Max Jarman

The Arizona Republic

Feb. 9, 2008 10:24 PM

For Zonies with serious San Diego addictions, there could be an upside to falling real-estate prices.

 

A condo-market meltdown has put the dream of owning a piece of downtown San Diego within the reach of more Valley residents.

 

Tightening credit and pain caused by rising payments on subprime loans have put the brakes on new-condo sales, sending prices plummeting and strapped buyers running for the exits. 

 

While still lofty, prices for some units are now more than 30 percent below previous highs and still falling.

 

A new 725-square-foot “bank-owned” studio, two blocks from the San Diego Padres’ ballpark, is listed at $189,900, down from $289,900 at the end of September.

 

“Prices are at least starting to make sense,” said Stanley Paul Cook, a former Phoenix resident who is now a San Diego real-estate consultant.

 

He noted that real-estate speculation over the past few years pushed average San Diego home prices near $700,000, making it one of the nation’s most expensive housing markets.

 

 

 

But the deals probably won’t last. Construction of new condos has dramatically slowed, and when the existing units are sold, prices are expected to creep up. After all, it is San Diego, still one of the country’s most desirable places to live.

 

Falling mortgage rates and a possible increase in the size of loans that can be sold to government-backed agencies also could help jump-start the stalled market. And there is increasing interest from foreign buyers who get an additional discount due to the weak dollar.

 

But for now, terms like “short sale” and “lender-owned” have become the bywords of the real-estate market downtown, along with “desperate” and “make offer.”

 

Lockboxes for real-estate agents cover railings outside buildings. Inside, residents come home to find foreclosure notices on their neighbors’ doors.

 

Tiny ‘treasures’

 

The building boom, spurred by an aggressive downtown redevelopment effort and the construction of the Padres’ Petco Park, brought thousands of new condominium units to downtown San Diego in the past few years.

 

Real-estate speculators fueled the frenzy, flipping (selling, often before taking occupancy) properties from building to building while creating an artificial demand that sent prices through the roof. “The market was so good and prices were going up so fast that we were oblivious to any kind of a peak,” said Ken Baer, an agent with Willis Allen Real Estate in San Diego. “We knew things were high but thought they would keep going up.”

 

Unit 211 in Discovery at Cortez Hill, for example, sold in 2002 for $409,000 and in 2004 for $699,000. The unit sold to a Phoenix couple in December for $470,000.

 

Downtown, there are more than 1,000 condominiums on the market in a roughly 125-block area. That is up from 700 last year and 500 in 2005.

 

Of the 1,000 units, about 400 are in new buildings that are just being completed.

 

Most of the others have been built within the past few years, and many, bought by speculators, have never been lived in.

 

They are generally small. One-bedroom and studio units, some under 500 square feet, make up the largest category of unsold condos on the market.

 

“An entry-level condo that sold for $400,000 a year ago is practically impossible to sell at that price in this market,” said San Diego real- estate agent Mark Mills. As a result, prices are dropping fast for the small condos, and many are landing in foreclosure.

 

Some frustrated owners, now struggling to sell their properties, blame the developers for building so many small units.

 

But with the high cost of land and construction, Mills noted the tiny condos were the only way some developers could make their projects make economic sense.

 

The Centre City Development Corp., a non-profit agency that is spearheading the redevelopment of downtown San Diego, reported that the agency has assisted in the development of 7,200 condominium units in more than 50 projects downtown since 2001.

 

That has helped push the downtown population to 30,000 from about 10,000 at the start of 2000. Another 60,000 are forecast to move downtown, bringing the population to 90,000 by 2030.

 

“You can’t beat it. Everything is close by,” said Gary Smith, a longtime downtown resident and president of the Downtown San Diego Residents Group. “You drive to the golf course on weekends but walk to everything else.”

 

Although new construction has fallen off dramatically, more than 1,300 units are expected to be completed in the next two years. Thousands more have been approved and are waiting to be built.

 

Arizonans’ views

 

Susan and Michael Markowitz of Scottsdale spent three years studying the downtown San Diego market before buying a bay-view condo in April.

 

“Our timing wasn’t the greatest, but we weren’t looking to make money and couldn’t be happier,” Michael Markowitz said.

 

On his last visit, he walked to his condo from the airport.

