The year 2013 brought continued prosperity to Pacific Union, and we are extremely proud of our real estate professionals, who helped our company achieve a number of significant milestones.
In 2013, Pacific Union posted sales volumes of $5.5 billion, the second consecutive year we’ve increased sales volume by more than 40 percent. The company has doubled its sales volume in two years, growing more than twice as fast as the overall market in 2013. We also increased our revenue to nearly $130 million, up 41 percent from 2012.
Pacific Union enjoyed sales growth at every price point but shined brightest in the high end of the luxury-home market. We lead the market in sales volume in the $1 million-to-$3 million range in the six-county region consisting of Alameda, Contra Costa, Marin, Napa, San Francisco, and Sonoma counties.
And in the final quarter of 2013, Pacific Union moved up to the No. 1 sales-volume slot in the $3 million-plus range, closing out the year with $750 million in total sales above that price point.
Growth also came in the form of market-share gains. The company continued its upward trajectory in the key Marin County region, moving into the top position with an 18.2 percent share of the market. Market share also increased in Contra Costa, San Francisco, and Sonoma counties. In Alameda County we have the second largest market share, and in Napa County, we rank No. 3.
Across those six counties, Pacific Union is now second in sales volume despite working with only about half the number of real estate professionals as the market leader. And there’s a simple reason for that: Our elite real estate professionals are the Bay Area’s most productive.
In 2013 Pacific Union real estate professionals ranked No. 1 in sales volume per capita in the six-county Bay Area region. Our real estate professionals also placed first in the quantity of total transactions closed per professional.
According to Pacific Union CEO Mark A. McLaughlin, the company’s dedication to recruiting only Northern California’s best and brightest real estate professionals has been instrumental in driving its exceptional growth over the past three years.
“Our organization is built on our principle of ‘managing to the top,’” McLaughlin says. “Our recruiting efforts are by invitation, not application. We cater to the finest professionals in the market and invest daily in programs, technology, and resources to enhance their efficiencies and separate them from the ordinary. Our results in the marketplace continue to support our vision.”
The year 2013 also saw the company launch its presence in Silicon Valley via a Menlo Park office. And in November, Pacific Union expanded in Sonoma County by opening an office in Petaluma and recruiting 18 of the region’s top real estate professionals.
The industry has taken note of McLaughlin’s role in leading the company to such robust growth. Recently, he made the Swanepoel SP200, a list that recognizes 200 of the residential real estate industry’s most powerful people. In November 2013, McLaughlin received RISMedia’s Real Estate Leadership Award, which honors the country’s top CEO for extraordinary leadership and innovation.
Pacific Union itself also earned accolades from both the real estate industry and media in 2013. In October we were named one of the 100 fastest-growing companies in the Bay Area, just two months after making the prestigious Inc. 5000 list.
Earlier in the year, the San Francisco Business Times ranked us third largest residential real estate company in Northern California; RISMedia named us to its PowerBroker list; and REAL Trends ranked us third in the U.S. for average home sales price.
The crowning achievement in Pacific Union’s extraordinary year came in December, when McLaughlin received an invitation from the U.S. ambassador to China to attend an exclusive meeting at the ambassador’s residence in Beijing. There, McLaughlin met with 10 of China’s wealthiest individuals about potential investments in U.S. real estate.
The year 2013 brought continued prosperity to Pacific Union, and we are extremely proud of our real estate professionals, who helped our company achieve a number of significant milestones.
Home prices in the Golden State showed the second largest year-over-year gains in the county in November, according to CoreLogic’s recently released Home Price Index.
California home prices, including distressed sales, increased 21.3 percent from November 2012 to November 2013, trailing only Nevada. Not including distressed sales, home prices in the state grew 17.6 percent in that time period, also No. 2 in the country.
Nationally, home price growth was more modest, with year-over-year gains of 11.8 percent including distressed sales and 10.4 percent excluding them. According to CoreLogic, November marked the 21st straight month of yearly home price increases.
The company predicts that 2013 will be the healthiest year for appreciation since 2005.
January 3, 2014 – By: Pacific Union
The year 2014 is just a few days old, so homebuyers and sellers still have time to make some practical resolutions for the new year. And remember to stick to them in the weeks and months ahead!
- Get your financial house in order. That means paying off credit cards and other debt so that you meet your mortgage lender’s qualifications. Anything you can do to improve your credit history and raise your credit score will help you get a better interest rate.
