November 27, 2012
Things are looking better all the time for luxury waterfront buyers and sellers. A year ago it was almost impossible to get a loan for a million dollar property, but things have changed.
Lenders who were cautious to the point of not lending at all are lending once again, especially when it comes to jumbo mortgages. A jumbo mortgage is considered anything over four hundred and seventeen dollars.
Behrooz Torkian and his wife, both doctors in California, tried to get a mortgage for a million dollar home three times over the past few years, and were denied. This year they finally received a mortgage for a three-bedroom cottage-style home for over one million. They included a 20 percent down payment, which they think helped them get the loan.
Sales of luxury homes over one million dollars have increased 44.1 percent compared to the same period last year, according to The National Association of Realtors last Existing Home Sales Report.
"There's no question that the increased availability of jumbo loans is stimulating home purchases on the high end," says Guy Cecala, publisher of Inside Mortgage Finance.
This seems to be a trend among luxury buyers across the United States. Luxury homes in metro areas with a loan of and over onemillion were up 28 percent this September compared to the same time last year.
Lower credit scores are an obstacle for the average home buyer these days, but luxury home buyers are not facing the same issue. Buyers of luxury oceanfront homes are going to lenders with credit scores as low as 700 and receiving the loan.
Lenders have also increased what they are willing to finance. Lenders have increased loans from one and a half million to two million, which is a very good sign.
"If they are willing to make jumbo loans knowing they will carry the credit risk themselves, it's a sign of their confidence in the housing recovery," says Paul Diggle, a property economist at Capital Economics.
We have seen a significant increase in sales this year of luxury oceanfront condominiums from Miami Beach to Palm Beach. Some of the more notable sales have taken place at Canyon Ranch Living, The Continuum, Apogee, One Bal Harbour, Mansions at Acqualina, L’Hermitage, The Palms and Bellaria to mention a few.
We have also seen an increase in sales and prices of luxury waterfront homes from Miami Beach to Palm Beach. It looks like we will continue to see the sales and prices of luxury oceanfront condominiums and waterfront estates rise in 2013.
Source: The Wall Street Journal
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