Jumbo loan blues easing?

Hadn't seen that - there is a lot of data still out about jumbos tightening up and being hard to get though.

Which has a huge impact on Boston, of course. If your buyers can't get a mortgage, it will be very hard to sell anything over conforming limits. Which puts a cap on prices of 7-800k or so - way below a lot of the "gold towns".

Which will in turn be another force for pushing prices down - this is lending not returning to normal, but overshooting to below normal currently

ANd if the conforming levels go back down, it'll be a blood bath (because of that, I doubt the administration will let theat happen, though, even though it is supposed to)

I'd be interested to hear how the bulls and the anecdotalists can spin this positive... though since it involves actual numbers and data it will probably be ignored.

(For those into data, once again the T2 partners deck is well worth searching for)

No, the "battered upper reaches of the real estate market" are just battered. ABC News: America's Most Troubled Luxury Neighborhoods: The Collapse in Prices Has Finally Come Home to the Rich [tinyurl.com/l9eeu9].

"Why haven't you heard about this? Statistics lag. With relatively low unemployment, high-end addresses don't have foreclosures to hasten capitulation. If they've attracted luxury high-rise developers, these markets may be propped up by recent condo closings at foolish prices agreed to two years ago. But talk to experts who know the regions block by block -- or to people who've sold (or tried to sell) a home or co-op. There is a still-growing supply of wildly overpriced, unsold homes"

Indeed, why would anyone use a jumbo mortgage to leverage up more losses for themselves as high end prices fall? Just because banks will lend to god borrowers doesn't mean that real people who cannot zap their debts out of existence (who would really want to be god's lender?!) will take out jumbo loans.

Yet more reasons to expect bearish news at all levels of the market until the ultimate reset to the fundamentals, which are still tens of percentage points below.

A house near me just went under agreement for 1.3 mil or so. The buyer is putting down 700k. Last year another home sold for 1.1, and it was paid for in full in cash. Both are in Metrowest.

People who think expensive home buyers leverage it all simply dont know how much more wealthy than common folk a lot of these home buyers really are.

Prices may be down 10%, 20%, maybe more. They have more than enough to not be crying a river of tears. They are buying their dream homes and enjoying them, instead of blogging all day on the internet how terrible it is to spend any money on a home.

Middle (#3): Most of the transactions that are occurring in high-end neighborhoods are all or mostly cash. The reason for this is that financing is not available to average borrowers. Last I checked sales volume was down around 50% year over year in both Weston and Wellesley. Think about this for a minute... If normally 1 in 4 sales is all cash in these towns (I'm just picking arbitrary numbers), then what happens when financing dries up and sales volume plummets by half? The buyers who need to borrow a lot disappear. But the all-cash and big-down-payment crowd is not affected. So when you look at the numbers suddenly 100% of transactions are all-cash or big down payment. I believe this is what is happening now.

I agree there will always be buyers with money. But unfortunately they make up a very small percentage of buyers-- probably no more than 1-2% of the total population. Somebody on this blog said it well the other day. High end areas are not "immune" from the crash. They are "buffered". But time has run out. In a few months when the sale data from the spring season is published we will start to see the damage in the high-end neighborhoods. It will be ugly.

middle, you might take a brief moment to look at the demographics on who has 500k sitting around for a downpayment. Do people? Sure, I know lots of them. But I'm not silly enough to think that the people I know accurately represent the market.

High downpayments and cash sales are more common in wealthy towns no doubt. But ex Aspen, they are not the norm. No need for anecdotes - check the data and do the math.

Put another way, something I just saw in the New york Times. Only 15% of the Massachusetts population can afford a 500k house. Haven't checked the data, but that sounds plausible - we are talking a 150k income to support that. And googling the census numbers shows 6.8% of massachusetts households make more than 150k.

Care to bet far more than 6.8% of the Mass population thinks their house is worth more than 500k? A wild guess off a quick look would be more like 50%....

And I'm hard pressed to believe that people living in Massachusetts with under 150k household income are managing to save 100s of thousands for downpayments. The US indebtedness statistics certainly point the opposite way.