Weekly market Watch

Coldwell Banker Weekly Market Watch
Week of August 5, 2007

It has been an interesting week. The financial markets reacted severely to the tightening of credit in the mortgage industry. Institutional second loans for purchase (ex: 80/10/10) are predominately gone, and practically overnight. On a national scale, the Fannie, Freddie conforming loans, and FHA, VA remained relatively unchanged, but that doesn’t help us much here where the lay of the land is mainly a jumbo loan arena. To balance the perceived risk from investors who purchase these loans, most interest rates on jumbo loans have increased a full percent or more. Therefore, it is imperative to thoroughly review and understand the financing qualifications and terms for each potential home buyer. In order for any transaction to be closed successfully, buyers will require a real estate professional that is fully informed, knowledgeable and able to provide expert guidance as it relates to the financing aspects of the transaction. It is also important to ensure that buyers are working with a well-capitalized, established lender such as our partner, Princeton Capital. Our Sellers also need to take advantage of our in-house loan professionals who are prepared to help Listing Agents scrutinize offers coming in on their properties.

In the Bay Area, the start of August shows numerous bright spots in what is traditionally a slower month for real estate sales. Many areas have seen an increase in activity as sellers have adjusted their pricing, and for qualified buyers this remains an excellent opportunity to invest in some great real estate deals. Working with an experienced Realtor® remains the savviest means for buyers and sellers to navigate the muddy mortgage waters. As one Sebastopol agent succinctly put it, “they need us more than ever.”

More than 525 homes were held open during the week and many enjoyed a higher-than-anticipated number of potential buyers in most areas. Of the offices reporting, listing inventory was declared as being steady for 13 offices, decreasing for 10 offices and increasing for four. Sales activity continues to be solid for Coldwell Banker Residential Brokerage offices with 17 reporting steady activity and three seeing an increase. Sales activity decreased for seven offices.

A few transactions had loan setbacks which delayed or cancelled an escrow. You can expect some uncertainty with your current Buyers, and staying informed on the credit crunch is imperative. I’ve had several conversations with a number of our Princeton loan officers the past three days on solutions to current issues, and I’m truly pleased with the caliber of our partners. I’ve learned of some really forward-thinking actions already being implemented with several of our Buyers initiated by their Princeton loan rep. Cool heads will prevail in this – there are Buyers who need to buy, and Sellers who need to sell, and many opportunities exist.

Here is a link to an informative AP story Friday which will help you understand more clearly what the Fed did to increase liquidity in the market – accepting roughly $35 billion in mortgage backed securities.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/08/10/financial/f092914D27.DTL&hw=friday+august+10&sn=004&sc=458
(you may need to cut and paste the above into your browser)

Have a great week!
Rick

Rick Turley
President, San Francisco/Peninsula
Coldwell Banker Residential Brokerage