 

“It took about 40 minutes, and it was a beautiful walk,” he said. “I never imagined it was even possible to walk home from an airport.”

 

Scottsdale real-estate agent Bob Sutton has owned a second home in San Diego since 1997.

 

“It was a great way to experience the whole Southern California lifestyle thing without having to pick up and move,” he said.

 

Sutton started out with a $73,000 condominium in Pacific Beach and moved up to a downtown high-rise four years ago. He bought another unit as an investment at the peak of the market and has been trying to sell the one-bedroom, 800-square-foot unit since. He’s hoping to break even or take a small loss on the property.

 

“It hasn’t turned out to be such a great investment,” he said.

 

Converted to hotels

 

While some condo projects are being abandoned or put on hold, others are being reinvented as hotels, apartment houses and office buildings.

 

“Before, they were all condominiums,” said Sherm Harmer, chairman of the Downtown Residential Marketing Alliance, which promotes downtown housing. “Now, it’s a mix.”

 

The Centre City Development Corp. plans to use the lull in condo construction to catch up on infrastructure improvements. That includes the development of 10 new parks, a new public library and waterfront improvements, among other projects.

 

Upside down

 

The downtown condo market peaked in late 2006 when sales slowed and prices started to fall.

 

“Everything went into the crapper the same time I bought this place,” Vern Scholl said of his 1,550-square-foot penthouse in the Park Place complex downtown. Scholl paid $1.9 million for the unit in 2006 and had been trying to sell it ever since. He originally asked $2.3 million but was trying to negotiate a short sale for $1.65 million prior to its sale for $1.5 million at a January foreclosure sale.

 

“What do you do when you owe more than it’s worth?” he said.

 

Lew Breeze, a number cruncher and real-estate agent, estimates that there were 20 foreclosure properties on the market a year ago and now there are more than 100. There are even more short-sale deals.

 

A short sale occurs when a lender agrees to take a loss on the sale of a property in order to avoid the foreclosure process and the possibility of a greater loss.

 

Short sales also allow owners to get out from under properties they can’t afford without incurring the stigma of foreclosure.

 

An Aqua Vista penthouse that sold for $2.1 million in 2004 is now on the market as a short sale for $1.2 million.

 

Turnaround ahead

 

A slowdown in new construction eventually is expected to lead to a short supply, particularly if a ramp-up in new construction lags behind the falling supply of units.

 

Baer added that foreign investors, particularly from Canada, are beginning to snap up the units, gaining deeper discounts with the declining value of the dollar.

 

He believes there is also considerable pent-up demand out there from people who have always wanted to live in San Diego but were put off by the high prices.

 

 

 

While sellers scramble, civic officials remain pragmatic about the situation.

 

Barbara Kaiser, vice president of real-estate operations for San Diego’s Centre City Development Corp., said the city is still processing design review and zoning changes for new residential projects.

 

“People are positioning themselves for the next boom,” Kaiser said.

 

 

 

Reach the reporter at max.jarman@arizonarepublic.com or (602) 444-7351. 

By Rex Nutting, MarketWatch

Last Update: 9:40 AM ET 2/26/08

WASHINGTON (MarketWatch) — Home values in the U.S. fell 8.9% in 2007, the largest decline in at least 20 years, Standard & Poor’s reported Tuesday.The Case-Shiller National Home Price Index fell 5.4% in the fourth quarter alone, S&P said.“Wherever you look, things look bleak,” said Robert Shiller, chief economist for MacroMarkets LLC and co-inventor of the index.Prices in 17 of 20 major cities were lower at the end of 2007 than at the beginning, with eight cities falling in double-digits. After adjusting for inflation in other consumer prices, home prices were lower in all 20 cities.For the fourth straight month, nominal prices in all 20 cities were lower than in the previous month.The biggest annual declines were seen in the former bubble areas in Florida and the Southwest. Home prices in Miami were down 17.5% in the past year, while prices fell 15.3% in Phoenix and Las Vegas.National home prices were down 10.2% from the peak reached in late 2006. Some economists say home prices will fall about 20% to 30%.Between 2001 and 2006, home prices rose an unprecedented 63%.The 20-city index fell 2.1% in December and 9.1% for the year. The original 10-city index fell 2.3% in December and 9.8% for the year.Phoenix had the largest decline in December, falling 3.5%, followed by San Diego at 3.4% and San Francisco at 3.2%The Case-Shiller index, which tracks multiple sales of the same homes, is considered by many observers to be the best gauge of national and metropolitan-area real-estate values. Its major flaw is that it may overemphasize the coastal regions that had the biggest bubbles.But even in non-bubble cities, such as Atlanta, Cleveland, Chicago, Dallas, Detroit and Minneapolis, prices are dropping.Here’s a list of price changes over the past year for the 20 cities in the index:Miami, down 17.5%; Las Vegas, down 15.3%; Phoenix, down 15.3%; San Diego, down 15%; Los Angeles, down 13.7%; Detroit, down 13.6%; Tampa, down 13.3%; San Francisco, down 10.8%; Washington, down 9.4%; Minneapolis, down 8%; Cleveland, down 6.3%; New York, down 5.6%; Chicago, down 4.5%; Denver, down 4.5%; Atlanta, down 3.4%; Boston, down 3.4%; Dallas, down 2.4%; Seattle, up 0.5%; Portland, Ore., up 1.2%; and Charlotte, N.C., up 2.3%.

