A study was just released by the National Association of Realtors (NAR) reporting that the limited availablility of jumbo mortgages (loans over $480k) is holding back high-end real estate sales. NAR reports, in today's market, lenders are less likely to loan to jumbo-borrowers even with good credit scores and large downpayments than they are to smaller-scale borrowers with lesser credit and a higher loan-to-value ratio.
Jumbo loans, even to well-qualified buyers, are carrying a much higher interest rate than smaller loans which is leaving ready, willing and able buyers sidelined or resorting to smaller cash-only purchases.
At the top of the market in 2006, jumbo mortgages were at $480billion and now last year (2008) are down to $97billion.
This inavailability of financing is keeping the mid/high-end real estate market from its turn-around.
Meanwhile, while much of the high-end inventory is becoming stale, low-priced homes and condos are selling at record rates. It appears that lower priced condos [under $225k] and houses [under $300k] have hit rock-bottom or are very near, especially in costal areas. Of course, the biggest battle in this price range is the monumental number of short sales, many of which have multiple offers and sometimes an unethical process. Unfortunately, it does not look like short sales will be going away anytime soon.
If you have any questions about short sales or the short sale process please look at my short sale post or email me-- I am here to help.
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