- Save as much money as you can for a down payment. This may be difficult if you focus all your efforts on the previous resolution, but both strategies are vital to save you money over the life of your home loan.
- Look at your finances and determine how much you can afford to spend. No matter how gorgeous it may be, you’re not going to enjoy a home you can’t afford.
- Educate yourself on the real estate market where you hope to live. What neighborhoods and homes can you afford? What parks, retail districts, and other amenities are nearby? If you have children, learn as much as you can about the local schools.
- Talk with a real estate professional who is familiar with your desired community. Learn the intricacies of buying a home — the paperwork, estimated timelines, making a bid (and multiple bids), and closing a sale.
- Strategize your moving plans far in advance. Familiarize yourself with moving and storage options. Eliminating household clutter now will save you moving headaches later.
- Finish any home-improvement projects you started but haven’t completed. Maybe you can live with bare drywall panels in that extra room upstairs, but it’s a total turnoff to a prospective buyer.
- Speaking of home-improvement projects, take a look around and determine what quick fixes and changes you can make that will add value to your home. A new stove? Fresh paint in the living room? A landscaping upgrade?
- Schedule a home inspection to help get your property ready for sale and ensure there will be no surprises.
- Talk with a real estate professional who is familiar with your community. Learn what your home is worth and what strategies will help it sell quickly. Familiarize yourself with the home-selling process.
- Learn the basics of home staging. If desired, your real estate professional can refer you to a professional stager.
- Plan your exit strategy. Are you buying your next home at the same time you’re selling your current one? Familiarize yourself with moving and storage options.
Marin’s real estate market neared a strong close for 2014 as the price of a single-family home jumped 13 percent in November, according to the Marin County Assessor’s Office.
The median price for conventional detached dwellings clocked in at $875,000, compared with $775,000 in November 2012, the assessor reported. Sales dipped five percent, with 185 single-family dwellings selling compared with 195 last November.
Seventy condominiums sold in November 2013, compared with 54 in the same month in 2012, and the median condo price increased from $330,000 in November 2012 to $429,500 in 2013.
The double-digit leap in the median price continued a year-long trend of increases. Real estate agents in Marin predicted a good year in 2014, though not at the same pace as this year.
“In general, the market is healthy. It’s a very positive market,” said Peter Richmond, an agent with Pacific Union International in Mill Valley. “I think prices will continue to rise (in 2014), just not as steeply as happened in the first half of 2013.
“In April, May and June, some homes were up 20 percent or more. I don’t think you are going to see that as a general rule (in 2014),” Richmond said. “It’s going to depend a lot on how quickly interest rates continue to rise and how far they go.”
Richmond and other agents repeatedly referred to the first half of 2013 as a boom period, and seemed to agree that interest rates were the factor that slowed things down somewhat in the second half.
“The rising interest rates are moderating things a bit. Right now they are probably a full percentage point over what they were a year ago today,” said Richmond, who was a banker for 25 years before becoming a real estate agent. “They’re (rates) supposed to continue to go up.”
When interest rates go up, so do a potential buyer’s monthly payments, edging some out of the market who are already stretching to make a purchase.
Just as a matter of perspective, current rates are by no means high in terms of the overall picture.
“These are still historically low interest rates,” said Mary Kay Yamamoto of Re/MAX of Central Marin in San Rafael. “Having been in the business since 1980, I have seen interest rates as high as 16 percent for a first mortgage. Right now they are hovering around 4.25 to 4.50 percent; on any given day, it can shift.”
Yamamoto attributed the five percent November sales drop to what she called “buyer fatigue.”
“For much of 2013, multiple offers on homes and bidding wars were a regular occurrence. Some buyers made so many offers and didn’t have an offer accepted. They had a difficult time competing and they got discouraged,” Yamamoto said.
Jean Mastagni, a broker associate with Coldwell Banker in Mill Valley, attributed the sales drop to the time of year.
“It’s historic. The holidays always slow down the market,” Mastagni said.
The broker associate described the market crash that began around 2009 as unprecedented in Marin.
“I’ve been in the business since the 1970s and have seen every phase. We never had such a long dip in prices as during the five years before 2013,” the broker associate said, adding that 2013 “started with a bang and everything went up. It came back in every price range.”
Bob Ravasio, a Coldwell Banker agent in Greenbrae, elaborated on Mastagni’s comment.
“The annual sales price in Marin increased for some 40 years with just one exception, decreasing around 3 percent in 1990 and 1991, based on numbers from the MLS (multiple listing service),” the agent said. “In the 2009 recession, the annual sales price went down as much as 20-25 percent.