---

Rex Nutting is Washington bureau chief of MarketWatch.

Copyright © 2008 MarketWatch, Inc. All rights reserved. Please see our Terms of Use.MarketWatch, the MarketWatch logo, and BigCharts are registered trademarks of MarketWatch, Inc.Intraday data provided by ComStock, an Interactive Data Company and subject to the Terms of Use.Intraday data is at least 15-minutes delayed. All times are ET.Historical and current end-of-day data provided by FT Interactive Data.

 

After a closed market on Monday, all of the coming week’s economic reports will be delivered on Wednesday and Thursday - but don’t expect that any volatility will be limited to those days.The most recent read on inflation will come via the Consumer Price Index, being reported on Wednesday alongside the latest Housing Starts and Permits data. And of particular interest - the “Meeting Minutes” from the last Federal Reserve meeting will be released as well. These Minutes give the inside commentary between members - and remember, Dallas Fed President Richard “Loose Lips” Fisher was not in agreement with the most recent cut to the Fed Funds Rate. His seemingly uncontrollable remarks regarding his concerns over inflation have rocked the markets of late, with Mortgage Bonds losing 187 basis points since his tirade on February 7th - that translates into about .375% higher for home loan rates. Bottom line - the inflation data and Fed Meeting Minutes could be real market movers. Since inflation erodes the value of the fixed return provided by a Bond, if the news of the week continues to reek of inflation - this could spell more bad news for Bonds and home loan rates.

Chart: Fannie Mae 5.5% Mortgage Bond (Friday Feb 15, 2008)

 

“CUTS LIKE A KNIFE, BUT IT FEELS SO RIGHT” Bryan Adams And financial pros will tell you it’s wise to never try and catch a falling knife. Seems like decent advice in general - but in the financial world, it means that when the price of a Stock or Bond is in the midst of a severe decline, be very cautious about stepping in to buy…even if it feels so right because the price starts to look cheap. That’s because when prices declines sharply, it often gets even worse, making it hard to call the bottom. That’s why many investors, who attempt to buy on the way down, say the feeling cuts like a knife. And over the past week - Bonds have been dropping much like a knife, and home loan rates have risen by about .25% across the board.And speaking of sharp objects, Cupid’s arrows might have been flying around everywhere last week - but little love came calling for the Bond market. First, Retail Sales for January were far better than expected - which was good news for Stocks, but as money flowed into Stocks, pulled money out of Bonds and caused Bond prices to move lower. Next, Fed Chairman Ben Bernanke gave it to us straight from the heart, as he testified that the Fed would keep the door open to more rate cuts, which worried Bond Traders about the risk of more inflation ahead. And unlike the media seems to believe, cuts to the Fed Funds Rate generally cause home loan rates to rise, not decline. Why? Because Fed Rate Cuts can spur on more inflation, as it becomes less expensive to finance business and personal purchases. And as a result, inflation erodes the value of the fixed return provided by a Bond - so in the face of inflation, Bond prices fall, and home loan rates rise.Finally, Moody’s credit rating agency downgraded FGIC - one of the very largest Bond insurers in the world. This is another concern for Bonds, as the downgrades of Bond insurers in turn threaten the ratings of the Bonds they insure. If the added safety from insurance on Bonds is in doubt, the yield or rate on those underlying Bonds must increase to compensate investors for the additional risk. All in all - a tough week for Bonds and home loan rates - read on to find what’s in store for the week ahead.AND DON’T MISS THIS WEEK’S MORTGAGE MARKET VIEW - ALERTING YOU TO IRS SCAMS, TO WHICH EVEN THE SAVVIEST HAVE FALLEN PREY.

