{"id":3557,"date":"2022-12-31T18:48:20","date_gmt":"2022-12-31T18:48:20","guid":{"rendered":"https:\/\/www.coastalcapital.com\/?p=3557"},"modified":"2022-12-31T18:51:45","modified_gmt":"2022-12-31T18:51:45","slug":"december-latest-updates-insights","status":"publish","type":"post","link":"https:\/\/www.coastalcapital.com\/december-latest-updates-insights\/","title":{"rendered":"December Latest Updates & Insights"},"content":{"rendered":"\t\t
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COASTAL CAPITAL INSIGHTS<\/span> <\/h1> <\/div>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Each month Coastal Capital strives to bring you the latest updates and insights into the California real estate market for both investors and brokers.\u00a0 We always welcome new investors who enjoy above-average returns that are not correlated to the equity markets.\u00a0 As always, we appreciate both new investor and broker referrals, as the network builds it brings more value to all through diversification.<\/span><\/p>

Please note that you can add on to your existing investment in any amount.\u00a0 While an initial investment requires an investment of $100,000; existing partners in the Fund can add on in any amount from $2,500 or more.<\/span><\/b><\/p><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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MARKET UPDATE<\/span> <\/h1> <\/div>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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As we wrap up 2022, we are reflecting on the changes we\u2019ve all experienced since the beginning of the year.\u00a0 We have gone from 3% conventional mortgage rates to well over 7% and now settling in around 6.5% as we close the year.\u00a0 Tons of uncertainty hit the residential mortgage market for single family homes as financing rates marched North with\u00a0the Federal Reserve steadily raising rates at every recent meeting.\u00a0 Currently there is a inventory supply issue for the SFRs all the way from the low-end to the high-end of the market.\u00a0 Existing homeowners have no desire to trade in there 3% (often even lower rate) that\u2019s locked in for 15 or 30 years!\u00a0 New inventory entering the market is being driven by life events such as job relocation, marital status changes, etc.\u00a0 Many prospective home buyers are paralyzed;\u00a0wondering if rates and home values will drop in the coming months and they want to avoid overpaying for a property or for financing.<\/span><\/p>

California still has has a three-month supply of\u00a0SFRs on the market.\u00a0 While sales volumes are down 40% year-over-year with\u00a0the number of completed transactions plummeting, home values for most California markets are relatively flat, except for the Bay-area which is down roughly 5%.\u00a0 Reality setting in for home sellers that normalcy has returned to the market with homes taking weeks (not days) to enter escrow and it\u2019s a more balanced market with buyers having some negotiation power on price and\/or\u00a0concessions.\u00a0 The multi-family & industrial markets are a completely different story!<\/span><\/p>

Rents keep powering upward across almost all categories: SFR, Multi-Family & Industrial properties.\u00a0 For the residential markets in California the home affordability index is at historic lows.\u00a0\u00a0CNBC<\/a>\u00a0is reporting that Los Angeles is the 2nd least affordable housing market coming in just below Miami and above New York City!\u00a0 This index compares housing prices to median incomes.\u00a0 As more first-time home buyers sit on the sidelines renting, they put even more pressure upward on rents.<\/span><\/p>

Latest data released this week from\u00a0<\/span>Rentometer<\/span><\/a>\u00a0shows all major metropolitan markets moving upward by at least 3% in just the last quarter alone. Los Angeles leads the charge with a 19% increase in rents during the past just 3 months!<\/span><\/p>

No wonder our application desk is filled with requests for financing from residential income property landlords. They are renovating existing properties and scooping up any multi-family unit property that comes on the market in days (if not hours.). Industrial properties are not seeing as large of an increase but are still increasing quarter after quarter.<\/span><\/p><\/div><\/td><\/tr><\/tbody><\/table><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Source:\u00a0Rentometer.com<\/a><\/span><\/p>

Landlords continue to drive the majority of our application volume as they collect premium rents, especially in Southern California.\u00a0 We continue to see a wide range of 1st & 2nd position trust deed flow come in from our brokers in this client segment. Existing clients who are building their income property portfolio are purchasing everything and anything they can find no matter the property\u2019s condition.

Not surprising established retail banks are preparing for an economic downturn in 2023.\u00a0 The first clients they turn their backs on is always small\u00a0business owners.\u00a0 Instead of selecting industries or segments of business owners (in business less than two years); they cast a wide net and shut out all small businesses.\u00a0 While this is terrible for our local economies, it\u2019s a boon for our business.\u00a0 We continue to see high activity from this client segment seeking capital from $50,000 to $150K to smooth out cash flow or assist in taking advantage of a business opportunities.\u00a0 For these borrowers, speed to close & certainty to close are the primary factors to choosing a lending partner and cost of funds is insignificant.\u00a0 This factor is driving a slightly high yield that we are current originating that should positively affect future returns for\u00a0the Fund.\u00a0<\/span><\/p>

Thank you for all our existing partners who have been referring over friends & family to join us.\u00a0 Just a reminder that initial investment amount requires $100,000; existing partners in the Fund can add on in any amount from $2,500 or more.<\/span><\/p><\/div><\/td><\/tr><\/tbody><\/table><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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PORTFOLIO HIGHLIGHT<\/span> <\/h1> <\/div>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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A long-time client who specializes in residential income properties recently purchased a beautiful duplex in West Hollywood and needed just minor upgrades before putting it on the rental market. Unfortunately, there was not enough equity in the new property for Coastal Capital to provide financing. So, we suggested to his broker using the equity in a condo that we had financed before!

Given we had a trust deed on this property before it was a quick close. Also, with a combined loan-to-value ratio of less than 40% we were able to close in just days.\u00a0 Most important to our partner broker, he was able to get the deal done with minimal headaches and collect a commission check.<\/span><\/p><\/div><\/td><\/tr><\/tbody><\/table><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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