Reports of “touching bottom” seem to be increasing
among media analysts in their comments about the housing
slump and credit crisis. The San Francisco Chronicle
recently reported an increase in properties being bought…
citing April sales in the Bay Area increasing by the largest
percentage in 20 years, a 30% from March. A group of 52
professional forecasters agreed that the worst of the credit
and housing crisis is over. I’m seeing loan options increasing
again. Some new lenders have sprung up in spite of
the market and I can again offer stated income jumbo
loans with decent rates. The new “conforming jumbo”
loans have come down in rate too, to the 6% range.
Locally we’re seeing a shift that signals better times are
just ahead. In January of 2008 my parent brokerage, First
Priority Financial, charted 35% of all loans being closed as
purchase money (as opposed to refi’s). This percentage
has increased to 60% in the months since. The number of
FHA loans being originated also rose dramatically. Both of
these trends seem to support hopes that some of the new
loan programs recently born from Congress’s intervention
are actually having a positive impact on the larger real estate
market. When these trends are added to others we’re
seeing on Wall Street, and among financial analysts, the
picture takes on a decidedly rosy glow… especially given
the rough ride we’ve had lately. It may not be time to dust
off that hammock yet… because your summer as a realtor
may be busier than you thought!
It’s “local heart felt service on transactions that counts,
not call center sweat shops”, wrote Tim Kearns, CEO of
First Priority Financial. He certainly has a point! The great
thing about real estate as a career is that you can literally
create the quality of business you want. Sure, we need to
follow impeccable ethics and have excellent training, but
in the end it’s your presence, demeanor, and unique ways
of conducting your business that makes you stand out…
and in these areas there is lots of room for creativity. If you
haven’t given your past clients a call recently to see how
they’re faring this is a terrific time to reach out with a heart
that genuinely cares. One thing may lead to another and
gain you valuable referrals. As you find unique ways to
reach out to others, you open doors for more business to
come your way. Enjoy the ride as your business grows!

Market Update May 21, 2008
Reports of “touching bottom” seem to be increasing
among media analysts in their comments about the housing
slump and credit crisis. The San Francisco Chronicle is
reporting an increase in properties being bought… citing
April sales in the Bay Area increasing by the largest
percentage in 20 years, a 30% from March. A group of 52
professional forecasters agreed that the worst of the credit
and housing crisis is over. I’m seeing loan options increasing
again. Some new lenders have sprung up in spite of
the market and I can again offer stated income jumbo
loans with decent rates. The new “conforming jumbo”
loans have come down in rate too, to the 6% range.

Locally we’re seeing a shift that signals better times are
just ahead. In January of 2008 my parent brokerage, First
Priority Financial, charted 35% of all loans being closed as
purchase money (as opposed to refi’s). This percentage
has increased to 60% in the months since. The number of
FHA loans being originated also rose dramatically. Both of
these trends seem to support hopes that some of the new
loan programs recently born from Congress’s intervention
are actually having a positive impact on the larger real estate
market. When these trends are added to others we’re
seeing on Wall Street, and among financial analysts, the
picture takes on a decidedly rosy glow… especially given
the rough ride we’ve had lately. It may not be time to dust
off that hammock yet… because your summer as a realtor
may be busier than you thought!

It’s “local heart felt service on transactions that counts,
not call center sweat shops”, wrote Tim Kearns, CEO of
First Priority Financial. He certainly has a point! The great
thing about real estate as a career is that you can literally
create the quality of business you want. Sure, we need to
follow impeccable ethics and have excellent training, but
in the end it’s your presence, demeanor, and unique ways
of conducting your business that makes you stand out…
and in these areas there is lots of room for creativity. If you
haven’t given your past clients a call recently to see how
they’re faring this is a terrific time to reach out with a heart
that genuinely cares. One thing may lead to another and
gain you valuable referrals. As you find unique ways to
reach out to others, you open doors for more business to
come your way. Enjoy the ride as your business grows!

Rates are lower this week! News Tuesday from Fannie
Mae of losses brought concerns and lower indexes initially
on Wall Street… however this news was offset by
a positive development. Regulators responded to this,
plus related news that Fannie would bring in $6 billion in
new capital to offset the losses, and responded by lowering
Fannie’s surplus capital requirements (reserves). This
caused Fannie’s stock to bounce back from it’s low earlier
today and gain ground by 8.9%, welcome news to shareholders.
But the best part of all this is that it’s likely to
increase Fannie’s strength and ability to help the housing
market to recover. Lowered reserves means that Fannie
can make more loans… good news for us all.

“We don’t expect a recession in the U.S.” and the financial
crisis stemming from the collapse of the U.S. subprime
market may be nearing an end, said Deutsche Bank AG
Chief Executive Officer Josef Ackermann in Frankfurt
today. Conversely, Harvard University economist Martin
Feldstein, a high ranking republican economist, said the
U.S. economy is “sliding into a recession.” Who will be
right? This will depend on whether lenders heed the advice
of our Fed Chairman. Ben Bernanke spoke with banks
and mortgage lenders yesterday and echoed his recent
statements, urging them to work harder to reduce foreclosures.
Will they listen? It seems that banks and lenders
continue to turn a deaf ear to pleas for sane restructuring
of homeowner debt and continue to focus protecting their
bottom line and investor profits. Perhaps the federal government
will have to step in and impose stronger regulation
of the banking industry.

What does this mean for you? If you have credit card debt
this is a fine time to pay it off (if you can) to avoid interest
rate increases. Creditors are trying to turn a profit by raising
rates without warning. HELOCs are also being frozen
without warning, so if you think you may need cash in the
near future my advice is to borrow now and stash the cash
in an interest earning investment to offset the loan interest
until you need the money. Increased buyer interest at
open houses recently seems to indicate that more folks
are getting ready to snatch up great deals on properties.
We’re also hearing that some analysts believe we’re at the
bottom of the market cycle right now. If the current trends
continue there’ll be more positive news next week.