“What’s happening now is as quickly as the bottom fell out in 2009, in 2013 you saw a snap back in the other direction. We’re almost back to where we were in 2006, 2007. We’re getting close to that. I don’t think anyone saw this price recovery happening as fast as it did,” Ravasio said.
One of the principal factors spurring the recovery: The dearth of homes on the market.
“You’re seeing the laws of supply and demand play themselves out. Demand is very strong, and there’s not that much inventory. So what remains continues to get bid up,” the agent said.
Patti Cohn, a broker with Pacific Union, echoed Ravasio’s sentiments.
“Right now around 49 percent of the homes on the market in Marin are in contract, meaning that a buyer has purchased the home and is waiting for the sale to close,” Cohn said.
“If you have 100 homes on the market and 49 of them are in contract, that’s an unusually high number. Anything over 30 percent is considered a seller’s market,” the broker said. “If it’s 25 to 30 percent, it’s a normal, neutral market.”
As more homes come on the market and supply increases, this should temper price increases, Ravasio said.
“What you’re seeing now is fairly characteristic of what you would expect to see coming out of a low period,” Ravasio said. “Buyers are always leading the market; they went away in 2009 and came back strong in 2013, and sellers haven’t caught up yet.
“I think we are going to see more homes on the market in 2014,” Ravasio said. “You will see prices increase, just more modestly.”
Hot on the heels of the overall real estate rebound, Marin’s luxury home market is coming back, with sales up 38 percent in 2013 and upbeat predictions for 2014 from market experts.
In 2012, according to Bay Area Real Estate Information Services, a North Bay multiple listing service, 384 luxury single-family homes and luxury condominiums sold for $1.5 million or more in the county. That number zoomed to 532 in 2013.
“Sales in the luxury market took longer to come back than sales for homes overall, but we saw dramatic gains in 2013,” said Tracy McLaughlin, a luxury property specialist who is a major shareholder in Pacific Union International and did $113 million in sales in 2013. Sales in the general market heated up toward the end of 2012.
High-end homes were by no means immune to the precipitous sales drop that began in 2008. Only 234 such homes sold in Marin in 2009, the year the luxury market reached its nadir.
“The luxury market suffered to an even greater extent,” said Susan Hewitt, principal of SHLuxuryGroup.com, affiliated with Coldwell Banker Residential Brokerage. “People stopped purchasing up. Everybody, no matter what their financial situation — even the high net worth clients — pulled back because of the uncertainty of the economy.”
Starting in the first quarter of 2013, the luxury market began to see gains, and momentum built throughout the year. Now, “just using the MLS, there are multiple buyers on so many properties. Prices have been driven by the demand and the shortage of good inventory,” McLaughlin said.
“What we’re seeing in terms of available inventory is that good new inventory moves very fast because there’s such a demand,” said Patricia Navone, an agent with Pacific Union International and Christie’s International Real Estate. “Inventory” refers to properties up for sale.
“A Tiburon house came on the market Dec. 30 for $3.5 million. It went into escrow on Dec. 31,” Navone said. This means that it took less than 24 hours for an offer to be made and accepted and a contract signed.
At the same time, McLaughlin said, “it’s still a compartmentalized market,” with the lower end of the luxury market seeing more recovery. “The price is still a very important determining factor.”
“The recovery in the luxury market is very active at the lower end of the market, between $1.5 and $3 million,” Hewitt agreed.
More expensive luxury homes constitute “a very unbalanced market — a buyer’s market,” Hewitt said.
“From $4 million to $6 million, there are 48 homes listed on the market now. Only three of them are in escrow. From $6 million up, there are 26 currently listed, and only three are in escrow. Over $10 million, there are nine active listings and zero in escrow,” Hewitt said. “The recovery in the luxury market is working its way up.”
“Even when there’s supply, if something is not priced right, people are not going to buy it. Even if it’s five percent overpriced, they’re not going to buy it,” McLaughlin said. “People are not going to make the same mistakes they made in 2005 or 2006. They are going to make a prudent purchase.”
High-end buyers have become more finicky about what they purchase, just like those buying under $1.5 million, but for different reasons. For many lower-end buyers, a house has to be “turnkey,” meaning that no repairs are needed. For these buyers, it’s because credit is tight and it would be hard to get a loan to do the work, agents said.
