Friday, November 16, 2007

Dwindling Jumbo Loans

Sales of existing, single-family homes in the nine counties that touch the bay slid 41.3 percent, from 5,761 last year to 3,384 in October, the firm reported Thursday.

Although it was the 33rd month in a row of year-to-year sales declines, the market has been slammed in recent months by a tightening in the mortgage market, which is making home loans harder to come by and more expensive.

Of particular concern in the high-priced Bay Area housing market is that the number of jumbo loans, or those over $417,000, has slowed to a trickle. This summer, after higher defaults in the subprime sector - where mortgages were given to people with iffy credit - investors stopped buying jumbo mortgages, leading buyers to walk away from deals or avoid the market altogether.

"We don't have liquidity in the marketplace, and that's creating a drop in market value because people can't close on a purchase," said San Francisco mortgage broker Leon Huntting.

According to DataQuick's analysis, the number of homes purchased using jumbo loans tumbled 50 percent between July and October.

Price data show a bifurcated market, with decreases in many of the counties outside the region's urban core. For instance, in Solano County, the price for a detached home plunged nearly 18 percent; in Sonoma County, the median dropped nearly 12 percent.

On the flip side, prices in Santa Clara County and San Francisco were up 7.4 percent and 4.3 percent, respectively. Even in those submarkets, however, DataQuick analyst Andrew LePage and others say the picture is mixed. Sales at the higher end of the market are relatively brisk compared with the lower end, helping to draw the overall median higher.

For all existing homes in the Bay Area, the median paid in October was $685,000, up 3.8 percent from $660,000 in October 2006.

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