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Jumbo Mortgage Market: Home Prices & Delinquencies

Looking at active property prices in the Jumbo mortgage range (this equates to the “top/first quartile” in Altos-speak) for the Altos 10-City Composite:

Altos 10-City Composite: Median Price, Price of New Listings & Price of Listings Absorbed since 1/1/2009

  • Asking prices of new sellers entering the market each week is well below all active sellers in this price range quartile – indicating new sellers feel the pressure to compete on price vs. existing sellers.
  • Over the past year, the new sellers are pricing close to the upper end of FHA-conforming limits.  At a listing price around $850k, there’s room for a 10-12% price negotiation, bringing a negotiated sold price for a buyer with 3% down below the conforming FHA loan limit of $729k.
  • Homes exiting the market (“listings absorbed”) are reflecting these upper end FHA loan limits – with exits pricing well under $850k since Spring 2009.

Seems to show that upper end sellers are pleading for mercy. The May 2010 Standard & Poor’s U.S. Prime Jumbo RMBS Performance Update released this week reveals distress for Jumbo mortgage-holders (free registration required to view the release):

After 36 months of seasoning, the 2007 vintage reported delinquencies totaling 17.83% of the current aggregate pool balance. In comparison, the 2005 and 2006 vintages had delinquencies of 3.93% and 11.84%, respectively, with the same amount of seasoning.

Graphically (pun intended…):

Source: Standard & Poor’s Ratings Direct “U.S. Prime Jumbo RMBS Performance Update: May 2010″

(Astute readers will recall articles from July 2009 and November 2009 on this topic.)

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