fat_lazy, you’re correct jumbo loans aren’t going to “vanish”..I don’t think anyone is saying that, but demand is going to contract by probably 95+% to a trickle. This will virtually halt activity in the region, infact that is what is happening before our eyes right now.
How many well doc’d, 20% down, high credit score, high income buyers do you know that can buy $600k+ properties?? 20% down in itself is $120k cash + fees. How many have this kind of liquidity? The person who has this much liquidity is most likely already a homeowner or not looking to buy at the bottom end of the market, in that case who is going to buy the $500-600k “starter” homes? As for move up buyers with a lot of equity who is going to buy their 600k homes if they cannot find qualified buyers for their place first? And what makes you think that move up buyers are going to buy because they may as well wait for prices to come down to get a better tax basis.
Nothing adds up here except one reality…the market is going to crash and burn like no tommorow so that it is back to fundamentals that were in existence before this mania.
Remember that this SEVERE credit crunch is only a few weeks old and we do not currently know the effects until new reports come out. Wait a month or two and we will see SHOCKWAVES through this market because of this. One doesn’t have to be a rocket scientist to figure it out.
