3% Down – 585 FICO
6.5% Interest Rate - Up to $729,000

Hot off the Press from my friend Kamila Harkavy at Pacific Mortgage Consultants

How’s that sound for a California home buyer? The $729K is the new conforming loan rate and will depend on the county. This is a better rate than people with 800 FICO’s were getting 7 months ago on conforming loans under $417K

That's a 30 year fixed loan for FHA!!!  For someone with a 585 FICO and only a 3% down payment, this is an incredible opportunity to take advantage of in this buyers' market.  These rates are in effect only through 2008 so people should not wait too long.

This same FHA loan is available for cash-out refis too.  People don't have to have any cash reserves in the bank and there's NO pre-payment penalty!!!

This same loan would have come with an interest rate much higher than this in the recent past.

Please note - this loan requires the borrower to fully document their income.

Many people with good credit will be taking advantage of this loan for refis and for purchases due to the high loan-value ratio which is very hard to find in today's mortgage market.  Few lenders will loan to that high a ratio and certainly not at a blended rate of a first and second mortgage of 6.5%!!.

Buyers may be able to find highly motivated sellers who will cover some or all of their closing costs at which point, all they need is a 3% down payment and qualifying income to become a homeowner!

Here’s an outlined breakdown of real estate in transition 2007 – 2008.

What Went Wrong?

• Two things happened:
• Mortgage industry went largely unregulated
• Mortgage industry and Wall Street got the risk wrong
• Irresponsible/overly optimistic lending
• Substantial increase in subprime lending
• Aggressive lending
• Looser lending standards
• Increase in mortgage-backed securities

Bottom line… Both the Mortgage Industry and Wall Street tried to expand the pie that should not have been expanded.

What Resulted? Domino Effect on U.S. Housing

• Mortgage lenders pulled back
• Buyers found it difficult to obtain financing
• Housing inventory increased
• Sellers resisted dropping prices
• Homeowners default
• Now prices begin to drop

Looking at the Numbers:

Sales

• It was the worst drop in 19 years for Existing Home Sales
• Existing Home Sales
• Peaked in 2005 – 7.1M Transactions
• Sales down 13% from last year
• In the last 38 years, existing home sales have declined 4 times
• 1974 – 1 year
• 1979-1982 - 4 years
• 1989-1990 - 2 years
• 2006-2007 – 2 years so far

How long is this real estate recession going to last?

• The last time housing declined at a higher rate was in 1989
• Declined by 14%

Volume

2007 was the fifth best year ever for existing home sales volume.

• Existing Home Sales Volume = $1.502 trillion
• Down 14% from 2006 - $1.737 trillion
• A 2-year decrease of 20% from 1.886 trillion in 2005
• New Home Sales Volume = $241 billion
• Down 25% from 2006 - $322 billion
• A 2-year decrease of 37% from $381 billion in 2005

Prices

2007: First Decline since the Great Depression.

• Median Existing Home Price - $218,900
• Down 1.4% from 2006 - $221,900
• A 2-year decrease of 0.3% from 2005 - $219,600
• Median New Home Price - $246,900
• Up 0.2% from 2006 - $246,500
• A 2-year increase of 2.5% from 2005 - $240,900

2007 Real Estate 2008

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5
• Part 6

Click Here to Get In-Depth Local Real Estate Market Data - Updated Weekly

Joe Natividad, our contributing author, has been missing in action the last couple of months - understandable with this being his first semester at UCSD.

Joe tells me that things are beginning to settle down and he hopes to begin contributing again to our site soon. 

His post today over on his site is very timely - Register Your Cell Phone on the Do Not Call List 

It seems all cell phone numbers go public today.

Thanks for the heads up! 

Last night I was in Sunnyvale attending a presentation on LinkedIn. LinkedIn is the premeire business networking site.

The presentation was hosted at Intero Real Estate by Mitchell Levy of HappyAbout. Jason Alba author of I’m On LinkedIn – Now What??? was the featured speaker.

I got to chat with Jason before the horde arrived – he was expecting about 20 to 30 attendees but 120 showed up. That’s Silicon Valley for you – everyone is networking like crazy. Some estimates are that over 70% of people in tech in Silicon Valley use LiinkedIn.

It turns out Jason is from Salt Lake City. I moved out here a year and a half ago from Park City, UT. Jason and I talked a bit about Utah, tech, LinkedIn and other social networking platforms. I found him to be insightrful, practical and helpful. He has an easy-going manner and a wry wit.

Jason’s presentation was straight-forward and focused on four things we could do to start reaping immediate benefits from LinkedIn. He then answered questions for over an hour.

The lobby-shot picture was taken when the meeting room was already full. Thus, you see people in the last shot having to bring additional chairs into the room for the presentation.

I had a great talk with Lois Steiner of Facilities First, a professional facilities solution provider. We talked about the business potential of having an industry wiki on the Facilities First website and a few other ideas for increasing web presence and traffic.

It was really one of the best events I have been to in a while – well worth the drive down and the time invested.

Mitch interrupted the meeting for a five minute break so everyone could catch the lunar eclipse. At the end, he even allowed anyone who wanted to get up and make any announcement they wanted as a means of promoting networking between the attendees.

According to rumors we’re hearing, Safeway of Pleasanton, California will be announcing some pretty significant layoffs within the next week.

One of those unnamed sources told me their boss disappeared in the last day or so and they will soon follow. Exact numbers weren’t mentioned, but it appears many of the cuts are in the tech side and possibly the online shopping side of things – Safeway.com.

If you’re effected by these changes and need help in selling your home or relocating, gives us a call.

I also had a great chat with unnamed about a couple of possible joint ventures. I’m always interested in startups and technology – keep me in mind if you’re thinking of breaking free and doing something exciting.