New Increased Conforming Loan Rates no help as of yet

So the new conforming loan rates have been signed into law, and many of us have been waiting to see how those new guidelines will actualize themselves in the coming weeks.

Unfortunately it's not shaping up to be much of a boost to the jumbo loan affordability, at least for the moment.

As reported by Matt Carter from Inman News - The Securities Industry and Financial Markets Association announced that the new conforming loan increase of $729,750 will not be put into the same pool of secondary market where most conforming loans are traded, presumably to avoid contamination and an increase in interest rates to existing conforming loans.

The primary concern for investors of the new 'jumbo light' loans is early pre-payment ironically, not default of the existing loans.

Meantime interest rates, while still at historic lows overall, have been inching up steadily since the Fed's began lowering rates the beginning of the year - presumably on fears of inflation, is the latest buzz explanation I'm being told.

Thanks for Stephen Barber at Pacific Guarantee for passing the Inman News article onto me - it's well worth the read for any mortgage interest watchers.

2008-09 San Francisco Allowable Rent increase and Security Deposit Interest is Posted

The San Francisco Rent Board has published the 2008-09 allowable rent increase for units that qualify under rent control (commercial units, and any residential units built after June 13, 1979 are exempt from San Francisco rent control) and it's up slightly .05% from last year, to 2%.

Which means a monthly rent of $2800 can be increased starting in March, on the anniversary of the lease date to $2856.00.

In addition the yearly interest owed on security deposits (which applies to all units rent control or no) stayed the same as last year at 5.2%

From the San Francisco Rent Board Site:

Calculation of Interest Owed: Generally, the tenant is owed simple interest at the rate in effect when the security deposit interest payment is due. If the deposit held is $1,000.00 and the applicable interest rate is 1.7%, then the interest payment due is $17.00. Pursuant to Chapter 49, if interest is owed for multiple years, the interest may not be compounded. For example, if the deposit held is $1,000.00 and interest for two years is to be paid on the annual due date of November 1, 2005, the landlord would owe the tenant 1.2% or $12.00 for 2004, plus 1.7% or $17.00 for 2005, for a total of $29.00. Other than payment of the past interest owed, Chapter 49 does not provide for any penalties for the late payment of interest.

Snapshot of the Market for two weeks

73 Properties Changed hands in the San Francisco Real Estate Market during the two week period of January 23rd - February 5th 2008

SFH Single Family Homes
17 sold Over Asking ↑
13 Sold Under Asking ↓
7 Sold At Asking ↔

Condos
9 Sold ↑
12 Sold ↓
10 Sold ↔

2-4 Unit buildings
1 Sold ↑
3 Sold ↓
1 Sold ↔

Which means that even though we are down on the volume of sales year over year we still have over 61% of properties that are selling at or over their asking prices...

By far still the best deals are to be had in the Southern Part of the city, District 9 but interestingly enough South of Market is also posting (unofficially) the current highest price/per square feet for sales with the Infinity garnering $2000/sf for their penthouses - and due to close soon by all accounts.

Condo's sold do not include the numerous new developement sales which will eventually show up in the tax records.

Source: San Francisco Multiple Listing Service

'Final' Economic Stimulus Package Includes $729,500 Conforming Loan Limits

From an email I received this evening from the California Association of Realtors...

Congress agreed to an economic stimulus package today and sent the bill to President Bush for approval.

The Senate's version of the bill expands rebate checks for seniors and disabled veterans and includes the same increases in conforming loan limits found in the House stimulus package. The House also passed the Senate's version of the bill, and it will now be sent to the White House. The President is expected to sign the legislation by the end of next week, ahead of the Congressional self-appointed deadline of February 15th. The increase in conforming loan limits is currently slated to last through 2008, although many groups (read: Realtors) are lobbying to make them permanent.

The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas (such as San Francisco). By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation could see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.

Increasing the FHA loan limits is critical to bolstering California’s housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices.

Additionally, raising Fannie Mae and Freddie Mac’s (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%.

The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.

SFGate has an article from the Associated Press this afternoon about this as well...

California Association of Realtors [official site]
Congress Sends Economic Aid Plan to Bush [SFGate]

Plan C's TIC protest makes the News

Plan C made headlines in the Chronicle today, with 60 demonstrators making it to the protest at city hall yesterday to bring attention to the antiquated lottery system for TIC condo conversions. 

Not a bad turn out for the middle of a work day in the middle of a work week.

This year, 1,994 tenancies-in-common entered the lottery in an attempt to join the ranks of the condominium converted - a 51% increase from 6 years ago. This is indicative of the fact that, with only 200 units winning each year, the backlog re-entering the pool of hopeful condo conversion winners is going to continue to increase dramatically in the years to come.

You can read the full story HERE