Alhambra Real Estate
Alhambra Homes For Sale - Investing in Real Estates of Alhambra, CA

Its Hard to Keep Up With All the Changes
By Lee Lieberg

March 15, 2008

While the news is full of stories about the troubled real estate market, the lending crisis, and the stimulus package, I thought I might try to relate some of the changes to Alhambra.

Part of the government’s stimulus package is raising the conforming loan limits from the old $417,000 to $729,750. This is great news, as the interest rate on conforming loans is currently 1 to 1.5% lower than the rate for jumbo loans. This is meaningful to our market, where as $417,000 might buy you a nice home in many parts of the country, it was quickly becoming irrelevant in Alhambra.

It should substantially reduce the interest rates on homes in the $500,000 to $800,000 range which presently makes up about half of the homes and condos listed for sale in Alhambra. This reduction in interest coupled with the recent dip in Alhambra prices should make mortgage payments more affordable.

Another recent move included the Feds pumping $20 billion into the system, which will hopefully relieve some of the trouble with a lack of liquidity for the lenders. As private money has dried up in the market, particularly in the privately financed jumbo mortgages, lenders have not had money to lend. Additional money in the system should make loans more available.

The market was being choked by lenders not having money to lend. In the month of February, the most expensive home to sell in Alhambra was $525,000. This was due to the difficulty of obtaining a loan over $417,000. Raising the conforming limit to $729,750 should have a positive impact in the higher end of our market.

The FHA is also adopting the same limits making it easier for some to find a loan. With a 20% down payment these will now be a viable option for many.

Gone are the days of buyers being able to qualify for any amount they wanted, but that is not bad news, remember how we got into this mess? (Sub Prime) In order to qualify for the newer limits of $729,750, you will have to establish your ability to repay the loan through traditional documentation, by providing W-2’s, tax returns, and showing cash reserves.

This is a temporary stimulus package which is only in place until the end of the year and is geared toward new purchases. If you, like many, are waiting to refinance your jumbo loan at conforming rates, we’ll have to wait and see.

So while we are not out of the woods just yet, there is cause for optimism in Alhambra as some of the financing issues that have affected us appear to be improving.

 

*Data was obtained from California MLS Alliance and deemed to be reliable. Lee Lieberg can be contacted at lee.lieberg@dilbeck.com.