Today I was contacted by a Los Angeles Times housing market reporter covering the market on new loan amounts coming into effect soon. It's really hard to say exactly what the outcome will be, but one thing is certain: California really doesn't need any more uncertainty or instability in its housing market. Legislators elsewhere really do not seem to be very concerned, probably because the vast majority of them do not have a home to sell in California.
Single family homes in the high end market of 90803 and 90814 may feel the cut in loan amounts to $625,000. Currently there are 145 active listings, 113 of which are over $625,500 (the new loan amount starting October 1st). Between June 1 and August 31, 26 homes sold over $729,750 (the current limit on conforming loans), and 24 sold under $625,500, while 16 sold between the two loan amounts. That represented 25% of the total 66 homes sold in that time period.
Currently, of the 145 active listings, 113 are listed over $625,500 (just using the loan amounts as the dividing line for the sake of discussion), 95 are listed over $729,750--meaning 18 are in the critical area in between. Currently, 26 homes are in escrow, all over $625,500--but would the 8 in the critical area under $729,750 be buying in the future at a higher interest rate? The homes in escrow (26) of the 145 active listings shows that the seller in this area currently has about an 18% chance of selling in the current loan market.
Now, along with an already competitive situation in the high-end market, what will the future bring with a jump up in interest rate for the new jumbo loan amount?
See more at http://longbeachrealestate.blogspot.com/2011/07/change-may-be-coming-in-loan-amounts.html
But, there is more, not to be discussed here: the QRM, or qualified residential mortgage which basically could turn the conventional loan market at all levels into a one-size-fits-all 20% down payment.
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