By Paul Jackson

President Bush on Wednesday signed H.R. 5140, the Economic Stimulus Act of 2008, making official a temporary boost to both conforming and FHA loan limits. The new law boosts the GSE conforming limit to as much as $729,750 through the end of this year, and also raises FHA lending limits to the same level for high-cost areas.

“I know many Americans are worried about meeting their mortgages,” President Bush said prior to signing the bill. “My administration is working to address this problem.”

Bush cited HOPE NOW and the recently announcedProject Lifeline initiative as examples of ongoing work by the administration to address the housing crisis.

A White House-produced fact sheet covering the new growth package is available here.

The U.S. Department of Housing and Urban Development now has 30 days to publish a database of house prices that will be essential in determining which markets get access to the new ‘jumbo conforming’ or ‘expanded FHA’

loan products.

Of course, that could prove to be bit of a problem in and of itself, given that HUD doesn’t currently independently gather or otherwise publish home price data. Bankrate’

s Holden Lewis was on this right from the start; he and I had chatted briefly on the matter when Congress first passed the bill:

The Office of Federal Housing Enterprise Oversight, or OFHEO, compiles periodic indexes of home prices. Fannie Mae and Freddie Mac use the OFHEO data each November to update the next year’

s conforming limit.

The Federal Housing Finance Board and the National Association of Realtors both collect and publish home prices. The FHA takes information from both entities to calculate the FHA limits for each metro area.

Congress could have pegged the conforming and FHA limits to data collected by OFHEO, the Federal Housing Finance Board or the Realtors. But it didn’t. Instead, the law says: “The secretary of Housing and Urban Development shall publish the median house prices and mortgage principal obligation limits … for all areas as soon as practicable.”

The law gives HUD 30 days to publish the database of house prices.

The simplest solution would be for HUD to use the same house price information it uses to calculate FHA loan limits. But a HUD spokesman says: “We have not yet determined if the same data will be used to make the new calculations.”

That leaves lenders in the dark until HUD makes a decision.

While price designations aren’t yet known, a few industry sources close to the process have suggested that the new conforming limits won’

t be as broadly applied as many might expect; just 15 counties in California might be designated as eligible for the loan limit increase, for example.

That’s not the only grey area out there, of course — there’s also the as-of-yet unclear issue of TBA trading in the secondary market that will need to be settled, something HW has covered often recently. (The unconfirmed word from our sources today is still that SIFMA wants to keep the new ‘jumbo conforming’

loans out of TBA pools.)

It’

s also unclear exactly how the GSEs will price the newly-conforming loans, given that neither Fannie nor Freddie have experience underwriting within the jumbo mortgage market.

Similarly, it isn’t exactly clear what the initial underwriting criteria will be, although most expect it to at least sit close to existing ‘traditional conforming’ guidelines — if not ending up more restrictive. “OFHEO has already gone on record saying that jumbo loans are more risky, so I wouldn’t be surprised if the underwriting guidelines end up being tighter than what you’d see for usual conforming products,”

said one executive at a large lender, who asked not to be identified.  

 

 

By Paul Jackson

President Bush on Wednesday signed H.R. 5140, the Economic Stimulus Act of 2008, making official a temporary boost to both conforming and FHA loan limits. The new law boosts the GSE conforming limit to as much as $729,750 through the end of this year, and also raises FHA lending limits to the same level for high-cost areas.

“I know many Americans are worried about meeting their mortgages,” President Bush said prior to signing the bill. “My administration is working to address this problem.” Bush cited HOPE NOW and the recently announcedProject Lifeline initiative as examples of ongoing work by the administration to address the housing crisis.

A White House-produced fact sheet covering the new growth package is available here.