“In this area, people always believed real estate would do nothing but increase (in value),” Hewitt said. “But after the recent downturn, people at all ends of the market are more cautious because this (the downturn) went on for five years. Before, you thought if you made a mistake, in three or four years you could turn around and sell it. But now they don’t have that certainty,” the agent said.
“With a discretionary market, the buyers are looking for things to be perfect,” said Marti Grossman of Alain Pinel in Corte Madera. “At the lower end, they are so desperate to buy they are willing to overpay, whereas at the higher end they have the money to pay but they want value as well.
“I had one buyer who said, ‘The family room’s too far from the kitchen, the pool is too far from the house. If I’m going to spend this amount of money I want it to be perfect.’
“They choose perfection. It’s what they expect,” Grossman said.
Just as with the overall market, the agents agreed there is a dearth of homes available for eager buyers.
“There’s a lot of pent-up demand,” Navone said. “I think some people sat on the sidelines for a while. They were watching, and then they started to see investors coming in at the low end of the market last year and the high-end people decided, ‘Now’s the time.'”
“The industry might suffer more this year from lack of supply than pricing issues,” McLaughlin said.
The agents were upbeat in their predictions for 2014, though none believed the jaw-dropping 38 percent sales increase would hold steady.
“I think we’ll see an increase in 2014. Now, how much is still up in the air but there’s a lot of demand for those luxury properties,” Grossman said.
“I think we have had our big lift, and so, with the proviso that we have the inventory, there will be an increase in 2014 over 2013, but probably not that dramatic of an increase,” Navone said.
These six properties carry nine-figure price tags — but their sale prices may end up being quite a bit lower.
At least a half-dozen homes in America are priced at $100 million or more. The question is which — if any — will actually sell for nine figures in 2014?
The $100 million sale seems to have become an annual rite of passage for the luxury real estate market since the end of the financial crisis, a number that seems to sum up both the rising wealth of the super rich and their growing appetite for trophy properties.
In 2011, Yuri Milner bought a mansion in Los Altos Hills, Calif., for $100 million. In 2012, Stan Kroenke bought a $132.5 million Montana ranch. And in 2013, a mansion in Woodside, Calif., sold to an unnamed buyer for $117.5 million.
There is no shortage of homes officially listed for $100 million or more. And there are even more $100 million-plus “whisper listings” — homes that aren’t publicly on the market but are quietly seeking buyers at that price.
Yet most homes priced at $100 million or more end up selling at a fraction of that price. The Versace mansion inMiami, also known as Casa Casuarina, was on the market this year for $125 million. It sold at auction for $41.5 million. The Candy Spelling Estate in Bel-Air, Calif., was listed for $150 million but sold to heiress Petra Eccelstone for $85 million.
Here are some of the candidates, and their likelihood to break the $100 million mark next year.
Copper Beech Farm, Greenwich, Conn. Asking price: $140 million.
Copper Beech is a stunning piece of land, with 50 acres and 4,000 feet of water frontage, in one of America’s richest neighborhoods. But brokers say it’s mainly a development play, because the house is not all that spectacular. The question is whether a developer would be able to spend $100 million, build homes on the site and still make enough of a return.
Owlwood Estate in Holmby Hills, Calif. Unofficial asking price: $150 million.
California seems to be the land of $100 million sales recently, and this home could be a contender. It’s not officially listed, but brokers say the Tuscan estate, with 10 acres and a classic 12,000-square-foot mansion, could well trade for nine figures.
The de Guigne Estate, Hillsborough, Calif. List price: $100 million.
This 47-acre property has been owned by the same family — the de Guignes — for more than 150 years. The 16,000-square-foot home and grounds are just 20 minutes from San Francisco, making it ideal for a newly minted tech billionaire or foreign buyer interested in a foothold in the tech world.
Steve Cohen Duplex, New York City. List price: $115 million.
Embattled hedge fund billionaire Steve Cohen is selling this massive duplex at One Beacon Court in Manhattan. The apartment spans about 9,000 square feet with double-height windows and big views of the city. There are more and more sky-high duplexes coming on the market in the city, but brokers say Cohen’s pad is a solid contender for a nine-figure sale.
The Residence at River House, New York City. List price: $130 million.
River House is an unusual offering, to say the least. It’s a five-story building that serves as a private club and would need a huge investment to turn into a new private residence. But it’s a colossal 62,000 square feet and has a riverfront garden and 62-foot indoor swimming pool. Probably only a Middle East royal or a Russian oligarch would consider the purchase.
