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The expected Fannie/Freddie bailout is in play, and it has had a noteworthy improvement on mortgage rates - so far.  Conforming 30-year fixed rates have improved .375% since Friday, and you can now get 6.125% with no points.

Jumbo ARMs with no points are decent too, for those who don't mind short-term and interest-only:

6.375% for five years

6.625% for seven years

6.875% for 10 years 

You can also get 7% interest-only fixed for 15 years, on a 40-year term.

Jumbo 30-year fixed is around 7.5% with no points.

If this can hold up for a while, we should see conforming rates in the high-5% range this week.  It used to be that you could add 1.75% to the 10-year treasury yield to figure the conforming 30-year fixed rate, but, because of the uncertainty, the spread has been close to 2.50% lately.  Today's 10-year treasury yield is around 3.70, so if the spread just got back under 2.00% we might see mortgage rates in the mid-5% range again.

The San Elijo Hills auction happened today.  The 2,568 sf house that originally sold for $806,500 when new in February, 2005 has been on the market since February, but no takers.  The NOD was filed in May, 2008, so time was running out.

The seller hired an agent who tried the auction format, and held a few open houses in advance to drum up buyers.  The opening bid was $399,000, which was artificially low - or was it?

The house backed up to San Elijo Rd, and had dead grass - but the biggest bummer was that they took out the horns!

The agent carried on about how recent sales nearby had been around $600,000, then hedged later and said sales prices had been around $550,000, which, in his mind, made this an obvious bargain.  But the atmosphere was the same hokey, circus experience that we saw before - well no wonder, it was the same auctioneer as we saw in Fairbanks Ranch a few months ago:

Just like at the Fairbanks auction, it got off to a slow start, but this time after some prodding the four bidders reluctantly responded - the highest bid was $455,000.

The agent and auction people were aghast that people wouldn't pay more - obviouly this was a great bargain, at least in their minds.  But buyers do their homework these days, and knowing that they'll have to endure months of the short sale process, it had to be a deal to get someone to bite.  The original loan amounts total $745,100.

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Let's follow up on a few others while we're at it:

Wachovia foreclosed on this 4,213 sf one-story gem in La Costa Oaks with a big ocean view. 

The loan had been $1,632,000 in 2007, and at the trustee sale on July 31st the opening bid was $1,425,500, but no takers. 

I had guessed that their list price would be $1.395 million, but they came out hot and listed for $1,245,000 instead.  It went pending in the first week.

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We also mentioned some professional sellers - listings we could watch to gauge how tough it is on flippers.  So far, two of the nine went pending:

The house on Whimbrel in Aviara that was purchased for $636,231 at the trustee sale last month went pending after 21 days on market - it was listed for $799,000, we'll check the final sales price, but he probably did well.

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Swashbuckling Captain Jack got this one into escrow too.  He had paid $51,173 to the second mortgage holder who was foreclosing, and took ownership subject to the $305,000 first mortgage.  He listed for $519,900 in May, 2008, and in June started lowering his price $5,000 to $10,000 every three weeks until he got down to $484,900.  After 111 days on the market, he found a buyer.

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One I didn't mention was another of Jack's deals, this on Adams in Old Carlsbad.  The same type of package - he picked it up at the trustee sale of the second mortgage holder in July, and has about $400,000 into it.  He listed for $619,900 originally, and came down to $579,900 before finding the buyer - it went pending last week too.  It was on the market for 26 days.

CA renter asked if more listings are going off-market - are sellers getting frustrated and packing it in? Or are they hanging in there a while longer in hopes of getting a boost from 'Charger-fever'?

BMIT notes that in September, 2007 the inventory was 23,649, which is the all-time high mark for inventory. As of 8/31/08 it was down to 19,778 listings, a 16.4% decrease in homes for sale, compared to last year around the same time.

Here's the comparison of detached and attached listings that expired, cancelled, or withdrew:

It looks like last year a bunch of sellers gave up right at the end of summer - but not this year. "Maybe if we just wait a few more weeks, honey, that lucky sale will come our way!!"

Nice to see some market-clearing in North Oceanside (92057) and North Vista (92084) once pricing got under $200/sf, and it looks like South San Marcos/SE Hills (92078) is about to follow them. As pricing improved by -30%, -25%, and -26% respectively in the three Oceanside zips, sales perked up nicely, but sales still dropped in 92078 even though the $/sf declined 23%.

But look at Carmel Valley - you can say there was an 8% drop in sales, but overall CV is still holding up, statistically.

August Sales and Pricing for Detached Homes

County-wide sales were up 9.5%. Sandicor still hasn't figured how to rate the whole county on pricing, or they're holding it back.

CA renter mentioned the other day how people are out in droves looking at houses for sale. 

I concurred, saying I'm so busy it's hard to keep up with it.  But let's not confuse activity with closed sales, there is a big difference these days, with buyers anticipating more downdraft in pricing.

Could something in this year's election change the course of the real estate market?  Could either presidential candidate or other politician make a difference?

Just once I'd like to open the floor to a political discussion, but specifically in how it relates to the real estate market. 

I'll go first.

Homes are still unaffordable for most, and financing is getting tougher - it'll take a long time before that changes.  But today's buyers are using big down payments to keep their payments reasonable.

But I think there are plenty of buyers that have down payments and would be willing to buy - after another leg down price-wise, like the one coming in 4Q08.   If the new president can inspire consumer confidence, could it be enough to get buyers to buy? 

Let's use yesterday's data for an example.

If next spring we are seeing lots of houses for sale in Carlsbad that are 2,500sf to 3,000sf in the $600,000s, and the new president steps up to the podium and says something magical that makes people feel better - would it be enough to get them to buy?

There should be a better spring kick next year, so that'll help too - if potential buyers see others buying, that'll help boost confidence as well.  It won't be the bottom, and there will be plenty of opportunity in the years to come. But for the folks who are ready, willing, and able to buy, would the combination of better pricing and a warm, fuzzy feeling about the country's future make a difference?

It's about the only way I can see the politicians having any effect on the real estate market - forget the goofy programs that'll never work, can you just inspire a little confidence in people? 

It's all they can do - will they do it, and will it work?