Looking at “Jumbo Loans, Jumbo Headaches”

By Alicia Lanier, REALTOR

An excellent Wall Street Journal article by Nick Timiraos called Jumbo Loans, Jumbo Headaches points out that the federal mortgage-bailout plan announced last week excludes borrowers of  “jumbo loans.”

The housing stability plan focuses on middle-income borrowers with “conforming” loans. These so-called conforming loans max out at $417,000 in most states,  though they can run as high as $729,750 in pricier markets, such as California’s Silicon Valley (and other areas), New York and Hawaii. 

“Anything bigger is called a “jumbo” loan — and not only is the government ignoring this segment of the market, so are lenders, few of whom are originating or refinancing jumbo mortgages. The reason: Jumbo loans are too large to be guaranteed by a government-backed mortgage agency, such as Fannie Mae or Freddie Mac, meaning banks assume the risk if the loan goes bad. In the current lending environment, few banks want to take on any risk,” says Timiraos.

“Many homeowners in high-priced markets are experiencing similar difficulties, and are left with few options other than to raid their savings or retirement accounts and use the cash to ‘buy down’ their mortgages. In some cases, home buyers need to put up a large down payment, often 25% or more, to qualify for a jumbo mortgage. Others are bypassing jumbos altogether and putting up enough cash to become eligible for a lower-rate conforming loan.”

Click here to read the full story. If you have – or will need – a jumbo loan, you will want to understand the ramifications.

Don’t miss the buying opportunity presented by declining prices, rising inventory and historic low home loan interest rates in the Silicon Valley. Ask me to send you, free, a list of bank-owned properties currently being offered for sale - or photos and pics of other homes for sale in your preferred area: Call 408-491-1634 or e-mail me at Alicia@AliciaLanier.com

 

Silicon Valley Home Buyers: “It May Be Time To Get Off the Fence”

The following is an excerpt from the Weekly Market Watch by Joe Brown, president of Coldwell Banker Silicon Valley-Monterey Bay-East Bay. His message for prospective home buyers: “It May Be Time to Get Off the Fence!”

“Buyers may truly be in one of the best positions than they have been in some 50 years to purchase a home. Consider the benefits to today’s homebuyer:

• “New $8,000 first time home buyer credit (and in most cases, the buyer does not have to repay the tax credit).
• “Reinstatement of FHA, Freddie Mac and Fannie Mae loan limits. These limits were equal to the greater of 125% of the 2008 local area median home price or $271,050 for FHA and $417,000 for Fannie and Freddie, with an overall maximum cap of $729,750.
• “Historically low interest rates. Changes in mortgage rates can affect a consumer’s purchasing power. The fact is, right now interest rates are low—certainly by historical standards—and those low rates translate to increased purchasing power for buyers.
• “Though we’ve seen decreasing inventory in many of our markets over the last several weeks, we still do have quite a bit of inventory in many markets. This translates to more choices for buyers. We are also anticipating that Spring will bring on a lot of good, new inventory for us and that should bring in a surge of new buyers—for today’s buyer’s, that’s competition for you.

“My point in all of this is that you may not want to make the mistake of waiting. Sitting on the sidelines could cost you plenty in terms of higher housing prices, increased competition, fewer choices and higher interest rates. We live in one of the most desirable areas in the world and regardless of the recent slowing in the market, there is still plenty of pent-up demand. Even the most pessimistic analysts aren’t predicting a decline in home prices, simply a slowing of appreciation rates. …

“The lesson I’d like to leave you is that waiting for the real estate market to hit rock bottom may be a mistake. The only way to know that the market has “hit rock bottom” is when it is on its way up and by then, the window of opportunity is gone.

