Showings Down in August and the Mortgage Fiasco
The news about the real estate market has not been good these past few weeks. Every time you read a paper, turn on your computer or watch TV news you will hear about the sub-prime mortgage crisis and how that is affecting an already depressed housing market. The number of sales are down about 11% in our local market. Showings have been fairly strong all summer but the latest two week period was down 18% from the last two weeks in July. has been down this year in the number. Here is a chart showing the trend.
Now on to the mortgage situation. For a number of months it has become clear that the easy mortgage standards that have been fueling the market over the past few years were resulting in a large number of foreclosures (bad loans). As the losses added up, the loans became harder to sell on the secondary market. When the mortgage companies are unable to sell their mortgages they don’t have money to lend to new borrowers. When there is limited money available, only the best borrowers get the money. Jumbo mortgages (loans over $417,000) are now priced higher than conventional loans. Second mortgages, which are used when the borrower doesn’t have a 20% down payment, are now hard to get. It is going to be very interesting how this all plays out. Sales and closings are still happening daily, the world goes on we just have to adapt to a tighter market.