The median paid in the nine-county region declined to $350,000 from $383,000 in October 2010, according to the San Diego-based research firm. Prices dropped 4.1 percent from $365,000 in September. The decrease was largely due to the expiration of so-called conforming loan limits on Oct. 1, DataQuick President John Walsh said in a statement.

“This may well be a short-term pause while the market recalibrates changes in loan thresholds,” he said.

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The regions median sale price dipped to its lowest level since January as activity above $500,000 fell sharply, distressed property sales rose slightly, and mortgage availability worsened, a real estate information service reported.

A total of 16,829 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in October. That was down 7.3%

from 18,149 in September and up 0.5% from 16,744 in October 2010, according to San Diego-based DataQuick.

A separate report released on Tuesday showed California home sales posted a marginal increase in October and also were above year-ago levels.

According to figures released Tuesday from the California Association of Realtors, closed escrow sales of existing, single-family detached homes in California edged up to a seasonally adjusted 493,240 units in October, up 0.9% from a revised 488,700 in September.

The October statewide median price of an existing, single-family home sold in California was $278,060, down 3.3% from $287,440 in September and down 8.9% from the $305,150 median price recorded for October 2010, according to C.A.R.

Both reports cite the drop median price on Congress failing to act on conforming loan limits as a possible reason.

Most homebuyers use what are called “conforming” loans, or those backed by the Federal Home Administration, to purchase their homes. Congress sets the limits for these loans. The previous limits reset to lower limits on October 1. In high cost areas, the cap for these federally backed loans dropped to $625,500 from $729,750.

In short, what this means is that buyers who need a loan that exceeds the new limit are forced to obtain a “jumbo” mortgage loan, which is often considerably more expensive.

Based on preliminary analysis, it appears that the lower conforming loan limits has had a cooling effect on home sales in October, particularly in the higher cost markets across the state, such as the San Francisco Bay Area and coastal regions of Southern California, said C.A.R. President LeFrancis Arnold. This evidence supports the need for reinstating the higher loan limits while the housing market is in transition to recovery.

Long Beach area Realtor Richard Daskam, with Keller Williams Realty in Los Alamitos, said the expiration of the loan limits has already been cutting into his business.

With the expiration of the loan limits, Im not at all surprised by the numbers, Daskam said. Two of my buyers in the $750,000-range backed away and signed one-year leases on their current rentals because they felt that the decrease in the loan limits will cause home prices to fall further over the next year. Both buyers were going to use FHA loans, so it really affected their ability to purchase.

The regional median has declined year-over-year for the past eight months, according to the DataQuick report. The last time any one of the six Southland counties posted an annual gain in its median sale price was in January, when San Bernardino logged a 1% year-over-year increase.

Theres still some optimism in the market, as many buyers realize the historically low interest rates wont be around forever.

In the greater Long Beach region I’m seeing buyers with a cautious sense of optimism – the low interest rates are very attractive and (buyers have) been waiting for some time, said Helen Najar, with ReMax Real Estate Specialists in Long Beach. The buyers I’m in escrow with now feel this is as good as it’s going to get and they have moved forward to buy.

Najar and fellow real estate agents shes spoken with feel there seems to be serious concern about government’s continuing intrusion into the housing market, she said. The unexpected consequences of regulations continues to cause major roadblocks to getting business done.

Paying a median $204,000, cash buyers purchased 29.4% of all Southland homes sold in October, up from 29.2% in September, and 27.8% a year ago. Cash purchases hit a high of 32.3% of sales this February, while the 10-year monthly average is 14.5%. Cash purchases are where there was no indication in the public record that a corresponding purchase loan was recorded.

The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,040 last month, down from $1,084 in September and $1,111 in October 2010. Adjusted for inflation, current payments are 55.4% below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 63.4 below the current cycles peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity remains high by historical standards but is lower than peak levels reached over the last few years. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

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In 2008, Congress stepped in to adjust conforming loan limits from $417,000 to $729,750 in an effort to stimulate the economy by making more money available for home buyers and enticing people to buy. Since then Congress has extended them every year through September 30, 2011. As it stands, effective October 1, 2011 it will cost home buyers more to finance a loan exceeding $650,500. This will affect many houses on the San Francisco Peninsula market.

“We are quite possibly facing a roadblock to any glimmers of recovery if this set-back takes place,” said Mary Ann Teixeira, a Burlingame real estate professional. “Buyers would need to come up with larger down payments and be able to qualify for higher mortgage payments. All mortgages backed by Federal Housing Administration (FHA), Fannie Mae and Freddie Mac, known as government sponsored enterprises, (GSEs) would be affected.”

Bay Area real estate will be hit hard by the change in loan limits when the conforming loan adjusts down to $650,500. Because of the high cost of Bay Area housing, purchasing a home often requires a loan in excess of $650,500. Given that jumbo loans generally carry a higher interest rate, monthly payments would increase and further hamper the buying power of potential new home buyers. Additionally, with the burden of a higher monthly mortgage on a household, businesses and services in the communities with homeowners who have less expendable dollars will suffer.