Crespi Hicks Estate, Dallas. List price: $135 million.
Private-equity chief Tom Hicks is asking $135 million for his 25-acre estate in Dallas. It’s a unique property, with more than 40,000 square feet of living space. But breaking the $100 million would be a big leap in the Dallas market.
December 20, 2013 by Pacific Union
From left to right: Pacific Union CEO Mark A. McLaughlin, CIRE CEO Bonnie Sellers, Pacific Union real estate professional Betty Sun Wong, and Better Homes & Gardens/Mason McDuffie real estate professional John Yen Wong enjoy themselves at Art Miami.
In a move that’s certain to strengthen bonds between the luxury real estate sector and the fine-art world, Pacific Union partner Christie’s International Real Estate (CIRE) recently sponsored the Art Miami fair. For the second straight year, CIRE was named Art Miami’s “Official Luxury Real Estate Partner.”
Now in its 24th year, 2013’s Art Miami attracted a record 72,500 attendees — including collectors and art-world luminaries — and 400 members of the international press. CIRE’s sponsorship of the early-December event enabled Pacific Union and other Christie’s affiliates to showcase more than 14,000 luxury homes to the many high-net-worth individuals in attendance via a prominently located booth.
Given Christie’s long heritage in the fine arts, CIRE’s sponsorship was a natural fit.
“I was extremely pleased to have Pacific Union join us for this prestigious event,” said Rick Moeser, CIRE senior vice president and regional manager of the company’s Southeast U.S., Caribbean, and Latin America regions. “With our real estate network being the only one of its kind owned by a fine art auction house, we have a firm grasp of the results-driven excellence and quality service that are necessary in cultivating and sustaining connections between individuals of this caliber.”
Pacific Union CEO Mark A. McLaughlin traveled to Miami to attend the event, as did San Francisco-based Pacific Union real estate professional Betty Sun Wong. Bonnie Sellers, CEO of CIRE, joined them in South Florida.
Pacific Union enjoys an exclusive relationship with CIRE in many Northern California regions — including San Francisco, the East Bay, Marin County, and Wine Country — enabling the firm to market its Bay Area clients’ homes to affluent buyers across the globe.
As the turn of the year draws closer, the discussions of “New Years Eve plans” heighten. Parties, champagne, music, attire, the ball-drop, fireworks – all things usually involved in the discussion. In the Bay Area, it is well known that when the clock strikes midnight (three hours after the ball drops in NYC) fireworks erupt in San Francisco. The city boasts one of the best waterfront New Years fireworks shows in the country – and many people flock from all over the Bay Area and from around the world, so scouting out a viewing point in advance is necessary.
The fireworks will begin at 12:00 AM on January 1st, 2014. They will be set off from barges 1,000 feet into the San Francisco Bay just south of the Ferry Building near Pier 14 – with arguably the best backdrops for NYE fireworks, the Golden Gate Bridge and the Bay Bridge, depending on where you watch from.
The main show is best viewed from the Embarcadero between Mission and Folsom streets, where background music is played to go along with the firework show. With this perk, this is of course where the crowds gather. If elbow to elbow crowds and hours of waiting after the fireworks end to get back home sound like a fantastic New Years Eve – this is the place to watch. Free, family-friendly, and alcohol-free.
If, however, you like bring in the new year with a glass of champagne and room to breathe, I’ve put together a short list of other memorable places to watch the New Years Eve fireworks in the Bay Area and bring in 2014 with a bang.
1. Treasure Island
Located in the middle of the bay, Treasure Island may boast an even greater viewpoint than the Embarcadero. Imagine viewing the spectacular firework show with both bridges in view and the city skyline. Sounds picturesque.
2. On the Water
Yep, I said it. Watch the fireworks from the water. Hop aboard a New Year’s cruise and enjoy the evening floating around the bay enjoying lavish drinks and snacks. There are many options for party boats – find the one that, literally, floats your boat. I’ve gathered a few options: Family Fireworks Cruise, Moonlight Fireworks Cruise, Hornblower Cruise, New Years Cruise.
3. Twin Peaks
Looking for a quiet place for just you and your hunny? Hop in the car and drive to the second most elevated point in the city – Twin Peaks. Although the fireworks may be tiny from this vantage point, here, you are sure to have much more privacy.
Wherever you decide to ring in the New Year, please celebrate safely. Never drink and drive, and always respect the city in which you celebrate and the people around you. Lets make 2014 the best year yet.