The U.S. Department of Housing and Urban Development now has 30 days to publish a database of house prices that will be essential in determining which markets get access to the new ‘jumbo conforming’ or ‘expanded FHA’ loan products.

Of course, that could prove to be bit of a problem in and of itself, given that HUD doesn’t currently independently gather or otherwise publish home price data. Bankrate’s Holden Lewis was on this right from the start; he and I had chatted briefly on the matter when Congress first passed the bill:

The Office of Federal Housing Enterprise Oversight, or OFHEO, compiles periodic indexes of home prices. Fannie Mae and Freddie Mac use the OFHEO data each November to update the next year’s conforming limit.

The Federal Housing Finance Board and the National Association of Realtors both collect and publish home prices. The FHA takes information from both entities to calculate the FHA limits for each metro area.

Congress could have pegged the conforming and FHA limits to data collected by OFHEO, the Federal Housing Finance Board or the Realtors. But it didn’t. Instead, the law says: “The secretary of Housing and Urban Development shall publish the median house prices and mortgage principal obligation limits … for all areas as soon as practicable.” The law gives HUD 30 days to publish the database of house prices.

The simplest solution would be for HUD to use the same house price information it uses to calculate FHA loan limits. But a HUD spokesman says: “We have not yet determined if the same data will be used to make the new calculations.”

That leaves lenders in the dark until HUD makes a decision.

While price designations aren’t yet known, a few industry sources close to the process have suggested that the new conforming limits won’t be as broadly applied as many might expect; just 15 counties in California might be designated as eligible for the loan limit increase, for example.

That’s not the only grey area out there, of course — there’s also the as-of-yet unclear issue of TBA trading in the secondary market that will need to be settled, something HW has covered often recently. (The unconfirmed word from our sources today is still that SIFMA wants to keep the new ‘jumbo conforming’ loans out of TBA pools.)

It’s also unclear exactly how the GSEs will price the newly-conforming loans, given that neither Fannie nor Freddie have experience underwriting within the jumbo mortgage market.

Similarly, it isn’t exactly clear what the initial underwriting criteria will be, although most expect it to at least sit close to existing ‘traditional conforming’ guidelines — if not ending up more restrictive. “OFHEO has already gone on record saying that jumbo loans are more risky, so I wouldn’t be surprised if the underwriting guidelines end up being tighter than what you’d see for usual conforming products,” said one executive at a large lender, who asked not to be identified.

By Jeremy Pelofsky

WASHINGTON (Reuters) - President George W. Bush on Wednesday argued the “genius” of the U.S. economy is its ability to withstand financial shocks, as he signed a bill to put $152 billion in taxpayers’ hands in a bid to avoid a recession.

“I know a lot of Americans are concerned about our economic future,” Bush said during the ceremony at which he signed the $168 billion, two-year economic stimulus package into law. Of that total, $152 billion is earmarked for 2008.

“Our overall economy has grown for six straight years but that growth has clearly slowed,” he said, acknowledging the “rough patch” the financial system has experienced as failing home mortgage repayments fed a vicious cycle of credit pullbacks by lenders in recent months.

Bush said however that the U.S. economy had often overcome a wide range of adversities over the past several years including corporate scandals, war and recession.

“The genius of our system is that it can absorb such shocks and emerge even stronger,” he said.

U.S. economic growth slowed to only 0.6 percent at an annual rate in the fourth quarter of 2007. House prices have been falling, and in January the U.S. job market shrank for the first time in 53 months.

That has led many economists to forecast that the United States will slip into a recession, and some have said it may already be in one. The Bush administration has steadfastly denied that would happen.

To prevent one, the Democratic-led Congress and the Republican Bush administration forged rare bipartisan cooperation to hammer out the economic stimulus package, which includes billions of dollars in tax rebates due to be paid beginning in May, as well as incentives for businesses to buy new equipment.  Continued…

President Bush is expected to sign the highly anticipated stimulus package today. This means that HUD will have 30 days or less to come up with the median prices for areas throughout the country, which may then cause an increase to the conforming limit in those markets. As you know our analysts have worked very hard to provide you with a jump start estimate of what HUD may do.

