by Jan Gray

The national news has been brutal regarding the housing market: more foreclosures, and “short sales” for borrowers owing more than their houses are worth. Every community has felt this tsunami of negative data. The Coastside is not immune to all this; however, our communities seem to be holding value better than most places. Ken Rosen, an economist at the University of California, Berkeley, believes that the Bay Area’s decline in value was around 12 percent from 2007 to the end of 2008.

Lower expectations for sellers mean golden opportunities for buyers — including those moving to the Bay Area for better job opportunities. Rosen states that 1.9 million jobs have been lost nationally while the Bay Area is adding jobs, because we have a better industry mix.

Montara State Beach. Staff photo.

Here is some straight talk from a local loan brokerage. There are fabulous rates for loan amounts up to $417,000 with 10 percent down, if the borrowers have high credit scores (720+). If your credit score is 620 or more, with 10-20 percent down you could qualify for the 2009 high-balance conforming Fannie Mae and Freddie Mac loans that are available  up to $625,500. And now is the time to use that VA entitlement, or go FHA with as little as 3 percent down.

The so-called credit crunch comes into play if you need a loan higher than $625,500 as the rates are considerably higher and the qualifications are tighter. These are the “jumbo” loans and this is where there is a lack of ready funds. As the economy picks up, this void will begin to get filled.

If you feel you have a secure job, wouldn’t it be prudent to finally take the plunge and buy a home? Interest rates are at a 50-year low, and home prices are expected to recover relatively soon. Once we hit that magic “bottom,” house prices will rebound rather quickly on the coast because we live in such a desirable setting and the Devil’s Slide tunnel is getting closer to completion.

The National Association of Realtors and the California Association of Realtors have a staff of economists who have begun to spread the word: Look for a housing recovery mid-year. The National Association of Home Builders also expects the housing market to improve in 2009. And the Mortgage Bankers Association says that mortgage applications are way up, with most applications coming from buyers getting themselves in the “pipeline,” ready to pounce when the time is right.

It used to take only minutes to get pre-qualified for a loan because the financing was totally based on the applicant’s FICO score. There was no documentation; you could just tell the loan officer what salary you made. We call these “liar loans” and they are the ones that are under water now, dragging down the housing market.

We’re back to basics — and we old-timers are glad to be back in a world of saner lending. Expect a flurry of paperwork and lots of questions. You’ll be asked to furnish employment verification, tax returns, bank statements and more. Lenders want to verify that borrowers can afford to pay the money back.

Getting started? It’s a long trail from the glimmer of hope that you have when you decide to settle down in a home to the final closing day. It’s normal to have jitters. As always, the best place to start is to contact a lender and remember the old adage: Local is best. Local professionals know the market; the appraisers have a database of local market comparisons and local agents know the properties better than anyone. Get yourself pre-approved and get going!

Jan Gray, GRB, GRS, GRI, SRES, is a broker with Coldwell Banker in Montara; she has been active in real estate since 1974. She is grateful to D. J. Johnson at Real Estate Funding in Half Moon Bay for much of the financial data.