By CHRISTOPHER S. RUGABER, AP Economics Writer
Updated 12:04 pm, Wednesday, December 18, 2013
In this Thursday, Nov. 14, 2013 photo, construction continues on a new single family home in Mount Lebanon, Pa. The Commerce Department reports the pace at which builders broke ground on homes in November on Wednesday, Dec. 18, 2013. Photo: Gene J. Puskar, AP
WASHINGTON (AP) — U.S. builders broke ground on homes at the fastest pace in more than five years, strong evidence that the housing recovery is accelerating despite higher mortgage rates.
The Commerce Department said Wednesday that developers began construction on houses and apartments in November at a seasonally adjusted annual rate of 1.09 million. That’s 23 percent more than October’s pace of 889,000 and the fastest since February 2008, just a few months after the recession began.
Construction of single-family homes jumped 21 percent to an annual pace of 727,000, also the highest in more than five years. Apartment construction soared 26 percent to a 354,000 annual pace.
Permits for future building slipped 3 percent to just over 1 million, down from 1.04 million in October. The drop reflected a decline in apartments, which can be volatile. Permits for single-family homes rose.
“Evidently, builders in the field are genuinely confident about the outlook for sales of new single-family houses, despite the rise in mortgage rates,” said Pierre Ellis, an economist at Decision Economics.
The housing market has been improving steadily since early last year, but construction had leveled off this summer after first reaching a 1 million annual pace in March. Last month’s surge comes as mortgage rates remain about a percentage point higher than they were in the spring. That suggests home building will boost economic growth in the final three months of the year.
The average rate on a 30-year mortgage fell to 4.42 percent last week. That’s down from a peak of 4.6 percent in August.
Rates jumped by more than a full percentage point after Federal Reserve Chairman Ben Bernanke first suggested in May that the Fed would pull back on its $85 billion bond-buying program before the end of the year. The Fed concludes a two-day meeting Wednesday, but most economists expect it won’t start reducing its purchases until January or March.
Home construction soared in the Midwest and South, while it fell in the Northeast and rose modestly in the West.
The surge comes as homebuilders are more confident. The National Association of Home Builders/Wells Fargo builder sentiment index, released Tuesday, matched an eight-year high first reached in August.
Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to NAHB statistics.
Future Bay Area homebuyers will want to keep an eye on real estate news in the coming months, as a proposed change to mortgage regulations could cost them many thousands of dollars in added expenses and higher down payments.
The change would lower the conforming loan limits for mortgages guaranteed by Fannie Mae and Freddie Mac, forcing many buyers in high-price regions such as the Bay Area to secure so-called jumbo loans — private financing that requires higher down payments and credit scores and, typically, heftier interest rates and fees.
The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, last week postponed a decision to reduce the conforming loan limits after fierce objections from state and national real estate associations. But it hinted that the stricter limits will be in place by the end of 2014.
Conforming loans are currently capped at $417,000 across much of the country, although in costlier regions such as the Bay Area the maximum loan amount limits are higher.
Fannie Mae and Freddie Mac guarantee mortgages up to $625,000 in San Francisco, Alameda, Contra Costa, Marin, and San Mateo counties, and up to $592,250 in Napa County and $520,950 in Sonoma County. FHA loans have higher limits: $729,750 in San Francisco, Alameda, Contra Costa, Marin, San Mateo, and Napa counties, and $662,500 in Sonoma County.
Jumbo mortgages generally carry steeper interest rates than conforming loans because issuing banks assume more risk without federal loan guarantees. But in an unprecedented twist, interest rates for jumbo loans have matched conforming loans in recent months, or even posted slightly lower rates. However, the added fees and higher down payments and credit score requirements are still in place.
The FHFA has proposed lowering the standard conforming limit to $400,000, and to $600,000 in high-price regions, pushing even more homebuyers in the Bay Area into jumbo territory.
Ken Harney, perhaps the nation’s best-known real estate columnist, wrote recently that the FHFA changes would usher in a much more challenging mortgage landscape for many buyers and sellers in 2014.
His advice echoes the words of wisdom we’ve been repeating here at Pacific Union in recent months: If you’re considering buying a home, you’ll likely save thousands of dollars by taking action sooner rather than laterbecause of rising prices and interest rates — and now the increasing likelihood of jumbo loans.
The bottom line, according to Harney: “If you’re thinking about buying — or selling — a house with an above-average price for your area next year, think jumbo mortgages. They may be your main, or only, financing option.”