Jumbo loan purchases down in Bay Area
San Francisco has the name and fame behind it as the number one town in California State, ever since the period of Gold Rush, centuries back. Migration of people – not only from other parts of the country – but people from other countries like China as well, was the order for many years in history, in search of gold finds and eventually settling in. No wonder the city grew into manifold proportions, as the prominent one in San Francisco Bay Area of 9-counties. Pricy houses and a costly Real Estate market were inseparable parts of San Francisco and its surroundings.
This necessitated home buyers, aspiring for a San Francisco property, to inevitably go in for the so-called Jumbo loans – with conforming limits beyond $417,000, so as to buy a home since the median price of a San Francisco area home, ruled during the years 2002 to 2007 in the range of $675,000 each.
Prior to the credit-crunch, due to foreclosure tornado hitting this region somewhere in August 2007, the norm for purchasing homes from SF Bay Area was to get jumbo loans and the percentage of these bigger size loans was 60% out of all sales made. Now that lenders are not inclined to take more risk and are hesitant to entertain loans from this category of applicants, the percentage recorded for June sales has diminished to 33.3% of all home sales.
However, purchase of properties from low end neighborhoods – in the bottom of the price ladder at $300,000 – showed an increase last month, by accounting 34.2 percent of all SF Bay Area home sales. Same period last year, there were still large numbers of foreclosure properties from this price range, and so the share of purchases from this category was recorded as 39.5%.
In the medium price range of $500,000 and above, home sales accounted for 39.2% in June. Sales of single-family homes priced above $800,000 recorded 17.5 percent of the total home sales in June.
Experts view this trend in a different way – had the origination of jumbo loans been higher as in the past, the sales of high-end properties in SF Bay Area would have been much more in June. We will see what happens in the coming months of 2010.
Posted by Amitesh Kumar
on Aug 9 2010. Filed under Lending.
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