So, if someone needs to borrow more than $417,000, they can count on paying a higher interest rate, or having to make a larger down payment, or jump through other hoops. As a result, the hardest hit part of the real estate market is the higher price ranges. to give you an idea, with 20 percent down, borrowing $417,000, you can buy a house for about $525,000. This year, about 3 percent of the 10,000 houses we'll sell through MLS will be over $525,000. In 2006, that market share was twice as high.

 

Do you care? You should, because it's going to impact the value of your house. How could it, you say, when my home is only going to sell for $325,000?

 

Well, the guy who can't get $525,000 might have to accept $475,000, and the guy at $475,000 might have to take $425,000, $425,000 may now be $375,000...uh oh...you're now competing with what was a $375,000 house. And you know what happens next: You lose.

 

So what's this horrible interest rate that's keeping buyers out of the nonconforming range? A qualified buyer today can get a nonconforming loan for 5.5 percent. There's a little work involved, because not all lenders want to play. If you'd like a good source, just send me an e-mail.

 

Students of this market know that the price reduction on properties requiring jumbo loans is a lot more than the typical house today. Call me contrary, but it seems to me that being able to buy a great home at a bargain price at 5.5 percent may turn out to be one of the great opportunities in real estate history. When that fact is understood, you'll see the higher priced homes start selling again, which will benefit every facet of the market.

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