The Jumbo-Mortgage Comeback

A recent article in the Wall Street Journal confirmed what we are seeing in the Jumbo Mortgage and Luxury Home arena.  During the financial meltdown, most banks quit underwriting jumbo loans and super jumbo loans entirely.  Thornburg Mortgage, a big secondary market player, saw their credit lines dry up and one of the biggest players in the jumbo market over the prior years eventually had to shut its doors.  Why is this all important to Luxury Home buyers, you may ask?  It is quite simple really.  As the Luxury home markets expanded during the tech/stock boom of the 90's and then the real estate boom of the 00's more and more buyers were lured into the market segment by utilizing financing, some of it highly leveraged.  With no financing available, those who needed to sell had to find cash buyers.  Obviously, the number of cash buyers was quite small and many were forced to give up their homes, putting more downward pressure on values.  Prices were way over-inflated and a correction was eminent, but the lack of financing made a terrible problem even worse. 

The good news from the banks is that jumbo financing is on the rise and more available.  The article mentions Wells Fargo and J.P. Morgan Chase but my experience is that ING has been real aggressive in offering jumbo financing and are quickly taking market share.  The affluent will recover as will everyone eventually and they have taken the stance that relationships developed now will pay off even more down the road.

Update on Desert Mountain club purchase by members

After several months of negotiations, the Letter of Agreement between the Desert Mountain Club members and the Developer has finally been presented.  Items involved in the transaction are:  Six golf courses, Clubhouses/Restaurants, Pools, Fitness center, Tennis courts, Options on Front Building/Real Estate office/Fairway office, Parcel 19, Parcel 1, Parcel 10, Northern properties (2,750 acres), 219 outstanding golf memberships, 261 outstanding Club memberships, & shares in water rights (4 RWDS/2  IWDS) and other items enumerated in the agreement.  The total cost to be $77.37mm.

What does this mean for each member?  For Equity Golf members, a one time assessment of $16,500 will be administered and monthly dues going from the present $850/month to around $1,200/month. 

This is predicated upon closing by the end of 2010. 

First Post

Greetings and welcome to our blog on the luxury home market.  I am doing this to give a balanced perspective on current market conditions in Paradise Valley and Scottsdale.  I say 'balanced' because the template for the news outlets appears to be one sided on the negative side.  A few years ago, the opposite was true.  As the market rocketed forward, no one who preached caution was given the time of day.  Now that the market has corrected (and continues to do so), stories emphasizing the negative abound and although there are has been positive signs over the past year, they have been generally ignored. 

Stats released by the government and local Universities lump everything together and distortions due to a lack of higher end sales can occur.  I will be posting statistics as well as utilizing a market conditions analysis designed by FNMA to hone in on the luxury market in particular. 

Thanks for reading, and welcome to my blog.

Chris