The Epic American Credit and Bond Bubble Laboratory Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: 10K a day	4/20/2008 10:12:56 AM
	of 110194

Speaking of starvation... CA HOME PRICES IN FREEFALL DUE TO LACK OF JUMBO FINANCING mrmortgage.typepad.com The lack of jumbo loans has destroyed the CA real estate market. Without aggressive, affordable jumbo loans, prices will naturally gravitate towards the most available financing, which is Fannie/Freddie $417k loans. 90% of the most widely used loans in CA over the past several years have vanished in the past 6 months. The new Fannie/Freddie 'ConJumbos' carry a rate much too high to complete with the affordibility of the programs that were lost. Now that all the exotics and jumbos are gone, home prices will also have to gravitate towards borrower qualifications using real household income. This means that if the average household income in San Francisco Bay Area is $85k, that borrower can qualify for about a $350k loan. Currently, the average home price is closer to $550k meaning we could have alot further to drop. Now, that we are back to traditional lending, historical valuation measures must be considered such as 3-4x household income, rental cap rates ect. As prices drop, defaults natually rise across all borrower types due to the 'negative equity effect'. Banks then take more losses, tighten credit further and this never ending snowball cycle continues. -Best, Mr Mortgage

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next