California Real Estate | Homes for Sale | Blog

After a year of dismal news in the residential sector we are seeing that mortgage rates in the commercial sector are still holding steady, according to a report released today by the California Mortgage bankers Association.

Delinquencies have risen slightly over the year, however they are no where near as drastic as seen in the residential market. This is mainly because the amount of a commercial loan is generally two times the amount of a residential loan and the down payment required is quite a bit more.

Vacancies have also held steady over the past year. As long as the units are being leased, mortgage holders should be able to pay their monthly payment.

While this news is good for California’s commercial market, it is expected that eventually the downturn in the residential market will seep into the commercial market, however the impact will likely be no where near the monumental downturn that has recently taken place in the residential sector.

California residents will have reason to rejoice this tax season!

The economic stimulus package announced this week includes rebates between $600 to $1,200 for most Californian families plus $300 per child. The big news that is relevant to the California real estate market is the fact that the plan also includes a drastic reduction in rates for loans between $417,000 and $729,00.

Jumbo loans (Loans over $417,000 in California) are generally priced at a much higher interest rate than loans for homes at a lower price point. The interest rate on a jumbo loan can be 1.5%+ more than a loan for a lesser amount. This mean that many homes in California markets are just plain unaffordable for consumers looking to buy - even in the current market.

The stimulus plan effectively raises the cap for conforming loans (loans that up until now were capped at $417,000) and the corresponding interest rate associated with them. This will give California markets a much needed boost in affordability as more consumers become qualified to purchase.

Hopefully this will be enough to begin to remove consumers from the sidelines and into the buyers category.