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Last couple of weeks the financial markets have been in turmoil, highlighted with news about the Bear Sterns bailout offer from JPMorganChase. As a result, the secondary mortgage market has “no appetite for adjustable rate mortages,” but 30 year fixed mortgages are still relatively “well priced”  There is now a more complicated three tier mortgage rate structure: loans under $418K; so-called conforming “agency jumbo” loans between $418K-729K; and jumbo loans above $729K. Rates a couple of days ago were: (5.875% for loans $417K and under; 6.625% between $418K-$729K; and 7.375% above $729K).Â
Ninety percent loans (10% down) are coming back in some local submarkets that are not impacted by foreclosures and lenders are dusting off old FHA programs (remember them?), which offer a little as 3% down.
What does this mean for Saratoga, CA real estate? It all gets back to supply and demand. Inventory of single family homes in Saratoga is still a low 76 and sales have been strong the past couple of weeks – despite the turbulent financial market. This reinforces the notion that pemium properties are the best investment when the market stutters. Raising the ceiling on conforming loans will help some Saratoga buyers, but with entry level pricing of detached homes at about $1 million, buyers will still need substantial cash down to purchase.
Meanwhile, the California Association of Realtors just released a report on February sales in the state as a whole, saying that volume of opened escrows was up 9.5% from January, 2008. This marked the forth month in a row that the figure inched higher. The median price of homes in the Bay Area also increased in February to $706,880.
For help finding your way through the financing maze, I suggest you contact John Shapiro with Private Mortgage Advisors or call Rick Bonetti at 408-857-8800.