Sherry Sim, SRES, E-Pro Covering the Beautiful Central Coast CA

I have just read Sandy Keller's blog on

"Have you had to deal with property tax increases in your area?"

and feel sorry for the homeowners in Horry County, South Carolina. Like Horry County, a high percentage of the homes in North Coast of San Luis Obispo County (where I specialize) comprise second or vacation homes. If there were a property tax increase of 301%, we would probably be as horrified as Sandy.

Lately, with the decline in property prices, more than 12,000 homeowners in San Luis Obispo County will face no tax increase in 2008/2009, or receive a reduction on their property taxes. Properties affected are likely those that have been purchased since January 2005. According to the San Luis Obispo County Tax Assessor's Office, properties in North County, such as the subdivisions in Paso Robles, and Atascadero, and South County, namely, Nipomo, are most affected. The values of these homes fell by an average of 18% in the subdivisions, and around 8% to 10% among custom homes. There are a few extremes of 20% to 25% decrease in lowered tax valuations.

Unlike the rest of California where the values of homes had dropped due to the general decline as a result of the high foreclosures and lending/credit issues, this is not the case in San Luis Obispo County. Realty Trac reported that one in 478 homes in San Luis Obispo County is in foreclosure, compared to one in 192 across the state.

The relief to these homeowners poses a challenge for the public agencies that rely on property taxes. In my area, three local school districts - San Luis Coastal, Cayucos Elementary, and Coast Unified School District in Cambria, CA are districts that rely on property taxes. These districts are thankful that there have not been huge declines in the assessments, due to lower declines in property prices on North Coast of San Luis Obispo County.

Interestingly, while relief to these 12,000 homeowners will mean lower tax assessments for the San Luis Obispo County, the overall tax roll for the county has increased marginally by 5.26%, or $40.7 billion. According to the County, that marginal increase was double of what the tax roll was worth in 2000.

If you purchased your property from January 2005, and did not receive a lowered tax valuation notice, visit the San Luis Obispo County Tax Assessor's website, to request for a review of your property's value, or please feel free to contact me for a complimentary home valuation report.

Does anyone knows what an offset loan is? How does it work? Are you seeing this product being offered in your area?

Recently, a mortgage broker emailed this to me - this is an article that appeared in Money Magazine

Quote -

(Money Magazine) -- Question: I've heard that American lenders are now offering something called an offset mortgage, which is popular in the U.K. Do you think this is a good deal? - Jeffrey S. Kallas, Columbus, Ohio

Answer: It depends. Here's how it works in Britain. You get a mortgage linked to a non-interest-bearing savings account whose deposits "offset" your loan balance.

So if you owe $200,000 on your home but have $50,000 on deposit, the bank calculates your monthly interest as if you borrowed only $150,000.

The bank gets its back scratched by getting to use your deposit interest-free. You pay off your mortgage faster because more of your monthly payment is applied to principal - and you can get your hands on your savings any old time.

Because this deal would give you an extra weensy tax break under U.S. law, however, no offset mortgages are allowed here.

But two U.S. companies - CMG Financial Services and Macquarie Mortgages USA - have introduced a version that passes muster with the IRS.

You take out an adjustable-rate mortgage and deposit your paycheck into the mortgage account. Doing that gives you an offset on the principal, which lowers your interest.

The arrangement could be useful if you receive big bonuses; you'll be reducing your interest until you use the money. But here's the real benefit: If you manage not to spend all your pay, you cut your costs.

Say you save 5 percent of take-home pay of a gross income of $150,000 - about $460 a month. On a $300,000 7 percent mortgage, you'd slash your interest by $197,300 and be paid off in only 18 years - and you'd still have the money you saved.

But if you spend more than you put in, the difference adds to your loan balance. END

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If available, would you recommend this product to your clients?

Buyers, who bought in Pismo Beach during the first six months in 2008, probably enjoyed the lower prices when comparing prices to the same period in 2007. The median home price during this period decreased by 12% from $757,000 to $665,000. Overall, home sale prices are lower.

During January-June 2008, home sales in Pismo Beach dropped by 25% from 52 home sales to 39. At the same time, the average number of days taken to sell these properties increased by 42 days, from 119 to 161 days.

The trend appears to reflect similar market conditions in the rest of San Luis Obispo County, that is, lower home sales and lower median home prices.

The above report was compiled based on the following:-

1. "AVG. DOM" refers to the average number of days on the market, or the average marketing time needed to sell the home.
2. The data is compiled from the Central Coast Multiple Listing Service as of August 22, 2008. The information is deemed accurate but not guaranteed.
3. Only stick-built single-family residences under $1M are included in this report.
4. Due to fewer $1M-plus sales, sales on similar properties selling more than $1M are excluded.
5. Condominiums, planned development units, townhouses and mobile homes are not included in this report.

Like Pismo Beach and Nipomo, the median home price in Oceano dropped by 12% from $429,000 to $378,400 in the first half of 2008, when compared to the same period last year. Home prices fell from $269,900 to $185,000 at the low end. At the high end, however, homes sold higher at $810,000; $30,000 more than the same period a year ago.

During the same six months in 2008, 14 single-family homes sold. The decline at 26%, is 5 fewer homes when compared to the same period in 2007. What's interesting is that the average number of days to sell a home during this period was shortened by half, or 50% from 131 to 66 days!

As noted on the shorter marketing time in Grover Beach, will the shorter marketing time continue in fall of 2008? Another review at the end of third quarter 2008 will be made to see what happens.

The above report was compiled based on the following:-

1. "AVG. DOM" refers to the average number of days on the market, or the average marketing time needed to sell the home.
2. The data is compiled from the Central Coast Multiple Listing Service as of August 22, 2008. The information is deemed accurate but not guaranteed.
3. Only stick-built single-family residences under $1M are included in this report.
4. Due to fewer $1M-plus sales, sales on similar properties selling more than $1M are excluded.
5. Condominiums, planned development units, townhouses and mobile homes are not included in this report.

The above statistics showed that Nipomo, like Grover Beach and Pismo Beach saw a decline of 12% in the median home price. In the first half of 2008, the median home price was $499,900. That declined by $65,100 from $565,000 a year ago. At the same time, overall home sale prices also fell to $246,000 at the low end, and up to $900,000 at the high end.

Unlike many of her counter-parts in San Luis Obispo County, Nipomo enjoyed a slight increase in home sales, by 6%. 85 homes sold in the first half of 2008, 5 more homes than the first half of 2007. Similarly, home sellers during this time took a slightly shorter time to sell their homes. The average marketing time was 10 days shorter, or 133 days in January-June 2008 versus 133 days in 2007.

The above report was compiled based on the following:-

1. "AVG. DOM" refers to the average number of days on the market, or the average marketing time needed to sell the home.
2. The data is compiled from the Central Coast Multiple Listing Service as of August 22, 2008. The information is deemed accurate but not guaranteed.
3. Only stick-built single-family residences under $1M are included in this report.
4. Due to fewer $1M-plus sales, sales on similar properties selling more than $1M are excluded.
5. Condominiums, planned development units, townhouses and mobile homes are not included in this report.