{"id":3566,"date":"2023-01-31T22:12:23","date_gmt":"2023-01-31T22:12:23","guid":{"rendered":"https:\/\/www.coastalcapital.com\/?p=3566"},"modified":"2023-01-31T22:15:33","modified_gmt":"2023-01-31T22:15:33","slug":"january-latest-updates-insights","status":"publish","type":"post","link":"https:\/\/www.coastalcapital.com\/january-latest-updates-insights\/","title":{"rendered":"January 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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Charging into 2023 we didn\u2019t expect conventional mortgage rates to settle and now we\u2019re back in the low-6% range. This seems to have given some relief in the single-family residence market and spurred a few homebuyers. With the Federal Reserve still poised to raise rates later this week 0.25% this is possibly setting up to be just a temporary reprieve. The Mortgage Bankers Association index for new mortgage applications made big gains during the month. Refinance applications to conventional lenders were up over 15% the second half of the month as compared to the second week of January. Although not an apples-to-apples comparison, here at Coastal Capital we also experienced incredible application volume from our brokers\u00a0for our business purpose trust deeds.<\/span>

The California market still has the same issue for both the residential and multi-family markets: Supply! Current owners still have little interest in moving and graduating up to an interest rate that is almost double last years (80% of them locked in at 3.5% or less.) Now to exasperate matters, new builders are delaying new projects as the cost and availability of raw materials is highly questionable. Construction on new U.S. homes fell a seasonally adjusted 1.4% in December to 1.38 million, the Commerce Department said last Thursday. The drop in construction on homes followed the decline in November, when housing starts also fell by 1.8%. In fact, housing starts are at the lowest level since July 2022. The annual rate of total housing starts fell from 21.8% from the previous year. The chart below from the US Commerce Department while not to scale highlights the drop off.<\/span><\/p>

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Source: US New Housing Starts in Units, Trading Economics<\/p>


Another story that hasn\u2019t changed is sky high residential rents. For the residential markets in California the home affordability index that was already at historic lows keeps getting worse. With limited housing supply outlined above we don\u2019t see this trend changing anytime soon. The average rent for a 3 bedroom single family home in Los Angeles has now eclipsed $5,000 per month. Soon the cost of renting will spur non-homeowners to settle on a property and purchase it to reap the tax advantages of paying mortgage interest.

Rentometer\u2019s 4th Quarter 2022 data is returning some mind boggling numbers. In just one year San Diego\u2019s average rent has gone from $3,800 to just over $4,500 per month. Our landlord borrowers are utilizing the equity in their properties to rehab old properties to capture this increase in cashflow. This is also driving up property values of multi-family properties. Many of our long-term landlords are aggressively\u00a0upgrading their portfolios of properties to larger buildings with more units.<\/p>

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Source:\u00a0<\/span>Rentometer.com<\/a><\/p>


Just like last month these landlords continue to make up a majority of our application volume, especially in Los Angeles, Orange and San Diego counties. Meanwhile, the industrial market continues to experience a steady state with\u00a0supply and demand levels are at historic norms.\u00a0 We\u00a0only see a few applications for this segment as the financing requests skew to $1M-plus. Generally, the deals are solid with very low LTVs and we welcome any brokers who want to partner with us. The commercial market continues to be a mixed bag. Kidder Mathews market research reporting that in the 4th Quarter rental rates are trending up and vacancies are trending down as workers slowly return to the office.

Big banks are locking down their vaults to mitigate risk and prepare for a possible recession. It is becoming increasingly difficult for borrowers to qualify for financing. This is especially true for those who are self-employed, own their own business or have less than perfect credit. This means that many existing borrowers are having difficulty refinancing to pay off existing liens or pull cash out on a refi. The availability issues of conventional financing is pushing up rates for trust deeds as well. Across the market in California for private mortgages and trust deeds we are seeing elasticity in rates that borrowers are willing to accept.

Thank you for all our existing partners who have been referring over friends & family to join us. Please contact Scott Griest at\u00a0<\/span>Scott@CoastalCapital.com<\/a>\u00a0if you would like to add to your investment.<\/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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PORTFOLIO HIGHLIGHT<\/span> <\/h1> <\/div>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Another small business owner needed to access the equity in his home fast! The family had the opportunity to buy inventory from a competitor going out of business. The request for financing was $150,000 but we were not comfortable pushing the loan-to-value that high on this property. This situation occurs quite often when borrowers think their property\u2019s value is sky high. Thanks to the tireless efforts of a great broker all parties got to a deal that everyone was comfortable with.<\/p>

After four days of back-and-forth Coastal Capital were able to close in a week. Can\u2019t wait to do more deals with this professional brokerage group. They made a hard-to-get-done deal look easy!<\/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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