It was cold, windy and wet here in Lake Arrowhead on Sunday. About 1/2 inch of rain. More rain expected; good for fire safety and a healthy forest.
CONDITIONS ARE CHANGING in the recovery of home sales $500,000 to $1 million. Arrowhead Woods has 111 listings from $500,000 to $1 million, over 2 years of inventory at the current rate of 55 sales in 2014. This is the mid-range of the three partitions of sales $100,000 to $500,000, $500,0000 to $1 million and $1 million to $15 million. The best medicine to increase sales in this bracket is relief in lender qualifications for a jumbo loan.
This price range most often requires a jumbo loan, over $417,000. A conforming loan, up to $417,000, requires a buyer to put 20% down, thus the top sale price for a conforming loan is $520,000. The down payment for a jumbo loan, over $417,000, is typically 30% down with an average 1% increase in the mortgage interest rate. Home sales are inching up with the conforming loan rate up to $417,000 being a significant barrier.
Home prices in the first and top brackets, $100,000 to $500,000 and over $1 million are now the same price homes were selling for in 2000 to 2004. Not so for this mid-range as sales and prices are impacted by the jumbo mortgage premium and qualification requirements. 2015 is expected to bring some easing.
FORECAST: Some of the largest mortgage lenders are preparing to further ease standards for borrowers after the release of new guidelines this month from mortgage giants Fannie Mae and Freddie Mac. Good new for Lake Arrowhead with the lifting of stringent credit overlays, especially applied to jumbo loans.
AN IMPROVING ECONOMY, RISING CONSUMER CONFIDENCE AND A CHANGE IN CONGRESS IS GOOD NEWS FOR MOUNTAIN REAL ESTATE.