The Economic Stimulus Act of 2008, signed into law on February 13, 2008, establishes temporary increases to Fannie Mae’s conventional loan limits.  This increase in limits has created the new “jumbo-conforming” mortgage loan.

Eligible Loans:

- Loans must be first lien mortgages only.

- Loans must have been originated (based on date of mortgage note) on or after March 1, 2008 up to and including December 31, 2008.

Property Type

- One -unit property on an individual lot of in a codo or PUD

- Principal residence, second home and investment property occupancy are permitted for purchases and limited cash-put refinances.

Principal Residence

- Purchase max LTV on Fixed 90%, max LTV onARM 80%

- Refinance max LTV on Fixed and ARM 75% (rate and term only, no cash out)

Second Home and Investment Property

- Purchase - max LTV on Fixed and ARM 60%

- Refinance - max LTV onFixed &ARM 60% (rate and term only, no cash out)

Eligible Products:

- Fixed 30 year and 15 year term, 5/1 ARM fully amortizing 5/1 ARM IO.

Fannie Mae will provide live pricing options based on the following schedule:

- Fixed 30 year and Fixed 15 year - 4/1/08

- 5/1 Libor Arm, fully amortizing       5/1/08

5/1 Libor ARM I/O                               5/1/08

Loan Limits by County

San Mateo          $729,750

Santa Clara         $729,750

Sacramento         $580,000

Alameda               $729,750

San Diego              $697,500

San Francisco        $729,750

Appraisals

As a result of investigations into fraudulent appraisal practices, FNMA/FHLMC are likely to implement some changes into appraisal practices.  They will be scrutinizing appraisals in greater detail and will be instituting a clearinghouse of appraiser information, conduct and activity.  Value will be looked at intensively so appraisals need to be clean and solid.

There is a sense that buyers and sellers are really listening to the people that they ought to be listening to – their real estate professionals – and starting to understand that real estate is local. 

A continually increasing buzz of activity is being reported from most areas, and house hunters are becoming more motivated to make informed buying decisions now while interest rates remain low and inventory levels in some areas create bargains.  Sellers should continue to take note that the well-priced homes in good showing condition draw the greatest number of potential buyers and get offers. A well-priced Berkeley listing drew 58 visitors. Burlingame notes agents writing offers in all price points. Half Moon Bay as well as majority of the EastBay, seem to have turned the corner most dramatically with respect to increased activity.  A few of the micro-markets in the City and Peninsula may have seen a little slower week. 

It was a wild week for the stock market, and financials had quite a roller-coaster ride this week.  Seems as if a good Employment/Jobs report for the month means one thing one day, and then totally another the next. Economists are having difficulty staying consistent with any story line. But isn’t it great to remember that in nearly every year-over- year period, San Francisco Bay Area Real Estate has consistently been a good investment.

Overall, listing and sales activity remains steady for most offices, but with a buzz of excitement and an increased sense of urgency. Sellers are beginning to think about the upcoming holiday season and many may be reconsidering their decision to sell. I believe if I were a potential Seller right now, I would try my chances over the next six weeks while inventory is likely to be its lowest -and while Buyers are enjoying lower interest rates as well.

These are actual news headlines culled from various sources over the past two weeks: “Does the Drop in Housing Prices Mean It’s Time to Buy?”, “Buying a House Now isn’t a Bad Choice for Everyone,” “Housing Economists Expect Market Turnaround to Begin in 2008,” “Investors Find Silver Lining in Real Estate Market,” and my personal favorite from the San Jose Mercury News Real Estate Blog, “For Avid House Hunters, the Season Starts Today.”Getting our Reality Check message communicated to the populace of Northern California seems to be having an impact and even the media is beginning to find those silver linings in our housing micro-markets. Motivated buyers are buying and motivated sellers are selling. And all before the Feds made their rate cut on Halloween!  

Attractive Berkeley and Oakland Hills properties are still getting multiple offers. A $900,000+ listing on the Alamo/Walnut Creek border sold in one day. A San Ramon listing priced at $1,425,000 sold in less than one week. Greenbrae is reporting solid activity, some multiple offer situations and steady movement of higher end properties. Pending sales are on the increase in Pleasanton and well-priced Santa Rosa homes are seeing multiple offer situations.

