When the financial crisis hit, the government had to essentially take over Fannie Mae (FNM 1.22, -0.03, -2.40%) and Freddie Mac (FRE 1.46, -0.06, -3.95%) — the two giant mortgage agencies whose job it is to keep money flowing into the housing market, especially in just such times of crisis. So Fannie and Freddie were able to keep doing their job.
But the private mortgage market didn’t fare so well. That largely is made up of jumbo mortgages, the home loans that exceed the Fannie and Freddie limits. Jumbo rates jumped well above rates on conforming loans, assuming you could get them at all as underwriting tightened up considerably. Securitization of jumbo loans, necessary to replenish lenders’ supply of funds, dried up.
Finally, though, the jumbo market may be returning to some semblance of its former self. Rates have fallen so they are now more in line with historical premiums to the conforming rate. There also are some financial institutions who appear once again ready to take on jumbo securities. That’s good news for the confidence of the entire mortgage market.
Some of our clients ask how we put together a model, so for the next few months I will give you updates on the process! We have hired Renee Gaddis to put together a model in unit 304. It will take approximately 2-3 months to complete start to finish! Here are some pictures on how it starts! Check back every few weeks for the progress!
The View from 304!!!!
What makes the market recover???
For starters, prices, at least for the time being, are stable, and inventory is tighter then it’s been in months.
Thanks to months of healthy sales activity and hesitant sellers pulling their listings off the market, inventory is now very tight in some neighborhoods. Bidding wars, in fact, have become common in those areas. That, in turn, means properties are selling for closer to or even above their asking prices in some areas.
Another hopeful sign is that after months of stagnation, a number of new condos have finally managed to reach or surpass the 51 percent-sold mark, a crucial tipping point that loosens up financing and lures new buyers. Meanwhile, the gridlock caused by disputes between condo developers and buyers — prompted by hundreds of buyers backing out of their contracts when the market soured — is finally starting to clear. That’s because many developers are now more open to negotiation instead of saying the price is the price
Finally, brokers are noticing an intangible but unmistakable shift in homebuyers’ attitudes. For the first time since before the Lehman Brothers crash, property buyers are allowing themselves to become emotionally attached to properties, brokers say. Instead of simply crunching the numbers, they’re now willing to pay a little extra for a property they love.
All of these factors have led industry insiders to conclude that Naples’s residential real estate market is at least on the path to recovery.