Interest Rates Drop to the Lowest Level On Record!

Thanks Criggchef for this flickr image.
We are currently seeing some amazingly low interest rates. Rates on loans less than $729,000 fell to the lowest level on record for the second consecutive week after the Federal Reserve launched a new effort to assist the staggering U.S. housing market. Yet, also interesting is that rates on loans larger than $729,000 are abnormally low as well.
With a loan amount of $1,000,000 and 75% Loan-to-Value:
| Purchase Price | $1,333,333 | |||
| Loan Amount | $1,000,000 | |||
| Loan Program | Rate | Points | APR | Payment |
| 30 Yr FRM Int Only | 6.000% | 1.000 | 6.142% | $5,000 |
| 3/1 LIBOR ARM Int Only3/1 | 4.500% | 1.000 | 4.629% | $3,750 |
| 5/1 LIBOR ARM Int Only | 4.750% | 1.000 | 4.881% | $3,958 |
| 7/1 LIBOR ARM Int Only | 5.000% | 1.000 | 5.133% | $4,167 |
| 10/1 LIBOR ARM Int Only | 5.250% | 1.000 | 5.385% | $4,375 |
We are big believers that it is impossible to time the bottom of the real estate markets. Yet, what we can assess is the current opportunity in the market relative to other times in history. Currently, rates are reaching historical all time lows while at the same time buying conditions and available residential housing inventory are creating abnormal Bay Area buying opportunities. This market is a prime residential buying opportunity for individuals and families that are endeavoring to purchase and live in their homes for the next 7-10 years.
One only has to look at the evening news to see that the National residential housing inventory has been seriously devalued over the last 2 years. Yet, the story that is not being told is that much of this Bay Area housing stock is now being sold with multiple offers. We know for we have been watching these offers begin to pool as rates have fallen. So, with this recent shift in financing over $729,000, we are also now beginning to witness a huge opportunity in the $700,000-$2,000,000 market. Many opportunities are beginning to present themselves to those that are looking for long term ownership (7-10 years) and can afford to ride out the many ups and downs we will inevitably see over the next couple of years.







Recently, past clients have asked me if this is a good market to sell their homes and move into better homes in better neighborhoods. This is an uncommon thought as compared to the typical national market sentiment that sellers should stay put in the current market turmoil. In working with these clients I have found that this market is a great opportunity for some move up buyers. The general discussion goes like this…
I know, alphabet soup… Welcome to the world of government acronyms and abbreviation. In lay terms, the 2008 Economic Stimulus Bill has cleared the way for three channels of mortgages (FHA, Fannie Mae & Freddie Mac) to increase their loan limits. Good news for most of California because these three types of loans generally have lower interest rates and/or easier qualifying criteria and/or higher loan-to-value limitations (the amount of a mortgage relative to the value of the home). 

First, I must say sorry for the lack of my writing as we get closer to the end of December. It has been a busy season for us, which is counter intuitive to what the media is saying about the marketplace. Don’t believe all of the hype. There are many areas in the East Bay that are still transacting fairly smoothly. As the year closes, I would say that pricing is the name of the game. This implies that buyers are still in the Bay Area marketplace. They are just looking for reduced prices. This is in correlation with the mood that the media has instilled in this market. Don’t get me wrong, there are many California cities that are currently at a standstill. One only has to drive through places like Antioch or Stockton to see the rows of for sale signs.