Burlingame, Half Moon Bay and Menlo Park are reporting exceptional open house activity. Burlingame noted that homes in solid middle price points were experiencing anywhere from 20 to 75 groups of visitors. Palo Alto is noting an “all time low of – 29 listings on MLS in Palo Alto.”  

San Francisco reports that supply and demand are “quite balanced.” It’s important for our hesitant buyers to be reminded that the upper end of the market remains strong. This week alone, our City offices reported a home closed at over $15M, and two new sales at $5M, while the Woodside office reported a new sale at $7+M. 

More than 565 homes were held open last week, and sales activity was reportedly increasing or steady by a vast majority of the offices.   It’s getting busy out there! Our patchwork quilt of a real estate market continues to be sewn together from dozens of micro-markets, but many of them are seeing marked improvement in what is a traditionally slower time of year. Even the headlines are beginning to agree that buyers are well-advised to lock in a lower home price now while the variety remains, grab a low mortgage interest rate from a reputable lender.

Week of October 21, 2007

The scope of the tragedy engulfing our Southern California neighbors is staggering. Nearly 2,000 homes have been destroyed by the fires rampaging through San Diego, Orange, Riverside and Los Angeles counties, and tens of thousands of people remain displaced. 

In the San Francisco Bay Area, buyers are starting to realize that selling prices are just not going to drop precipitously from where they are now in most of the Bay Area. If a deal is to be had, now is the time to negotiate it, and it seems the negotiating has begun. Offices in all areas reported increased sales activity and buyer interest, and our more than 600 homes held open were overwhelmingly well attended. Sales activity and buyer activity is reportedly increasing in practically every area. 

Oakland reports plenty of buyers and multiple offers on the better available listings. There’s a “buzz” in Lamorinda’s steady market.

The high end homes continue to sell quickly in Southern Marin while

Walnut Creek is seeing sales in all price points and in every corner of that market.

Inventory still remains tight on much of the Peninsula. Palo Alto and West Menlo are starved for fresh, well-priced inventory.  A San Mateo Park home sold for $3.8 million without ever being exposed to the market. There was an all cash sale in Woodside for $3.1 million. A Palo Alto property sold for $250,000 over list price in a multiple offer situation. Eight offers are on the table for a $2.7 million “tear down” in Atherton. 

San Francisco continues to see good activity in all price ranges with the properties over $1.5 million remaining the most desirable.

We are still seeing year-over-year median-price gains in Santa Clara, Marin, San Francisco, and Contra Costa counties. Bay Area housing remains a solid long term investment. It makes good sense to get into the market when there is still a good selection of available housing at multiple price points and while interest rates remain low.  

Reports this week indicate that, in many areas, our more than 560 open houses were seeing steady streams of visitors, and buyer interest is up. There are slower spots around the Bay Area to be sure, but for every slow spot, there is another that is seeing exceptional activity. The trends, numbers, statistics and “facts” we read about tell a regional story, but that story isn’t indicative of market conditions in specific locations, neighborhoods and communities. 

There are cold spots with high inventory levels, and there are hot spots where competition to buy a home is fierce.The reality is this – the increased median prices that are reported in most areas are affected by the fact that, in those hotter markets, the prices have barely dropped, if at all. In addition, homes in the $2 million plus range are selling quickly and often over asking price. There is a wide variety of homes available in several areas of the East and North

Bays at bargain prices waiting to be snapped up. In San Francisco and the Peninsula, sales activity is down largely because inventory is down – however offices in both the

Peninsula and the City noted activity and sales were more brisk at particular price points. I am aware of at least two high-end sales our offices ratified this week, and the lower of the two was over $14M.   SF Lombard noted a sale going $200K over list – and a $900K price reduction all in the same day. One of our

Menlo Park offices stated the market seems stalled under $1M, but $1.5 to $2.5 very brisk. In North San Mateo Co, including Daly City, Brisbane, So City – there are currently 321 Active SF Homes, with an average list price of $754K, 3bd, 2ba 1540 sq ft, and the average Days on Market is 67. Looks like Buyer opportunity time in that market.