H.R. 5140 — Increased Loan Limits

Although HUD has 30 days from the final passage of the legislation to provide their official loan limits for your area, the estimated data below can help you get a major head start on your competition! Our team of analysts have researched and referenced a number of trusted sources to compute this data and provide you reasonable estimates of the new loan limits in your area.Most of the estimated loan limits in this exclusive chart are listed by Metropolitan Statistical Area (MSA). If you are not familiar with what counties are included in each MSA code below, please visithttps://entp.hud.gov/idapp/html/hicostlook.cfm, where you can search by State.NOTE: THESE ARE NOT THE OFFICIAL GUIDELINES FROM HUD. THE OFFICIAL CHART OF LOAN LIMITS WILL NOT BE DELIVERED BY HUD UNTIL 30 DAYS AFTER THE PASSAGE OF THE LEGISLATION.

H.R. 5140 - Increased Loan Limits State CBSA/MSAD Code CBSA/MSAD Name Estimated Median Value based on Exclusive MMG Research and Resources Adjusted Conforming Limits: 125% of max median price and <= 175% * current conforming limit AZ 22380 Flagstaff, AZ $360,000 $450,000 CA 31084 Los Angeles-Long Beach-Glendale, CA $588,400 $729,750 CA 36084 Oakland-Fremont-Hayward, CA $825,400 $729,750 CA 37100 Oxnard-Thousand Oaks-Ventura, CA $589,000 $729,750 CA 41500 Salinas, CA $590,000 $729,750 CA 41740 San Diego-Carlsbad-San Marcos, CA $589,300 $729,750 CA 41884 San Francisco-San Mateo-Redwood City, CA $825,400 $729,750 CA 41940 San Jose-Sunnyvale-Santa Clara, CA $852,500 $729,750 CA 42044 Santa Ana-Anaheim-Irvine, CA $588,400 $729,750 CA 42100 Santa Cruz-Watsonville, CA $610,000 $729,750 CA 34900 Napa, CA $567,500 $709,375 CA 42020 San Luis Obispo-Paso Robles, CA $559,568 $699,460 CA 42220 Santa Rosa-Petaluma, CA $498,750 $623,438 CA 13860 Bishop, CA $480,000 $600,000 CA 42060 Santa Barbara-Santa Maria-Goleta, CA $470,000 $587,500 CA 46020 Truckee-Grass Valley, CA $447,000 $558,750 CA 46700 Vallejo-Fairfield, CA $424,000 $530,000 CA 44700 Stockton, CA $391,230 $489,038 CA 40140 Riverside-San Bernardino-Ontario, CA $390,000 $487,500 CA 33700 Modesto, CA $381,884 $477,355 CA 40900 Sacramento–Arden-Arcade–Roseville, CA $381,884 $477,355 CA 46380 Ukiah, CA $381,884 $477,355 CA   Alpine County $381,884 $477,355 CA   Mono County $381,884 $477,355 CA   Calaveras County $381,884 $477,355 CA 32900 Merced, CA $377,245 $471,557 CA   Amador County $355,000 $443,750 CA 38020 Phoenix Lake-Cedar Ridge, CA $350,000 $437,500 CA   Summit County $345,000 $431,250 CA 31460 Madera, CA $340,000 $425,000 CA 49700 Yuba City-Marysville, CA $339,744 $424,680 CA 39820 Redding, CA $338,900 $423,625 CO 20780 Edwards, CO $525,000 $656,250 CO   San Miguel County $381,884 $477,355 CO 14500 Boulder, CO $367,500 $459,375 CO   La Plata County $355,000 $443,750 CT 14860 bridgeport-stamford-norwalk, CT $491,100 $613,875 CT 25540 Hartford-West Hartford-East Hartford, CT $351,300 $439,125 FL 28580 Key West, FL $676,500 $729,750 FL 34940 Naples-Marco Island, FL $420,000 $525,000 FL 22744 Fort Lauderdale-Pompano Beach-Deerfield, FL $381,884 $477,355 FL 33124 Miami-Miami Beach-Kendall, FL $381,884 $477,355 FL 48424 West Palm Beach-Boca Raton-Boynton Beach $381,884 $477,355 FL   Walton County $381,884 $477,355 FL 14600 Bradenton-Sarasota-Venice, FL $353,789 $442,237 HI 26180 Honolulu, HI $649,900 $729,750 HI 27980 Kahului-Wailuku, HI $595,000 $729,750 HI 28180 Kapaa, HI $640,000 $729,750 ID 27220 Jackson WY-ID $475,000 $593,750 ID   Blaine County $381,884 $477,355 MA 14484 Boston-Quincy, MA $414,700 $518,375 MA 15764 Cambridge-Newton-Framingham, MA $414,700 $518,375 MA 21604 Essex County, MA $414,700 $518,375 MA 12700 Barnstable Town, MA $410,000 $512,500 MA   Nantucket County $381,884 $477,355 MA   Dukes County $381,884 $477,355 MD 13644 Bethesda-Frederick-Gaithersburg, MD $480,390 $600,488 MD 47894 Washington-Arlington-Alexandria, DC-VA-M $480,390 $600,488 MD 12580 Baltimore-Towson, MD $381,884 $477,355 MD   Garrett County $350,000 $437,500 MD 36180 Ocean Pines, MD $349,999 $437,499 NC 28620 Kill Devil Hills, NC $368,000 $460,000 NH 40484 Rockingham County-Stafford County, NH $414,700 $518,375 NJ 35644 New York-Wayne-White Plains, NY-NJ $550,900 $688,625 NJ 36140 Ocean City, NJ $479,000 $598,750 NJ 20764 Edison, NJ $430,000 $537,500 NJ 12100 Atlantic City, NJ $363,000 $453,750 NJ 45940 Trenton-Ewing, NJ $351,640 $439,550 NM 42140 Santa Fe, NM $341,145 $426,432 NV 23820 Gardnerville-Ranchos, NV $445,000 $556,250 NV 39900 Reno-Sparks, NV $381,884 $477,355 NY 35004 Nassau-Suffolk, NY $470,000 $587,500 NY 39100 Poughkeepsie-Newburgh-Middletown, NY $355,000 $443,750 OR 13460 Bend, OR $358,000 $447,500 OR 32780 Medford, OR $338,000 $422,500 PA 35084 Newark-Union, NJ-PA $459,700 $574,625 PA 49620 York-Hanover, PA $339,669 $424,587 UT 41620 Salt Lake City, UT $381,884 $477,355 VA 49020 Winchester, VA-WV $380,000 $475,000 VA 16820 Charlottesville, VA $340,000 $425,000 WA 42644 Seattle-Bellevue-Everett, WA $394,700 $493,375 WA 45104 Tacoma, WA $394,700 $493,375 WA   San Juan County $381,884 $477,355 WA 14740 Bremerton-Silverdale, WA $380,000 $475,000 WA   Jefferson County $350,000 $437,500