According to a recent study conducted by the California Association of REALTORS®, under the new GSE loan limits would impact the borrowing power of a potential Bay Area home buyer by $104,250. Projecting this onto 2012 home sales, 10.7% of San Mateo County’s home sales would be rendered ineligible under the new lowered GSE loan limit. Other Bay Area counties affected are Marin (12.2%), Contra Costa (11.5%), San Francisco (9.9%), Monterey (8.8%), Santa Clara (7.8%), and Alameda (6. 3%).

For additional information about reasons to use a Bay Area real estate agent or San Francisco Bay Area Peninsula real estate and relocation, call Mary Ann Teixeira at (650) 241-0318, or visit her website at www.maryannt.com.

About Mary Ann Teixeira

Mary Ann Teixeira is a licensed REALTOR® with McGuire Real Estate in Burlingame, California who specializes in relocation services, homes for sale, and luxury homes. She is a seasoned buyer’s agent who serves the San Francisco Bay Area Peninsula communities of Atherton, Burlingame, Cupertino, Hillsborough, Los Altos, Los Altos Hills, Los Gatos, Menlo Park, Mountain View, Palo Alto, Portola Valley, Redwood City, San Carlos, San Jose, San Mateo, Santa Clara, and Woodside.

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For the original version on PRWeb visit: www.prweb.com/releases/prwebburlingame_real_estate/peninsula_realtor/prweb8616223.htm

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/06/30/prweb8616223.DTL

Fannie Mae and Freddie Mac, the private mortgage lending entities under government conservatorship, are set to reduce their maximum conforming loan limit from the current $729,750 to $625,500 on October 1st. Bay Area mortgage broker Eric Leithliter of California Mortgage Advisors says this may adversely affect the Bay Area real estate market, making it harder for homebuyers to get loans and lowering home values. He recommends that people who have been waiting to buy act soon, before the loan ceiling is lowered.

When the financial crisis hit in 2008, the government-sponsored entities (GSEs) Fannie Mae and Freddie Mac tried to combat the tightening home lending market by temporarily raising the limit on conforming single family home loans to $729,750 [for the more expensive counties; some counties have a lower limit], an amount that has been renewed every year since. But in the current political climate, with a focus on reducing the national debt and encouraging private sector action, the federal government seems unlikely to renew the higher conforming loan limit. If congress allows the loan limits to drop, the highest conforming loan limits will go down to $625,500.

“If you have been sitting on the fence, thinking that rates are going to continue to go down, they may want to consider making a move soon. Waiting until later may limit your ability to get a low rate on a single mortgage loan, making it more expensive and time-consuming to buy,” says Eric Leithliter, a Bay Area financial advisor based in Walnut Creek.

Leithliter says that if the conforming loan limit is allowed to drop, it could a negative impact on the local housing market. Nonconforming loans carry a higher interest rate (typically 0.50% to 1.5% above rates for conforming loans), and private banks may be reticent to make large loans because their capital requirements are higher than GSEs like Fannie and Freddy. The likely effect for borrowers is to make credit more expensive and harder to get.

It would also be likely to cause home values to drop even further, which is bad news for sellers. According to the Oakland Tribune, over a quarter of all Bay Area homes are already underwater; if demand is decreased even further, it will be hard for the real estate market to make a recovery.

Leithliter also warns that many banks that use Fannie and Freddy to back mortgages may implement the $625,500 limit prior to the October 1st deadline, in order to process the last of their higher jumbo loans in time to qualify for the current financing rates.

“The signs are pointing to a tightening of the credit market in the near future,” says Leithliter. “Buyers who continue to wait around may come to wish they had acted sooner.”

For more information about the upcoming lowering of conforming loan limit and its impact on the market, or any of Eric Leithliter’s products or services, call him at 415-692-7415 or view him on the web at www.calmtg-ba.com. Connect with Eric Leithliter on Facebook at www.facebook.com/pages/Bay-Area-Mortgage-Guide/160527848509 and follow him on Twitter at http://twitter.com/mortgagecounsel.

About Eric J. Leithliter, California Mortgage Advisors, Inc.

Eric J. Leithliter is a Senior Residential Loan Officer at California Mortgage Advisors, Inc. He is focused on providing his clients education on the current financial market conditions and how this effects their mortgage options today and in the future. He began as a loan processor and underwriter and became an expert in all facets of the lending industry. As a Loan Officer, this background helps Liethliter construct complicated and difficult loans into successful loan closings. He continues to attend underwriting seminars that keep him abreast of all the changing requirements that lenders are implementing in today’s complex lending environment. Leithliter specializes in residential financing, private money financing, commercial financing, short sale and foreclosure transactions, FHA loans, credit analysis and repair, and jumbo mortgage loans in the Bay Area.

Eric J. Leithliter serves the San Francisco Bay Area communities of Walnut Creek, Orinda, Lafayette, Moraga, Alamo, Danville, as well as Marin County, San Francisco, Silicon Valley, and Sonoma County.

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For the original version on PRWeb visit: www.prweb.com/releases/prwebJumbo-Mortgage-Loan/Bay-Area/prweb8560737.htm

Article source: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/06/10/prweb8560737.DTL