It is nice to see that both buyers and sellers are starting to change their perceptions and recognize the localness of our real estate industry. Today’s consumer is best-served by being an educated consumer. Those interested in learning more about how to navigate current real estate conditions – and how to take advantage of the buyer’s market and historically low interest rates – should start that education with a LOCAL real estate professional instead of relying solely on the area newspaper or real estate blog. There are bargains to be had and now is the time to take advantage of them.

Refreshing, isn’t it, to note that listing inventory reported by our offices is steady almost across the board? Sales activity is also reported as being overwhelmingly steady. 

It is perplexing and frustrating to continue to see news reports with people who could be considered little more than “real estate pundits” talk about only one side of the current real estate story. This week, the controversial stock market analyst Jim Cramer of Mad Money told viewers of The Today Show that “If you buy a home now, you will lose money.” He went on to add “there is no money and no programs for first time home buyers.  Down payment money is the biggest issue in the market, because young people don’t have any.” Housing is a good long-term investment – it’s not a day-trading activity. As we witness the steep increase in foreclosures among housing boom “flippers” who secured sub-prime, adjustable rate loans with no money down, we see the folly of playing the housing market like the stock market.

Homes are not stocks. Most people stay in their home for about 6 years – they buy for the long haul to create a home for their family, not to buy, then turn around and sell six months later. Owning a home isn’t just about investment, although that’s certainly important. It’s also about building community, a place of your own, and having a part of the American Dream. For people who want to buy a home to live in, this is truly a great time to buy a home. In some areas there may be more to choose from, mortgage rates are historically low and the economy is strong. There are some investor opportunities out there as well, but it’s important to remember that the criteria regarding these buying decisions are different between the investor and the homeowner.

In our area we have seen steady appreciation in home values over the last 30 years.  Regarding the median prices in many parts of the Bay Area and Silicon Valley, most specifically in San Francisco and the Peninsula, properties are not only holding steady, but actually increasing. The case could easily be made that waiting for prices to drop may make the realization of home ownership steadily more difficult. Signs aren’t pointing to bargain basement pricing ever becoming the norm in our markets, though price is now, as always, an important consideration. Smart buyers are buying. Smart sellers are selling.  

Witness the number of buyers visiting our more than 600 homes held open last week. A Berkley listing was seen by almost 100 visitors. A Walnut Creek listing received four offers and sold for three percent over the current asking price. In

San Mateo

Park, a home received five offers and the lowest down payment among them was 50 percent. 

Palo Alto continues to report 100 percent multiple offers.  One

San Francisco office notes that the $2 million-plus market is “on fire.” The upper end markets are clearly not sending a negative message – in fact, quite the opposite. Last week San Francisco Van Ness closed both sides of a $7M property in a two week long escrow, and in the same week Woodside opened a new sale for $12M, sold by a fellow CB Menlo Park-El Camino agent, and the following day Woodside opened another $13M sale.  Again, the message is quite the opposite of the doom and gloom which make headlines.

Though the Fed may have assisted the mortgage crisis a bit with its rate lowering and some policy changes, there haven’t been any significant changes in the San Francisco Bay Area market this past week that can be attributed to anything happening in the latest news. Perception is driving the market. The chasm between buyers and sellers seems to be closing a bit – but not quite enough in some communities.

Buyers are starting to realize that selling prices are not going to drop precipitously from where they are. Sellers, on the other hand, are starting to make the adjustments in condition and price that are necessary to remain competitive. Still, there are some sellers that refuse to lower prices to saleable levels, and buyers who are convinced they’ll be able to get an even better deal by waiting. We are seeing some sellers who don’t need to sell taking their properties off the market – if a deal is to be had, now is the time to negotiate it.

More than 640 homes were held open during the week. Attendance was spotty in some areas, while Half Moon Bay and other enclaves saw booming activity. High end properties continue to drive in the fast lane in our markets with exceptional open house activity, and multiple offer situations being reported. Palo Alto continues to report 100% of listings received multiple offers, however that enduring lack of inventory on the Peninsula continues to compel competition among buyers in the area. San Francisco and Marin also have booming high end markets. There are fewer multiple offer situations in the City, and a lower number of multiple offers when they occur, but a week does not go by when several agents in each of our San Francisco offices is involved on one side of a multiple offer situation.