 

 The Bush Administration announced “Project Lifeline” Tuesday, a new initiative to help struggling homeowners with all types of mortgages, not just subprime or adjustable-rate mortgages.

 

Part of the Hope Now Alliance (1-888-995-HOPE), launched late last year, the new Project Lifeline outreach program would grant homeowners who are at least 90 days late a 30-day break from the foreclosure process while their lenders try and work out a more affordable solution, including restructuring the loan, freezing or even lowering interest rates.

 

The program was put together by HUD, the Department of Treasury, and six of the largest financial institutions, including Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., J.P. Morgan Chase and Co., Washington Mutual Inc., and Wells Fargo & Co. These banks, which collectively service more than 50% of mortgages in America, have agreed to this program as a means to lessen the anticipated impact foreclosures could have on the open market.

 

The objective with Project Lifeline, said Larry Di Rita, spokesperson for Bank of America, is to offer a “range of remedies to keep people in their homes.”

 

Not everyone is as hopeful as Di Rita, however. Bruce Marks, CEO of the Neighborhood Assistance Corporation of America (NACA), a non-profit, community advocacy and homeownership organization, called the Lifeline program a “public relations gimmick with no substance.”

 

The Hope Now Alliance, which includes 25 loan servicers, reportedly helped 545,000 subprime borrowers and 324,000 prime borrowers in the second half of 2007, according to CNN. No estimates on how many homeowners this new program will help have been announced thus far.

 

 

By Roger Showley

UNION-TRIBUNE STAFF WRITER

February 9, 2008

Congress may be issuing $600-per-person tax rebate checks this spring, but the temporary mortgage revisions in the economic stimulus package passed this week could have a greater effect on San Diego’s economy, particularly its beleaguered housing market.

