Mortgages still available despite credit crunch
Despite a gruesome economic downturn sparked by the collapse of the national real estate market, and Massachusetts home-sale prices sinking to a six-year low in August, JP home-sale prices are at an all time high, according to the Warren Group.
So far this year, the median sale price for condominiums and single-family homes is $365,000. That is the highest it has ever been.
At $335,875, the median price for condos is at an all-time high as well. The median single-family home sale price is $502,000, close to the 2006 peak of $520,000. The Warren Group compiles and publishes New England real estate data and publishes Banker and Tradesman newspaper.
Despite the recent credit crunch, it is also still possible for qualified buyers to get mortgages at decent interest rates, local brokers and real estate agents told the Gazette.
Basic Econ 101 tenets seem to have done well by the JP housing market.
“Demand has shrunk, but supply has shrunk enough to absorb the lower demand,” said Mary Hannon, a real estate agent with Prudential Unlimited.
The bulk of the market is condos, which are affordable to first-time homebuyers, she said. Additionally, JP is close to major medical institutions, particularly in the Longwood Medical Area, and has a reputation as a hip, friendly neighborhood with an abundance of green space. These factors make it attractive place for young professionals to live.
“I would go around to open houses this year and my clients would comment that they have the same medical textbooks” as the sellers, Hannon said.
“We are seeing good buyer activity,” agreed Diane Pienta, an agent with Coldwell Banker. “The neighborhood is good for first-time home-buyers.”
JP’s housing stock is more diverse than other areas like Somerville, Cambridge or the South End, Pienta said. Condos here can sell for as low as $199,000, and high-end single-family homes for as much as $1.2 million. “We have different housing products for different people’s needs.”
She also agreed with Hannon that shrinking supply is helping keep those prices from tanking. “I think what’s happening is sellers who don’t need to sell are feeling like they don’t want to take a hit. They are sitting tight,” she said.
The numbers bear that out. As of Sept. 29, 115 condos in JP were on the market. In September 2006 there were 220 condos on the market and in September 2005 there were 215, according to data from the Multiple Listings Service.
Sales are also down slightly, with 263 condos sold as of Sept. 29 of this year. Last year by the same date, 361 condos had sold and in 2006, 323 had sold.
Maureen McElroy, owner of Jamaica Hill Realty, said owners in JP are also financially stable enough right now that they don’t have to take a hit. “We are seeing very few foreclosures or short sales,” she said, “The market is healthy right now.”
Personally, Hannon said, she is having her best year in the decade she has been in the business. “I doubled my sales from last year, easily.” Others in her office also said they were having good years.
“A lot of part-timers left the business,” she said.
John Hannifin, a mortgage broker who lives in JP and works at Mortgage Masters Inc., said that, while it is not as easy to get a mortgage as it was before the meltdown, it is still possible.
Thanks to the recent bailout of Fannie Mae and Freddie Mac, the home loans that are JP’s bread and butter are still available, he said.
The two government-sponsored enterprises, which were recently taken over by the government, back around half of all US mortgages. Because of their huge market share, the rules they set for lending play a huge role in setting the conditions for mortgages.
Right now, “guidelines are changing and they are discontinuing programs every day,” Hannifen said. The changes are coming so fast, he said, that Mortgage Masters has hired a staff person to stay abreast of them.
But the upshot, he said, is that the mortgages they own and guarantee are still available.
Those mortgages must be smaller than $417,000. Loans larger than that are known as non-conforming or “jumbo” loans. “Fewer lenders are willing to lend at the jumbo loan amount,” Hannifen said. “The bad news is for the higher end of the market.”
It is still possible to get a loan with interest rates between 6 and 6.375 percent depending on the buyer’s credit score, he said. “Overall, rates really aren’t so bad right now.”
The days of lenders throwing money at people do seem to be over though, Hannifen said. “Stated income loans are no longer available,” he said, referring to a bygone mortgage-lending practice of letting borrowers simply say how much they earn annually without any verification, “Everything is full disclosure.”
From where he is sitting, “I don’t think the sky is falling,” he said. ”If you have a job and you are making a little money, and you have some money in the bank, chances are you can buy a property. It may take a little longer, but if you put your mind to it, it is definitely possible.”