Although the number of sales in San Francisco and the Peninsula is lower than YTD 2006, the median sales price continues to grow.

For the majority of the micro-markets within our San Francisco/Peninsula region, affordability at the entry level and available inventory at the higher end are our biggest concerns. Home Buyers and Sellers are not hearing this message from the media. Now, more than ever, it’s critical to know your market, and know just how local real estate really is.

The consensus seems to be that there are plenty of buyers out there, and that they are serious, qualified and eager to purchase. However, these same buyers are listening to media reports about the housing market and some are hesitant to commit to buying a home due to an erroneous thought that housing prices will plummet.

The reality is that in most Bay Area communities, housing prices are remaining steady, or seeing increases. In fact, DataQuick, a company that compiles data and reports on real estate trends each month, indicated this week that while median selling prices in Napa, Solano and Sonoma counties have seen moderate declines, every other county in the greater Bay Area saw an increase in median  prices ranging from 4 to 12.4%. This is not the time to sit on the fence. It is the time to commit, as our Walnut Creek manager eloquently stated, “to buying homes as opposed to houses.” Price and condition are always important deciding factors, but the deals are out there right now, so now is the time to decide!  And there may be even greater opportunity when we find out what happens after the Fed meet next week.

The upper tier market continues to hold strong in our region with most areas reporting exceptional activity. A $2 million home in Larkspur had a huge crowd for its open house and received three offers in one day. The inventory levels in the city and parts of the Peninsula are loosening up a bit and helping to spur activity. A condo in San Francisco received 11 offers, and a cosmetic fixer in the city’s Richmond district received 22 offers. Open houses were reported to be busy in most areas where our more than 600 homes were open for viewing. Listing inventory and sales activity were both reported as being steady among most offices.

Everyone wants to know the real story. It will be told, and powerfully so, next week when Southern California Economist Gary Watts presents “The Real State of Real Estate…What the Media Isn’t Telling You” on Thursday, September 20^th and Friday September 21^st.  Gary’s presentation is extremely timely, and dead-on. It will give you excellent facts and talking points with your customers.  He will be conducting three sessions -  in San Francisco, Santa Clara, and in San Ramon. Don’t miss this opportunity to be truly informed. I have attached the details, and I strongly encourage each of you to attend one of these sessions.

More than 250 homes were held open during the Labor Day holiday weekend and though many buyers were taking a home-hunting break to enjoy the fine weather, there was plenty of serious activity in most areas. Listing inventory and sales activity were both reported as being overwhelmingly steady in most areas. Offices are buzzing in anticipation of a busy September. There is pent-up demand for the new listings coming to the market this week.

As agents, buyers and sellers alike settle into the school year after refreshing vacations, let’s set the record straight as we move into Fall by rewriting the headlines from a new perspective. “99.2% of Mortgages are Not in Foreclosure.”   “Economy is Extremely Strong, with Many Business Sectors Reporting Huge Profits.” “The Global Economy is Exploding!”  “People Are Buying Houses.” Sadly, our media continues to focus on the negative and to create misconceptions in the minds of consumers about the housing market.

During our Coldwell Banker California Previews International Retreat in Monterey during the last week of August, more than 200 agents were treated to a speech by the renowned real estate economist Gary Watts. He handily dispelled the misconceptions and myths propagated about the current state of the real estate business, and made an excellent case for forecasting continued strength in the California housing market and the lending markets. Watts was so impressive that we have invited him to speak in all four of our regions in order to enlighten and energize you with a dynamic and informative presentation. Here are some excerpts:

“California is home to 36.5 million residents with a population growing over 800,000 last year. However, by 2025 our population will explode (nearly doubling) to 60 million people. With our large diversified economy, California will continue to prosper, the demand for housing will remain strong and as this housing downturn comes to an end, we will once again do very well!”

“The media will still report about massive delinquencies and huge foreclosures in the sub-prime market, but those reports will not be accurate because they don’t explain the difference between a delinquent payment, a notice of default or a foreclosure.”

“All you read and hear is that real estate is going down, yet last month, prices in the U.S. rose 3.4% from a year ago and California is up almost 1%. The Bay Area prices have gained 4.1% over last year and southern California median price is up 3.7%.”