It has been an interesting week. The financial markets reacted severely
to the tightening of credit in the mortgage industry. Institutional
second loans for purchase (ex: 80/10/10) are predominately gone, and
practically overnight. On a national scale, the Fannie, Freddie conforming
loans, and FHA, VA remained relatively unchanged, but that doesn’t
help us much here where the lay of the land is mainly a jumbo loan arena.
To balance the perceived risk from investors who purchase these loans,
most interest rates on jumbo loans have increased a full percent or
more. Therefore, it is imperative to thoroughly review and understand
the financing qualifications and terms for each potential home buyer.
In order for any transaction to be closed successfully, buyers will
require a real estate professional that is fully informed, knowledgeable
and able to provide expert guidance as it relates to the financing aspects
of the transaction. It is also important to ensure that buyers are working
with a well-capitalized, established lender such as our partner, Princeton
Capital. Our Sellers also need to take advantage of our in-house loan
professionals who are prepared to help Listing Agents scrutinize offers
coming in on their properties.
In the Bay Area, the start of August shows numerous bright spots in
what is traditionally a slower month for real estate sales. Many areas
have seen an increase in activity as sellers have adjusted their pricing,
and for qualified buyers this remains an excellent opportunity to invest
in some great real estate deals. Working with an experienced Realtor®
remains the savviest means for buyers and sellers to navigate the muddy
mortgage waters. As one Sebastopol agent succinctly put it, “they
need us more than ever.”
More than 525 homes were held open during the week and many enjoyed
a higher-than-anticipated number of potential buyers in most areas.
Of the offices reporting, listing inventory was declared as being steady
for 13 offices, decreasing for 10 offices and increasing for four. Sales
activity continues to be solid for Coldwell Banker Residential Brokerage
offices with 17 reporting steady activity and three seeing an increase.
Sales activity decreased for seven offices.
A few transactions had loan setbacks which delayed or cancelled an
escrow. You can expect some uncertainty with your current Buyers, and
staying informed on the credit crunch is imperative. I’ve had several
conversations with a number of our Princeton loan officers the past
three days on solutions to current issues, and I’m truly pleased
with the caliber of our partners. I’ve learned of some really forward-thinking
actions already being implemented with several of our Buyers initiated
by their Princeton loan rep. Cool heads will prevail in this –
there are Buyers who need to buy, and Sellers who need to sell, and
many opportunities exist.
Here
is a link to an informative AP story Friday which will help you understand
more clearly what the Fed did to increase liquidity in the market –
accepting roughly $35 billion in mortgage backed securities.
Rick Turley
President
Coldwell Banker SF/Peninsula
