New Mortgage Qualification Rules

New rules are  being proposed by the Consumer Financial Protection Bureau (CFPB) that are likely to have impacts on the ability of buyers to obtain a mortgage.  The CFPB, created as a result of the financial reforms enacted by congress after the near financial collapse of 2008-2009, is setting out requirements that most banks (although not credit unions or "community banks") will have to follow to determine if prospective borrowers actually have the ability to repay their loan.

The most prominent feature of the new regulations is the requirement that the lender must determine that a borrowers total debt payments including their home mortgage, student loans, credit card payments, and child support not exceed 43% of their income.  There's a good itemization of other features in a Washington Post article.

Some of the new rules are likely to make it more difficult for prospective home buyers to secure a mortgage, especially in high cost markets like the Bay area.

It's too early to know what the actual effect on borrowing will be but one thing is almost certain -- the already cumbersome process some of the big bank lenders use today is likely to get even more convoluted, requiring more documentation, and will take even longer.

It's been a busy quarter

Since blogging isn't my primary occupation, I'll use that as the best excuse for the long time since our last update.  Since our last post we've had four closings -- a condo in Sausalito, two commercial condos in San Francisco, and a home in Pacifica.  And our experience is borne out by the broader sales statistics our monthly reports, the latest version of which will be available at boldsf.com in the next few days.  In the meantime, here are some highlights:

• There has been a definite shift in pricing toward the high end of the market.  
• The percentage of homes (condos and single family homes) selling for under $1million has fallen to 74% this year, down from almost 80% last year.  The last time this percentage was this low as back in 2008.
• 6% of sales in 2012 were over $2million.  In 2011 that percentage was 5%.  The last time the high end of the market represented this much of the total market was, again, back in 2008.
• The average sales price of a 2 bedroom, 2 bath condo in San Francisco breached the $1million barrier in December reaching $1,019,000.  This tops the three previous months where we've seen a steady climb in selling prices from $889,000 in September, to $893,000 in October, to $995,000 in November.  

And this does not appear to be a statistical anomaly -- the median sales price shows a similar steady increase. For the entire year 2012, 885 2 bedroom, 2 bath unit were sold. You have to go back to 2004 to see a greater volume of sales.

September Sales Results



1 bedroom, 1 bath condos, San Francisco

 We've just posted September sales reports for San Francisco and Marin counties.  These are the reports we do each month.  We focus on specific configurations of homes and condos that are representative of the market as a whole.  Our survey covers roughly 60% of all residential properties in the two counties.

Generally, average sales prices continued their upward trend while the number of properties sold in September is lower compared to the last three months.

You can get the full reports on our web site:  www.boldsf.com and click on "Statistics" where you'll find other reports as well.

Foreclosures Sharply Down

Notices of Default, the first step in the foreclosure process, are down sharply the last two months:

CA - Foreclosure Filings

For San Francisco county the trend is the same:

06075 - Foreclosure Filings

Similar declines in Notice of Default filings can be seen in all of the immediately surrounding counties (Marin, Contra Costa, Alameda and San Mateo) at the Foreclosure Radar site.

Will this have any bearing on the election?

The California Association of Realtors put out the following yesterday.  (The link at the bottom is to the original Trulia press release)

(Click here to see the map from the Washington Post)

Asking prices up year over year in six out of seven swing states
Asking prices on for-sale homes increased 2.5 percent in September, according to the latest findings in the Trulia Price Monitor. Excluding foreclosures, year-over-year asking prices rose 3.5 percent. Meanwhile, asking prices rose 1.6 percent nationally quarter-over-quarter, seasonally adjusted, and 0.5 percent month over month, seasonally adjusted.

Nationally, rent gains continued to outpace home price increases in September, rising 4.8 percent year-over-year. Among the largest 25 rental markets, year-over-year rents rose the most in Houston and Miami, where they climbed more than 10 percent. Strong job growth has pushed up rental demand in Houston. Rent increases have cooled most in San Francisco, from 14.5 percent in June down to 7.2 percent in September.

More info