Comments on: How Real Is The Credit Crunch? Try Getting A Loan

By: Misha

Misha — Fri, 19 Dec 2008 18:26:24 +0000

Median single family home prices in November were
$751,000 and the average was $1,013,688 — this from actual sales recorded in the SF MLS, not Altos Research (sidebar) blended sales/projections methodology. I’d venture to say that if you take out the outlying MLS Districts (3 and 10), the median and average would be substantially higher. (I have a graph showing median price by district through September on my blog, here: http://www.pegasusventures.net/wordpressblog/2008/10/20/what-on-earth-does-this-chart-mean-click-to-make-it-bigger/#more-27).

The fact is that buying a home or a condo is still bloody expensive in this town and is always likely to be. There are simply enough people who are wealthy enough to buy, and the housing stock in this town aint getting any bigger. When I talked to the loan officers, I wanted to get a realistic view for my clients. That’s why I picked the 1.2 to 1.5 million range. I would add, however, that the interest rate picture is substantially better for loans under the conforming amount of $625,500.

Eddy, on loans being “near historical lows”, I stand by that comment. You’re absolutely right, of course, about them being much harder to get. For a great chart on mortgage rates over time, check this out: http://mortgage-x.com/trends.htm
(The last chart goes back to 1963).

By: zanon

zanon — Fri, 19 Dec 2008 17:59:06 +0000

Lev:

It would also include people who rented for the past 3 to 5 years because it was so much cheaper than buying, and saved their money.

Of course, those people thought prices were too high in 03, thought they were *really* too high in 05, found them too high in 07, and remain too high in ’08. SF prices have not budged.

By: Lev

Lev — Thu, 18 Dec 2008 23:22:30 +0000

asad: I’d think anyone who purchased in the last 3 to 5 years would have the hardest time coming up with 20% down. They can’t borrow against their house or get a LOC because thier equity has vanished. Selling in this market isn’t an attractive idea either to raise money.

First time home buyers can use FHA loans at 3.5% but IIRC they are limited to around $625k loan limit, so that prices most of SF out of the pictures.

I think all it leaves is people with enough credit left either through existing homes they own, stocks investments or borrowing against their 401k to gather enough funds for a down payment. So yeah… I’m with you, where do normal everyday folks get that kind of cash. It’s funny though I can hear my fathers voice saying ‘In my day everyone had to save 20%!’ seems like such a far away concept these days to actually have to save.

By: asad

asad — Thu, 18 Dec 2008 19:29:29 +0000

I am curious to see how many buyers have 200k-500k to put down on a house.
“I asked the lenders to assume we were talking about a loan of around $1 million on a primary residence worth $1.2 to $1.5 million.”

Maybe I am wrong but there aren’t that many people left from the stock market who have that type of cash.

By: eddy

eddy — Thu, 18 Dec 2008 18:39:16 +0000

Misha, thanks for doing some real legwork and posting the findings. Loans are not at near historic lows, well maybe in the context of all time history they are relatively low, but not in terms of simple 12/24/36months. It was cheaper and easier to get a loan this time last year. Your points are well taken though. It ain’t easy to get financing for anything resembling a home in the traditional areas of San Francisco.

The funny thing is that when buyers are forced to put real % money down — they become surprisingly realistic about the potential to lose their “investment”. It’s a noticeable shift away from the F’it borrowing mentality of the previous 4 years!