This week was the IRS deadline for filing income taxes and once again homeowners can be thankful for the tax deduction they get on their mortgage interest. This is one reason that owning a home continues to make good financial sense and is still a cornerstone of sound financial planning. In spite of all the negative reports on the housing market, many analysts continue to believe that this cycle will end in the next 2 years followed by a strong economic recovery. A high ranking executive at Lehman Brothers is quoted recently as saying that the worst of the credit crisis is over from the viewpoint of financial institutions…

The next few months could be the turning point for the real estate market. Some economists are saying that we’ve already seen the bottom of the market, which means that now is the time for buyers to get in contract. Remember that one never knows when the bottom (or top) of the market is reached until months afterwards… as the saying goes, “hindsight is 20/20″. This said, I concur that we’re at the darkest part of the tunnel right now, which means that light should be showing up soon. We’re still waiting to see improved pricing on the new “jumbo light” conforming loans since the initial rates for these loans are disappointing. It’s still too early to tell what the effects of these new loans will be. I’m keeping my fingers crossed that these rates will improve in the next 90 days, opening the doors for more buyers. In the meantime, jumbo ARMs are still available at excellent rates.

What does this mean for you? Regular jumbo ARMs can still be locked at excellent rates with good to excellent credit. The time to buy is NOW if you are in the market to buy, because we are likely at the bottom of the market right now. Down payments of at least 10% are essential for most buyers these days, but seller credits for closing costs up to 3% can still be approved by lenders. Marin stats are still showing us that most of Marin continues to be holding strong values although volume is down. You can use this to your advantage to get a property at a great price without a bidding war if you act now. Stated income loans are being removed from the market, so it’s essential to work with a sharp mortgage pro if you are self-employed and want to qualify for a loan. The Home Ownership Accelerator loan continues to be a great option to lower payments.

Good News! As some of you know from talking with me in the past week, I’ve been saying for some time that the Fed rate cuts have not helped mortgage rates… and that the only thing that will help rates is stabilization of the secondary mortgage market. As I’ve said, the best thing the Fed could do to help the situation is to buy the secondary market mortgage backed securities itself. Well on Tuesday this is exactly what the Fed announced it plans to do. The Fed is going to buy $200 billion in mortgage securities… not just those backed by Fannie Mae et al, but also those pesky jumbo loans that have had few interested secondary market investors for months. Could the credit freeze be seeing a spring thaw around the corner?

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Wall Street responded with a huge rally Tuesday… and the market closed with the DOW up more than 416 points, a truly spectacular bounce when one considers that it lost over 400 points in just the last week. While the rally may not last, it is an indicator of renewed investor enthusiasm over today’s move by the Fed. Treasury bonds experienced a sell off, but some of this money may flow into MBS (mortgage backed securities) as investors feel renewed confidence in the yields these bonds will produce. Remember… inflation hurts long term investments like 10-30 year bonds, so if the Fed does not cut rates again at its meeting next week this may also help curb the inflation trends we are seeing, improving mortgage rates even more.

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More good news! Lenders are moving quickly to get the higher limit conforming loans priced and released into the market. Marin, and the greater Bay Area qualify for these loans with limits to $729,750… so expect to see more buyer interest in the coming months if rates remain reasonable.

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What does this mean for you? If you plan to refinance or buy, then you might get a great rate with one of the new conforming loans if you’re content with getting either a 30 year fixed rate, 5/1 ARM, or interest only 5/1 ARM. Stated income and investor property loans are being hit with the highest rates so move quickly if you’d like one of these. My advice is, “if you like it then lock it!”. We may see rates improve in the next few weeks… so stay tuned for more updates and give me a call for daily rates.” 

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ana@avataraloans.com“ 

“Stagflation” is the word of the week… a term you may hear increasingly in the news in coming days. Stagflation refers to an economic climate that shows signs of both inflation and recession at the same time. The last time we saw stagflation was decades ago in the 70′s and 80′s… times when the economy was not growing (recession) yet interest rates and other prices rose (inflation). We are seeing signs of stagflation again and this has made markets nervous and tumultuous. This week will bring the release of some significant economic data that we hope will lower mortgage rates later in the week though.” 

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Mortgage backed securities insurers are having liquidity issues that have affected mortgage rates with upward pressure and there’s talk of a bailout, but nothing is certain yet. Until these insurers are given the financial support they need to ensure they stay afloat, investors are likely to remain nervous about buying MBS, and this hurts rates. The biggest issue for mortgage rates is inflation, so act quickly to lock loan rates with your mortgage pro when you hear that signs of inflation are increasing.

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March 7th is the day government loan agencies have promised to release the geographical areas that will qualify for the new, higher conforming loan amounts. While we eagerly await these new rates to take effect, there is still no word regarding when these loans will actually be available to borrowers. My advice is not to wait on buying because the rates may not be that much better than they are today even when they do take effect. Why? The market itself! We have seen rates worsen steadily in the past weeks, and unless this trend reverses the revisions to the conforming loan limits may not bring a significant savings to borrowers. Remember… “a bird in hand is better than three in the bush”.

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Home prices in Marin in many towns continue to rise… in spite of economic indicators elsewhere. If you want to check appreciation rates in the Bay Area you’ll want to visit www.dqnews.com for the latest data. Be sure to check the median price per square foot numbers in their charts when tracking what your home may be worth… or better yet, talk to an excellent Realtor® and have them give you a market valuation for your home.