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Recently interest rates have dropped way down and may well drop even more. At the same time, Congress seems to be about to raise the amount of a conventional loan to somewhere in the $600,000 range in high priced markets such as ours. Taken together these two changes will have a very positive effect on the real estate market throughout the country and here as well.
In the foreclosure brouhaha facing the country, the area where we live and work was hardly touched. El Cerrito, Kensington, Albany, North Berkeley, the hills, the Elmwood and Claremont areas, Rockridge—are all very desirable areas in which to live. As a result prices are high and sub-prime mortgages are pretty much unheard of. The main element in slowing down the market in our area has been the lack of inventory. Prices have remained stable and even risen in some areas.
Certainly the possibility of getting a larger loan with lower interest will stimulate buyers. Although there have generally been more buyers than sellers in our market, many buyers have been holding back thinking that prices might fall. A conventional loan at a low rate effectively makes purchasing a given house at the same price it might have been before the rates dropped, a bargain. So the combination of lower rates and a higher limit on conventional mortgages may be good for both buyers and sellers in our area.
This year more than ever, timing and strategy are crucial. Buyers need to have stronger credit, income and assets than one year ago to qualify. Down payments need to be larger in order to get the best interest rate. Don't even think of making an offer on a home unless you are fully prepared and pre-approved. Sellers, make sure your agent has the experience to help you price your property accurately and then scrutinize the financing of potential buyers to avoid a cancelled sale. During the boom, an accurate list price was almost irrelevant and there are some successful agents who haven't been in business long enough to have worked in another kind of market.
The key words are preparation—yours—and experience—your agent's.
Jerry Longs's Previous Market News for East Bay Area Real Estate