“The current housing market offers a unique window of opportunity for confident buyers. The exciting news is that for the first time in quite a while, the stars are in alignment for consumers: mortgage rates remain low (certainly by historical standards), loan limits have been raised, there is an $8,000 first time home buyer credit and there is a large selection of homes to choose from. Now truly may be the time to buy and you may not want to make the mistake of waiting; because my guess is that if we were able to jump ahead 10 years from now, we’ll be looking at this market as a thing of the past—a time when we all probably should have been buying a lot more real estate.”  ~ Joe Brown

TIP: Don’t miss the buying opportunity presented by declining prices, rising inventory and historic low home loan interest rates in the Silicon Valley. Ask me to send you, free, a list of bank-owned properties currently being offered for sale - or photo and pics of other homes for sale in your preferred area: Call 408-491-1634 or e-mail me at Alicia.Lanier@cbnorcal.com

3 California Metro Areas on Forbes’ “10 Worst” and “10 Best” Housing Markets in the U.S.

By Alicia Lanier, REALTOR

Illustrating just how “local” real estate really is, California – with its high statewide foreclosure rate – has the distinction of  having three different metro areas showing up on either the 10 Worst U.S. Housing Markets and 10 Best U.S. Housing Markets, according to a Forbes.com report on the most recent S&P/Case-Shiller home price index.

The Silicon Valley is  included in the 9-county San Francisco Bay Area, which ranks #5 among the Worst list (Las Vegas has the dubious distinction of being #1). The SF Bay Area experienced a 31% price drop in the past year, at least some of this decline due to heavy purchasing of low-priced distressed homes which were offered as bank foreclosures and short sales.

“This means that while prices in tony San Francisco neighborhood Pacific Heights might be holding up, the net effect of including a bankrupt suburb like Vallejo brings down the metro area’s score. Each city’s score is assigned based on the price difference from 2000, which is scored as 100. So San Francisco’s score of 130.12 means prices are up 30.12% from 2000. It still has the potential for a further fall, given the 31% year-over-year drop,” says Forbes writer Matt Woolsey.

Down in Southern California, both the Los Angeles and San Diego metro areas have recovered enough from the housing bust that they have now flipped over to the Best list: LA cities coming in at #9 and San Diego cities coming in at #5. Statistics used by Forbes.com are from the S&P/Case-Schiller Home Price Index through December, 2008.

TIP: No matter the national rankings, real estate is still local, local, local! Ask me how your Silicon Valley community or neighborhood of interest fared in the past year.

TIP:  Don’t miss the buying opportunity presented by declining prices, rising inventory and historic low home loan interest rates in the Silicon Valley. Ask me to send you, free, a list of bank-owned properties currently being offered for sale - or photo and pics of other homes for sale in your preferred area: Call 408-491-1634 or e-mail me at Alicia.Lanier@cbnorcal.com

SF Bay Area Rents Drop As Vacancies Spike

By Alicia Lanier, REALTOR

Bay Area cities are occupying prominent spots on Business Week’s list of the 25 Metro Areas with the biggest drops in rents. 

Weighing in at #7 with an annualized rents drop of 3% was the Silicon Valley trio of San Jose, Sunnyvale and Santa Clara. Suffering from technology layoffs and dimming economic prospects as the recession deepens, the unemployment rate in the San Jose metro area climbed to 7.2% in November 2008 compared to 4.9% in November 2007. Business Week said “the apartment vacancy rate jumped to 4.2% in the fourth quarter last year from 3.5% in the same period in 2007. Landlords on average are giving rent concessions of one week.”

Not far behind, at #9 on the Business Week list, is Alameda County’s Oakland-Fremont-Hayward metro area. This area’s economic troubles have only gotten worse with the financial crisis. But it has also seen a rising tide of foreclosures. The unemployment rate in the area climbed to 7.2% in November 2008 compared to 4.9% in November 2007. Business Week said “the apartment vacancy rate jumped to 4.6% in the fourth quarter last year from 3.9% in the same period in 2007. Landlords on average are giving 1.4 weeks of rent concessions.”

