November 3rd Housing, Economic and Mortgage Market Update

We are now headed into the holiday market, historically the slowest time of the year… but, not this year. We already experienced the slowest demand of the year due to the financial market crunch, September and October. November is already showing signs of improvement and December promises to be even better. Bernanke and the Federal Reserve lowered the short term rate by another quarter percent, but are beginning to warn that their cuts may be coming to an end. Yet, the financial crisis is not over, so we can expect at least one more cut. Rates have been dropping and so have jumbo loans (loans above $417,000). The discrepancy between conforming loans (loans at $417,000 or less) and jumbo loans is beginning to finally narrow. It is a great time to be a buyer with a lot of homes to choose from, low interest rates, motivated sellers and not a lot of competition among buyers. It looks as if Congress has not properly heeded Bernanke’s feedback at Congressional hearings back in September where he stated that the conforming loan limit should be temporarily increased to increase liquidity in the financial market and not wait until March when the market will right itself. Sometime in 2008, we can expect the government to step in and correct the giant discrepancy between the current conforming loan limit, $417,000 and the median price for a detached home in the state of California, $531,000.

The OC Coastal Group

Homes of Distinction Garry Loss

Principal / REALTOR

888-OCC-Views http://www.theoccoastalgroup.com