seem as if credit agencies want to keep you in the dark about how scores are calculated. Not to worry - with some diligence on your part and a little insight into the world of credit score-keeping, you can get back on track in 2020.
Paint your credit score on your wall for extra motivation
Credit scores follow an algorithm first developed by the data analytics company FICO years ago. For a while, credit scores weren't the primary force behind a credit decision but over time the impact of a credit score became more and more important. Most every loan program available today has a minimum credit score.
There are five characteristics of your credit history that make up your three-digit score: your payment history, account balances, the length of your credit history, the types of credit used and how often you've applied for new credit. Credit scores will improve much more quickly by paying attention to the two categories that have the greatest impact on a score: payment history and account balances.
Payment history accounts for 35 percent of the total score. When someone makes a payment more than 30 days past the due date, scores will fall. An occasional "late pay" won't do much damage to your score but continued payments made more than 30 days past due definitely will. Preventing late payments is a key to recovering your score.
Account balances compare outstanding loan balances with credit lines and make up 30 percent of your score. If a credit card has a $10,000 credit line and there is a $3,300 balance, scores will actually improve, as the ideal balance-to-limit is about one-third of the credit line. As the balance grows and approaches or exceeds the limit, scores will begin to fall.
The remaining three have relatively little impact. How long someone has used credit accounts for 15 percent of the score, but there's really nothing anyone can do to improve this area other than to wait. Types of credit and credit inquiries both make up 10 percent of the score. By concentrating on payment history and account balances, scores will improve significantly over the next few months.
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