Graphic: Conforming loan limit

That’s because the package, expected to be signed next week by President Bush, could save some homeowners hundreds of dollars a month in mortgage payments and rescue other owners wanting to refinance out of adjustable-rate mortgages.

Specifically, the stimulus package temporarily raises the maximum size of mortgages that government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy and market as securities from $417,000 to as high as $729,750 in expensive parts of the country, including some in California.

Lenders and real estate agents said that change in the “conforming loan” limit will allow more people to buy homes and refinance existing loans at a lower interest rate. Buyers needing bigger loans typically have to sign up for “jumbo” loans that have higher interest rates and tougher qualification requirements.

“For San Diego and other high-home-price areas, that part of the package is definitely more important than the tax rebate,” University of San Diego economist Alan Gin said.

The consumer reaction has been almost immediate, said Sherm Harmer, president of the San Diego County Building Industry Association.

At two downtown projects Harmer oversees, several potential buyers said they are ready to sign sales contracts now that the higher loan limits will reduce their costs.

“They’re paying attention,” Harmer said. “Everybody wants to own a home. Who doesn’t?”

However, the exact loan limits for San Diego are unknown, because the U.S. Department of Housing and Urban Development won’t announce them until early next month. Until then, mortgage brokers said they expect lenders to approve some loans in anticipation of what the new limits might be.

The amounts, which will be tied to median home prices in each metropolitan area, can vary between 125 percent and 175 percent of the median, but can be no higher than $729,750. The legislation says eligible loans must be made between July 1, 2007, and Dec. 31 of this year, when the limits would revert to existing levels unless Congress extends the cutoff date.

For San Diego County, the median price set by the Federal Housing Administration is $505,000, said David Ledford, vice president for housing finance and housing policy at the National Association of Home Builders.
That means the limit for conforming loans in the county could rise to at least $630,000, unless HUD issues other maximum loan limits for the area.

The gap in interest rates between jumbo and conforming loans has been stubbornly large for months. Last week, it was close to a full percentage point, compared with 0.2 of a percentage point in July, according to financial publisher HSH Associates. Freddie Mac’s most recent weekly national mortgage survey placed the average 30-year, fixed-rate conforming loan at 5.67 percent.

Lower interest rates are crucial to determining whether some buyers can afford the homes they want. They also affect owners who want to refinance out of adjustable-rate mortgages that are resetting to higher levels.

Martin Lopez, a loan officer at Park Avenue Mortgage, said several of his clients are eager to take advantage of the higher loan limits. One buyer in Poway stands to save as much as $400 a month on a $625,000 home, he said.

Lori Staehling, president of the San Diego Association of Realtors, called Congress’ action “incredibly good news.”

“I would anticipate a spike up in sales,” she said.

In the past two or three weeks, lenders have reported an increase in prequalification loan applications, Staehling said.
“That’s the first sign for us (of a possible turnaround),” she said. “I’ve also heard signs from real estate agents that open houses are being much more heavily attended.”

According to DataQuick Information Systems, nearly 50,000 San Diego County homeowners who bought or refinanced in the past two years stand to benefit from the higher loan limits. If their credit is sound and they have the required equity in their homes, they could refinance their jumbo loans to lower-priced conforming loans. That was about 20 percent of the 258,607 home loans of all sizes and types made in 2006 and 2007.

The significance of the conforming-loan-limit increase becomes clear when comparing San Diego’s housing prices and loan limits over time.

In 1988, the first year DataQuick began tracking San Diego housing, the median price stood at $138,500, well below the conforming-loan limit of $168,700. But starting in 2002, the local median exceeded the loan limit – $320,000, compared with $300,700.

As prices skyrocketed to a peak $517,500 in November 2005, more and more buyers were forced to sign up for jumbo loans, peaking at 55.2 percent of the market that year, DataQuick figures show. Last year, 32 percent of buyers used jumbos.

Now, with the new limit higher than the local median, buyers will have more wiggle room.

“It’s going to open up a window of affordability,” said Greg Wickstrand of Home Services Lending.

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The Associated Press contributed to this report.Roger M. Showley: (619) 293-1286; roger.showley@uniontrib.com
“That’s the first sign for us (of a possible turnaround),” she said. “I’ve also heard signs from real estate agents that open houses are being much more heavily attended.”