The American people don’t stand united on very many causes these days, but the recovery of the housing market is one of them. After all, failure was tied to the unhappy fate of so many households that most of us would like to think that its good fortune would signal similarly widespread prosperity.
Well, the housing market is now limping again, although the signs of a total return to health are a good deal more promising in the upper than the lower echelons. The Wall Street Journal reports that jumbo loans—larger, higher-cost loans used to purchase luxury properties—are doing really, really well. A lot better than the rest of the housing market, which is still bogged down by foreclosures and underwater mortgages in many parts of the country.
But at least those Americans still struggling to make their mortgage payments on houses that are worth far less than whatever they paid for them before the crash have some good news coming their way: as of this approaching November, it will be easier for homeowners to conduct short sales. Meaning that those with underwater mortgages will not need to jump through so many hoops to sell their property for less than it’s worth. Progress!
Also, some cities in California are trying to use eminent domain to take over troubled mortgages—a plan that’s going to be fought tooth and nail by mortgage-holders, but could potentially help to turn the tide in beleaguered neighborhoods.
Of course, the surge in jumbo loans means that Americans are buying homes again, which should, ostensibly, buoy the market overall. Or foreign investors are buying homes here because our economy still looks better than their economy. But still, good news, right?
The Journal reports that lenders issued $38 billion in private jumbo mortgages during the second quarter of 2012, up 65 percent from a year earlier. The financing generally covers loans exceeding $417,000, with higher cutoffs in more expensive markets like New York.
Rates on jumbo loans now average 4.22 percent, generally a percentage point higher than regular loans, and homeowners must generally put 25 to 30 percent down.
Luxury home sales, defined by the National Association of Realtors as homes over $1 million, went up 19 percent in July from a year earlier, a trend that the Manhattan luxury market, with higher price points (of course), is at the forefront of.