A reader forwards two articles from the Wall Street Journal today. The first titled "Jumbo Mortgages, Jumbo Headaches" chronicles the problems of getting a jumbo loan, particularly in California. This line from the article really stood out to me:
ING Direct, a unit of ING Groep NV, is one of the few lenders that is boosting jumbo originations, though it requires a minimum 30% down payment in the most expensive housing markets, up from 20% earlier last year. For condos, ING requires a minimum 45% down payment.
So anyone in Healdsburg looking to sell their home for $1 million is going to have to find a buyer with $300,000 in cash for a down payment. Quite a task in this economy.
The next article is called "In Maricopa, Ariz., a Paradise Found and Lost". It tells the story of a hard hit suburb outside of Phoenix that has seen homes that were worth over a quarter of a million dollars fall to $50,000. Parallels to certain areas of Santa Rosa or Windsor are clear. The last line of the article sums up what I expect to see more of across Sonoma County as the bailouts continue:
Mr. Dominguez believes his Maricopa house now is worth about half the $213,000 he paid in 2006. He can afford the mortgage, but thinks the lender should reduce his payments. "If they're not going to help me," he says, "they can have it."
I happen to think that 30% down for a Jumbo Loan in a declining market is appropriate.
ReplyDeleteI agree. Look at the home in the latest post for $2 million.
ReplyDeleteIf I were a banker I'd want more than 50% down on that place. It could easily fall to less than $1 million.