Ed's Blog

Ok, so I’m straying from my usual market updates this posting, but I have some exciting news that I wanted to share with all of you. I am officially a columnist! Yep, I’m writing a bi-weekly column for the San Francisco Examiner’s Real Estate Section, titled On The Line With Ed Craine.

In the column I answer questions from readers about their home mortgages, commercial mortgages, the housing and lending industries, and other timely topical issues that I’m qualified to answer. The response I’ve received so far has been extremely positive, so I’m hoping the next time you pick up the Examiner (my column comes out every other Sunday), you’ll take a peek and let me know your thoughts. If you’re out of the area, you can go to their website at www.examiner.com and search for my column.

If you have a question you’d like me to answer in the column, please email me at ecraine@smithcraine.com and I’ll answer it- in print.

Thanks so much for your support!!!

This week the National Association of REALTORS® (NAR) issued a report which indicated that median home prices are down nationally 9% from the same time last year. While that doesn’t sound like particularly good news for homeowners; in California, it may be an indicator that we’re nearing the end of price declines, as buyers are re-entering the home purchasing market.

Let me explain. Because home sales are rising so rapidly in the hardest hit areas of California, and because in many cases homes for sale in California are beginning to see multiple bidders for properties, NAR’s Chief Economist Lawrence Yun stated that this “suggests that future price declines may be minimal.” Hot diggity! Hope he’s right.

Although the financial crisis has now spread far beyond the housing bubble, there’s little doubt that the economy can’t make a full recovery until the surplus of inventory (homes currently for sale) levels off. So, although I’m not thrilled that most homes have lost value, I see the increasing number of home sales as a step in the right direction toward recovery.

As always, please feel free to email me at ecraine@smithcraine.com or call me directly at 415-406-2330 if you have any questions, on this or any other real estate or mortgage related questions.

The increases in conforming loan limits that we saw earlier this year are darn close to reaching their expiration date. Well, technically the loan limits (some as high as $729,750) will be decreasing effective January 1, 2009.

HOWEVER, most banks will not be accepting new loan applications for the higher limits past late November, or early December. There just won’t be time to get the loans funded before the limits change again.

So as a reminder, if you’re looking to buy, start your pre-approval process now, or else you may run the risk of shortchanging yourself on the limit of a conforming loan you are able to qualify for.

On the other hand, if you’re looking to sell, remember that because the loan limits are changing, that may very well decrease the numbers of potential buyers interested in your home. So, make sure to seriously consider reasonable offers that come your way.

If you have any questions about the reduced conforming loan limits in your area, please feel free to email me at ecraine@smithcraine.com or call me directly at 415-406-2330.

This week the U.S Census Bureau announced an unexpected increase in new home sales for the month of September. This increase (2.7%) is a great comeback from the decline in new home sales in August of 12.6%.

The increase in new home sales is undoubtedly in part due to the fact that median home prices are now at their lowest levels in four years. But, whatever the reason, it’s very good news that homes are selling, as nearly all respected economists and financial gurus insist that in order for our economy to recover, the housing market must stabilize.

With foreclosures being scooped up in droves by investors, and new home sales on the rise, the inventory of homes on the market for sale declines, which is very good news for all of us. As the market becomes less saturated, we will almost assuredly see home values begin to stabilize. Turning that corner would be very, very good for all of us.

Let’s all keep our fingers crossed that we’re slowly but surely turning a corner on our troubled economy.

Here are a few quick updates for you. Feel free to call for more details.

1) Fed Lowers Short Term Rates-Mortgage Rates Rise! Huh?! In what’s becoming a common occurrence lately, when the Fed lowered the discount rate this week, long term rates, including mortgage rates, actually rose! Go figure. Bond investors are now fearing inflation while we’re just hoping to keep our heads above water! If you’d like to know more about this common phenomenon, give me a call.

2) Reminder- Conforming Jumbo Loan Limits To Fall Soon. Just another reminder that conforming jumbo loans will retreat from the current high of $729,750 to $625,000 effective 1/1/2009. However, most lenders will stop accepting applications for these loans sometime in mid to late November, depending on the lender. That’s so they’ll have time to close the loans before the end of the year.

3) Trailing House Syndrome- Ugh! We’re currently working on a transaction that highlights a potential pitfall in deals you may be working on. If a buyer wishes to buy a new primary residence and rent out his or her current one, the rental income can only be counted to qualify for a conforming, conforming jumbo, or FHA loan if the current home has 30% equity based on a current appraisal! This can be a deal killer in some cases, so watch out! This rule was enacted because many people who were upside down in their current homes were buying new homes and then walking away from their old ones and letting lenders foreclose.