Home prices in San
DiegoCounty
rose some 5.2 percent in April compared to March with the median price now at
$340,190, according to the California Association of Realtors’ recently
released report. However, this remains 23.3 percent below the median price of
April 2008. Home sales in the county increased 62.6 percent in April compared
to the previous year although they dropped 2.1 percent from the prior month.
Of the 34 zip codes I monitor for the North County Resale
Report (see below), the sold prices this year through April increased in 20
compared to the prior month, based on Multiple Listing Service statistics. This
was the same number that increased in March compared to February, although not
necessarily the same zip codes. But these figures indicate that locally prices
indeed appear to be stabilizing. Statewide, the median has increased for two
consecutive months and the nine-month string of year-to-ear price declines in
the 40-percent range has ended, according to Leslie Appleton-Young, C.A.R.
chief economist.
The One Big Problem: The Two-Tier Market
We are in a two-tier market. Buyers are rushing in to pick
up distressed properties at the low end. For qualified, first-time buyers it’s
a bonanza. There’s a $8,000 federal credit for first-time buyers that’s good
only this year and, with conforming loans, banks can loan you up to 96.5
percent of the purchase price because they can quickly sell that loan to Fannie
Mae or Freddie Mac and pocket the fee.
The rise of the conforming loan limit in San Diego County
coupled with relatively low interest rates is providing a unique opportunity
for home buyers, according to Steve Gray of Wells Fargo Mortgage in Carmel
Valley. The conforming loan limit was raised to $697,500 from $546,250 recently
and the higher limit is good until the end of the year. This means that a buyer
who can qualify for an FHA loan can put down as little as 3 ˝ percent on a home
purchase. Of course, gone are the days when a buyer could just “state” his
income. “Now you have to be able to document your income,” Gray says.
Meanwhile, the jumbo loan market “continues to be starved
for financing, constraining sales for the high-end segment,” says the C.A.R.’s
Appleton-Young. Jumbo, or non-conforming, loans can present a problem in that
there is no after market for them now so the banks have to hold onto those
loans. This means the banks must have the money to lend and the buyer must show
he or she is capable of paying the mortgage. Gray says in the jumbo category
typically a 25 percent down payment and a good credit score are required.
“There is money to lend. For those qualified, we are writing loans to $3
million, but you have to show good cash reserves and a verifiable income,” he
notes. “We’ve really come full circle. This is the way it was when I got into
the business 21 years ago.”
Low, Low Rates: Going, Going….Gone
Just a few weeks ago a qualified buyer could get a 4.75
percent interest rate on a 30-year fixed conforming loan.This past week the cost of money jumped up
and as of June 5 the rate for a 30-year fixed was quoted at 5.45 percent and
even higher, according to the Mortgage Bankers Association. This has resulted in re-financings coming to a
screeching halt, says the association, and it also has given buyers a new sense
of urgency to get off the fence before interest rates go up again.
