Bump In The Road

Here we are in mid-May and despite the great weather we've had, we are  now having some very un-seasonal rainfall. It's snowing in the mountains in May! Nevertheless, what is seasonal is the real estate activity so far this Spring. There are currently 1360 homes on the market and 34% of those are in escrow and 800 homes have sold  this year. Savvy sellers are seeing what's ahead , pricing their homes right and selling them quickly, often with multiple offers. The buyers are definitely out there  looking for inventory.

 There is a very strong reason for buyers and sellers to take action now and not wait because we see a bump in the road ahead with the limits changing on government backed loans - Fannie Mae and Freddie Mac. On October 1, 2011 the limit on jumbo loans is  changing from $729,750 to $625,500. What that means is that in Marin, one of the "High-Cost" areas in the U.S., loans over $625,500 will become more expensive and lenders may ask for more down payment. We can also expect to see the banks using these new limits 60-90 days before the October 1st deadline.

The good news is that we are seeing some lenders reacting with some interesting loan packages to overcome the change in limits. For example, we know of one lender offering a loan up to $979,750 that requires only a 10% down payment and an interest rate that is only .375 % higher than the current rate for conforming loans.The other caveat that we see is that the yield on the 10 year Treasury Bond (a key benchmark for mortgage interest rates) has dipped to the same level as December 2010.

Now the general consensus among experts is that, by the end of 2011, we could very well see a marked increase in interest rates. Nevertheless, at least for the moment, the window of opportunity remains wide open for buyers and sellers.The  bottom line is that if you plan on moving sometime this year, you may not want to wait, especially as buyers line up with the school year coming to an end and families making transitions. The loan qualification factor aside, there has never been a better time to buy or sell.