[eastbay]

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The real recovery IMHO will not be when buyers return,but when credit standards are loosened on the consumers end,and that has already started with last months .50% Fed cut!


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In my area, I believe the ballooning of the jumbo rates is very meaningful. Since median prices are way above 417k, a great deal of loans need to be jumbo, or other "tricks" need to be played. With the "trick bag" dried up, it's the jumbo rates that have a great many otherwise willing buyers on the sidelines. If the currently ridiculous (IMO) premium comes off of the jumbo rates in the next 6 mo. to a year, IMO this period will have been a narrow window where a market "dislocation" created a great opportunity for the very few who have the cash to put down 150k+ on top of a conforming loan, because the pool of buyers is artificially and temporarily low. Heck, cops make six figures around here. Add a wife's teacher's salary and $500k is a blue collar buying range, it is simply not an expensive house or a large loan for the incomes in this area. Jumbo rates have already started to trend back in-line with conforming rates.

Also, reading this thread I'm reminded of the old saying about when to be greedy and when to be fearful. It's practically viral that you "have to be on the sidelines" now, almost as bad as it was viral that you "had to get in or be priced out forever" two years ago. The virus was wrong then, and I believe it's wrong now.

eastbay