TIP:  Why pay your landlord’s mortgage with your rent? Instead, take advantage of declining prices, rising inventory and historic low home loan interest rates in the Silicon Valley? Ask me to send you, free, a list of bank-owned properties currently being offered for sale: Call 408-491-1634 today or e-mail me at Alicia.Lanier@cbnorcal.com

Housing Crisis 101: Realogy CEO Offers Plan to Fix “Housing Mess” in CNBC-TV Interview

By Alicia Lanier, REALTOR

A recent CNBC-TV interview with Richard Smith, CEO-president of Realogy (parent company of Coldwell Banker Residential Brokerage among other major realty brands), is a great primer on the roots and scope of the current U.S. housing crisis. And, in the interview called Fixing the Housing Mess, Smith spells out a plan for slashing interest rates to help stimulate a housing recovery that Realogy has been working on in Congress. It’s a fascinating interview with some tough questions from some top CNBC newsmen.

To see the video in its entirety, click on: CNBC-TV’s Fixing the Housing Mess

TIP: In the interview, Smith mentions the large number of REOs (bank-owned foreclosed homes) that are available. If foreclosed properties interest you – either as an investment or as a first-time home buyer looking for a bargain-basement price …  Ask me to send you, free, a list of bank-owned properties currently being offered for sale: Call 408-491-1634 today or e-mail me at Alicia.Lanier@cbnorcal.com

Tax Credit for Homebuyers: Yes!

By Alicia Lanier, REALTOR

Whatever you think of President Obama’s mammoth economic stimulus bill, you must surely applaud the fact that the U.S. Senate voted Wednesday night to give a tax break of up to $15,000 to homebuyers in hopes of revitalizing our housing industry.

The proposal would allow a tax credit of 10 percent of the value of new or existing residences, up to a $15,000 limit. Current law provides for a $7,500 tax break – and only for the purchase of new homes.

This new proposal would give all homebuyers both an economic and emotional boost, and go a long way toward motivating fencesitters to seriously consider taking advantage of our excellent buyers-advantage market.

2008 California Million Dollar Home Sales Plunge

By Alicia Lanier, REALTOR

Definitely a sign of the times, sales of million dollar homes across California plunged in 2008, says real estate analyst, MD Data Quick. Sales were at their lowest level since 2003, a result of tight money and declining home prices. About 3 percent of California homes have been assessed by county officials at over $1 million.

A total of 24,436 Golden State homes sold for a million dollars or more last year. That was down 42.5 percent from 42,506 in 2007. It was the lowest sales count since 20,595 were sold in 2003. In 2006 the $1 million-plus total was 50,010, in 2005 it was 54,773, and in 2004 it was 36,990, according to MDA DataQuick.

Total California home sales – including all price levels – increased 2.5 percent last year, to 393,703 from 383,748 in 2007. Of last year’s sub-$1 million sales, at least 2,052 homes had previously sold for more than a million. One in sixteen homes sold for a million dollars or more last year; the year before it was one in nine.

“Discretionary spending in the housing market has pretty much been on hold the past fifteen months. The core of last year’s distress was clearly in affordable areas that had a lot of turnover in 2005 and 2006. That distress could migrate up the price ladder if this recession proves nasty for high-income households,” said John Walsh, DataQuick president.

“A lot of home sales in the upper half of the market have been on hold for months, waiting for financing,” he said.

Newly-built homes accounted for 2,933 of last year’s $1 million-plus sales, down 52.7 percent from 6,203 for 2007. There were 2,362 condo sales in the million-dollar category, down 20.9 percent from 2,986 the year before. Most $1 million-plus condos were sold in San Diego, Los Angeles and San Francisco.

How does one get around tight mortgage money? Around 24 percent of the $1 million-plus buyers paid cash. In the over-$5 million category, more than half of the purchases were cash.

TIP:  Ready to take advantage of declining prices, rising inventory and historic low home loan interest rates in the Silicon Valley? Ask me to send you, free, a list of bank-owned properties currently being offered for sale: Call 408-491-1634 today or e-mail me at Alicia.Lanier@cbnorcal.com