othing down, variable adjustable loans have
interest rate, EZ artificially low start rates for
qualification, stated the first year or two, interest
income. only payment terms, and are
indexed to volatile interest rate
These are the common lending indexes. This is setting the
terms that many believe have kept stage for a huge decline in home
our super-heated market going. As values.
the stories of fast home
appreciation proliferate, the One local major lender recently
desire to get into our local stated that they had no fixed
housing market by those who rate purchase loans in process;
hesitated in the past, have all their new purchase loans were
escalated. adjustable! Further, over 50% of
their new purchase loans were
This is typical of any bull zero down! Combine this with the
market, be it the stock or popular ‘stated income' loans
housing market. The paradigm and it's easy to see how these
changes this time. There is a policies have kept our market
huge increase in zero down and propped up. (A stated income loan
adjustable rate loans being basically means if the buyer has
pushed on poor credit risk good credit, the amount of their
borrowers and first time buyers stated income is NOT verified for
(below market start/qualifying), qualification purposes.)
as well as move up buyers being
induced to purchase homes that While a huge housing value
otherwise are far beyond normal decline seems unnatural to many,
qualifying loan guidelines! this phenomenon was last seen
locally in the mid-90's! At that
The majority of the new time, an approximate 20% housing
depreciation took many by reconsider any new purchase.
surprise. The easy loan practices Purchasing one's first home is
today, the double digit housing not something one should try to
appreciation of the past few time or tie into projections on
years, and irrational enthusiasm, the local housing trend. Just be
clearly signals another cautious! Stay well within your
approaching decline in the San normal qualification ratios.
Diego housing market! Except under certain conditions,
avoid E/Z qualification and
How bad could such a decline be? adjustable, zero down loans.
A number of local lenders state Start out modestly with a smaller
that the majority of their loans home or condominium that you can
for the past few years were zero easily afford.
down, adjustable loans. With the
slow but steady rise in interest No one can predict the future
rates, San Diego could be facing trend of any major market with
a decline in housing values that certainty. However, caution is
could dim the 20% decline of the advised in San Diego housing as
mid-90's! the multitude sing the siren song
of never ending double digit
By any measure, our local real housing appreciation.
estate market is more at risk
than any time in recent memory. Copyright 2005
www.brokerforyou.com All rights
Though housing bubbles may last reserved.
far beyond anyone's expectations,
now may well be a time to
About the Author:
Bob Schwartz,is a Certified Residential Specialist, real estate broker with http://www.Brokerforyou.com w/over 27 years of residential real estate experience. Bob's other sites are: http://www.downtown-san-diego-real-estate.com http://www.san-diego-for-sale-by-owner.com http://www.la-jolla-ca-del-mar-san-diego-real-estate-encinitas-california.us
Source: www.isnare.com
