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February 2021

First-time homebuyers getting help from families and friends

According to an article in USA Today, much of the housing market boom is due to first-time homebuyers getting down payment help from their parents. More than half of Americans who bought their first home in 2020 said family or friends helped them with the down payment, according to a survey of recent and prospective buyers conducted in early January by HarrisX for

In a separate survey conducted last summer by the National Association of REALTORS (NAR), just 26 percent of first-time home buyers who purchased during the prior 12 months said they got assistance from family or friends.

And just under half of first-time buyers and more than a third of prospective buyers were either outbid on their dream home or discovered they couldn't afford it. Because of the critical shortage of homes for sale, multiple bids have become the norm across the country, with roughly a fifth of these buyers saying they made five or more offers on different properties before having one accepted.

What are the new FHA loan limits for 2021?

The new FHA loan limits are very good for buyers, particularly first-time home buyers in expensive metro areas or locales with tight inventory. The increase allows buyers to look at a wider range of properties without having to qualify for a conforming loan.

Conforming loans are more restrictive with debt-to-income ratios and could potentially have a higher rate or mortgage insurance payment depending on credit. FHA loan limits are designated into two categories: "low cost" and "high cost" areas. Whether an area is "high cost", or "low cost" depends largely on population density and cost of living.

When a large number of homes in the area far exceed the median home value, the loan limit for that locale goes up. For the low-cost areas, limits are set at 65% of the baseline conforming limit. High-cost areas can go up to 150% of the baseline. The conforming loan limit saw an increase of $38,000 which is especially good for people at or near that amount, as once you go over a loan amount of $548,250, it becomes a jumbo loan with much more restrictive and onerous guidelines.
Low-cost area limits for Single Family is $356,362 (up from $331,760 in 2020)
High-cost area limits for Single Family is $822,375 (up from $765,600 in 2020)

US economy shrinks 3.5% in 2020!

The U.S. economy contracted 3.5 percent overall in 2020, the largest decline in 74 years, despite gross domestic product expanding at an annualized rate of 4 percent in the fourth quarter. Unemployment claims nationwide remain elevated, although claims are falling in California. Last week, first-time jobless claims by California workers fell to their lowest level in 10 months.

With mortgage rates still low, the housing market remains a bright spot for California's economy. California REALTORS continue to report strong demand and price growth, while supply remains tighter than the usual.

California eviction moratorium extended

Governor Newsom signed an emergency bill (SB 91) on Friday that extends the eviction moratorium for Californians suffering from financial hardship due to COVID-19 through June. SB 91 pauses evictions for tenants who declare under penalty of perjury an inability to pay rent for a COVID-related reason. Tenants will still be responsible for paying unpaid amounts to property owners, but they cannot be evicted as a result of those unpaid amounts. The bill also establishes a State Rental Assistance Program using the $2.6 billion in federal rental assistance funds allocated to California. The program will offer rent subsidies to help pay past-due rent by low-income tenants.

According to the Arbor Tree Foundation, did you know?

  • More than 20% of the world's oxygen is produced by the Amazon rain forest.
  • Surfaces shaded by trees may be 20-45 degrees cooler than the peak temps of unshaded areas.
  • Trees reduce minor crimes, there is less graffiti, vandalism & littering in outdoor spaces w/trees as part of the natural landscape than in comparable plant-free spaces.
  • More than 180 million Americans receive quality drinking water from forested watersheds.
  • One large tree can provide a day's supply of oxygen for up to 4 people.
  • Trees increase property value. Within a 10-month timeframe, homes with street trees in Portland, OR sold for $7,130 higher and 1.7 days sooner on average.

    January Comparisons for Santa Cruz, Monterey & the Bay Area

    Comments: New listings were up 112% in Santa Clara County and 31% in Monterey County as compared to the previous month. Total sales declined in Santa Cruz and Monterey counties and increased 33.8% in Santa Clara. All three counties experienced a slight decrease in the Median Price. Days on the market averaged between 25-30 across all three. And the list to sale price ratio increased across all three, although not significantly. The usual exception is Cupertino, where the LP to SP ratio was 99.4% in January of 2020 and is now 109.3%. (Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS)