This post explains why, if you own a high-end home, you shouldn’t necessarily “wait for the economy to recover” so you can get your price, unless you’re prepared to wait a very long time.
Keith Jurow over at the Real Estate Channel recently wrote a compelling article that relates specifically to everything I’ve been talking about for a while now. Make sure you read the full article.
As jumbo mortgage defaults have skyrocketed in the last two years, banks have raised down payment requirements for new loans and sharply curtailed the total number of jumbo originations. According to Lender Processing Services . . .
66,000 jumbo loans were originated nationwide in March 2007. In March 2010, a mere 13,000 were closed.
The drying up of jumbo mortgage money has made it extremely difficult to sell almost any California home which is encumbered with a jumbo mortgage. That has put tremendous downward pressure on prices for these homes.
If you want to sell a high-end home and preserve what equity you still have, then
- sell sooner than later,
- be flexible and willing to offer terms in one way or another, and (unless money is not an issue)
- don’t get yourself in a negative cash flow situation by leasing your property out instead of selling it . . . not a good idea heading into uncertain economic times
If you’re a buyer that can afford a luxury home, then just know that there are many opportunities for you to buy without getting a new bank loan if the existing financing is reasonably attractive.