Today, we again find ourselves in need of creative financing.  Up-scale homes, requiring ’jumbo loans’ are not experiencing the same resurgence as the lower cost, “conforming” group of homes.  In fact, homes with prices over $700,000 are selling at a much slower pace, if they sell at all.  Their prices are still falling while lower priced, ‘tract’ homes are rebounding.   It’s all about the financing or, lack of it.

Lenders are requiring at least 20% down from the buyer on prices above $463,300.  With the ‘Jumbo’ limit of $729,750 and minimum of 20% down many buyers simply don’t have enough cash.  Previously helpful, second loans offered by sellers must be over and above the minimum 20% cash from the buyer. ”Willing sellers and qualified buyers” (without 20%+ cash) for jumbo sales are being held at bay do to a significantly tightened lending atmosphere.

Even if an upper-end home finds a buyer with a large down payment good luck in the home appraising.  Lender’s are now being required to accept only those appraisals with 2 comparable sales within the last 90 days.  So, with fewer comparable sales, and dropping prices many higher priced home sales don’t close due to very low appraised values.

However, the “Wrap” is making a come back (more properly called an “All Inclusive Deed of Trust” or A.I.D.T.).  A willing and capable buyer can pay the seller’s price and avoid the lender limits and appraisal constrictions.  Additionally, since there are no lender fees the money normally spent on closing costs can be added to the down payment.

In the last 30 days I proposed 4 AIDTs for stagnant Hollister and San Juan Bautista up-scale homes.  Morgan Hill and Gilroy ‘Jumbo’ homes could also benefit form an AIDT sale.

When one of these AIDT sales records there will be a new comparable property appraisers can use to justify the higher prices nice homes should bring.  THEN, we’ll begin to see the ‘Jumbo’ home sales moving toward their earlier values.  I love problem solving!

The Average Sales Price (ASP) increased 15.2% from May to June! Hollister’s ASP in June was $287,900 whereas a month earlier the average was $249,900.  Compared to June 2008 however, Hollister’s ASP was down 14.7% .

A valuable indicator: the “Closed Sales to New Listings ratio” (CS:NL) is actually in conflict with the jump in ASP.   June’s CS:NL ratio dropped to 56.9% from May’s 89.6%.  We saw the same drop in Gilroy for June however, their ASP also dropped.   The harbinger of things to come, may lie in the nice increase of Hollister’s CS:NL over 6/08’s ratio of 40.2%.  Just wait and see.  As our CS:NL ratio increases so will our ASP.

Nearby Morgan Hill’s homes experienced an increase in both the CS:NL ratio and ASP.

My strong advice: if you plan to buy a home this year do it now.  We see nothing that suggest prices will drop or even level off in the foreseeable future.  Likewise I think interest rates for home loans are about as low as they are going to get.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

As you would expect, Gilroy’s Average Sales Price (ASP) of $395,900 dropped 3.8% in June from the month prior ($411,500).  Likewise, the ASP was down 32.5% from 6/08’s $586,800.

While  interest rates and prices are still down buyers who want the American Dream, Gilroy-style, should jump on the shrinking inventory of homes.  Gilroy’s home prices will go up.

Down the road in Hollister the CS:NL ratio also dropped from May to June but the ASP went UP 15.2% in that same month!   Compared to ‘08 Hollister is following Morgan Hill and Gilroy’s trend of an increasing CS:NL ratio.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

The best hint of what’s to come is the nice increases in CS:NL.  As that indicator continues to increase the ASP is bound to go up.

Next door: Gilroy’s activity seems to be headed in the right direction.  While June’s CS:NL ratio dropped slightly from May to June, June’s ratio nearly doubled over last year’s figures.  The Average Gilroy Sales Price was lower in June than May by 3.8% and down 32.5% from a year ago.  Stay tuned however.

As I update these ‘09 figures I predict an increase in ASP in both Morgan Hill and Gilroy.

For your own study of the actual Multiple Listing Service figures go onto “Client Portfolio” on the navigation bar.  There you can see a great deal of real-time data.  Enjoy.

Contributing to this hot market: New Listings of homes for sale in Hollister are down 27.9% so far this year over last year.  Last month alone we saw a drop in New Listings of 29.5% over 5/08.

The Gilroy housing market is experiencing a similar recovery with a 128.9% increase in closings and a 32.7% decrease in New Listings.

Make sure your Realtor knows all the current methods in getting an offer accepted.  You are going to need that if you want to buy a home here in Hollister.