Wednesday, April 15, 2009

Durham-Chapel Hill Surges Past Raleigh-Cary For Job Growth Potential

Story from Triangle Business News

durham real estate forhomebuyersThe Durham-Chapel Hill metropolitan area has surged past Raleigh-Cary in NewGeography.com’s annual study ranking job-growth potential.

Durham-Chapel Hill soared 24 spots, to No. 19, in the rankings of all U.S. metropolitan areas with at least 30,000 jobs. Raleigh-Cary tumbled 30 spots, to No. 38.

The rankings are based largely on federal job growth numbers for 336 metropolitan areas. Researchers assess the numbers for the current year, the previous year and the previous five years and also compare five-year growth rates over the past decade to come up with a score for each area.

In addition to the overall rankings, the metros are grouped by market size. Durham-Chapel Hill rose seven spots, to No. 4, in the midsize group, while Raleigh-Cary dropped seven spots in the large group, to No. 8, from No. 1 last year.

Joel Kotkin, one of the researchers who put together the rankings, said on his blog that Durham-Chapel Hill offers tax and housing-cost bargains compared to major markets such as San Jose, Calif., and Boston.

Asked why Raleigh-Cary fell, Kotkin said in an e-mail that “It is a drop of jobs that was a bit more than other high-flyers.”

But, Kotkin said, Raleigh-Cary’s job numbers were still relatively solid, especially considering how poor the U.S. economy has performed over the past 15 months. Both areas are still among the most popular in the nation for relocating, and Raleigh real estate continues to sell along with Durham and Chapel Hill real estate.

“In 2008, 2 percent growth made a city a veritable boom town,” Kotkin said on his blog.

“In past iterations, we saw many fast-growing economies – some adding jobs at annual rates of 3 percent to 5 percent,” said Kotkin.

The top city overall was Odessa, Texas. For the complete rankings, go to this page on NewGeography.com.

Sunday, April 5, 2009

The Return Of Jumbo Mortgages

As Originally Posted to the Wall Street Journal

Jumbo mortgages became more expensive and harder to come by as the nation's credit crisis deepened. That might be starting to change.

"Jumbo" refers to mortgages that are too large to be bought by Freddie Mac or Fannie Mae. The "conforming loan limit" for those government-backed entities is $417,000 in many parts of the country, but goes up to $729,750 in high-cost areas of the continental United States.

Bank of America recently began trumpeting its jumbo program, offering 30-year fixed-rate jumbo mortgages with rates in the high-5% range. "We decided it was time to really go after that market," says Vijay Lala, a product management executive for the bank.

More lenders may soon join in, says Guy Cecala, publisher of Inside Mortgage Finance.

He says Bank of America appears to have lower jumbo rates than its giant banking competitors Wells Fargo, J.P. Morgan Chase and Citibank. "I suspect the others will slowly follow suit," Mr. Cecala says.

Big Drop in Rates

The rates on 30-year fixed-rate jumbo mortgages averaged 6.5% for the week ended March 27 -- the lowest since May 2007, according to HSH Associates, a publisher of consumer loan information. On Oct. 31, a recent high point, the average rate on a 30-year fixed-rate jumbo mortgage was 7.9%, according to HSH data.

GMAC also has been pricing its jumbos aggressively, says Paola A. Kielblock, national product specialist for Fairway Independent Mortgage, a mortgage broker and banker based in Madison, Wis.

She recently has seen rates in the high-5% to the low-6% range for 30-year fixed-rate jumbo mortgages, and the low-5% range for five-year adjustable-rate jumbos.

Bill Higgins, chief lending officer for ING Direct, says his firm has been offering jumbos in the 5% range for several months -- even back when average rates were higher.

Lenders' interest in making more jumbo loans isn't surprising, says Keith Gumbinger, vice president for HSH.

Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books. Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments.

"More cash comes in the door," Mr. Gumbinger says, and so "the loans go out the other side."

Plus, banks have gotten assistance from the federal government, and record-low conforming mortgage rates have inspired more people to refinance loans -- giving banks some more liquidity, he says.

For financial institutions, the return on a jumbo mortgage is also starting to look appealing. Banks are "taking a look at what investment alternatives there are," says Mr. Higgins of ING Direct, and they "are saying 'we wouldn't mind a 6% to 7% asset on the books.' "

Cheaper But Not Easy

Borrowers in the market for this kind of loan, however, shouldn't expect a simple process. Mortgage shoppers will find differences in price and availability from lender to lender, Mr. Gumbinger says. Jumbo programs vary greatly from one side of town to the other, he adds, and lenders will sometimes originate a higher volume of loans for a while, then slow down.

"To be honest, I'm not certain if [the low rates] will be around for a while," Ms. Kielblock says.

What You Need to Know

If you think you're in the market for a jumbo mortgage, consider the following:

Do you really need a jumbo? Don't automatically assume that your mortgage will exceed the conforming loan limits, says Cameron Findlay, chief economist of LendingTree. As home prices have fallen and the U.S. has raised loan limits in some areas, more home buyers probably need conforming mortgages.

Some people who are looking to refinance and who originally needed jumbo loans may also fall within increased loan limits.

With a conforming mortgage, you will likely get a better rate.

Availability may be increasing, but requirements are still stiff. Bank of America jumbo loans, for example, require at least a 720 credit score and a 20% down payment (or 20% home equity on a refinancing). And borrowers need to have at least six months worth of reserves in the bank. ING Direct requires 25% down.

Search widely for good deals. "Borrowers need to shop around for any mortgage, but particularly for jumbos," Mr. Cecala says. "A small local lender or credit union may have a good deal, but you won't know unless you do your homework. Ask real-estate agents, your friends, or anyone who might have a lead on a good jumbo lender."

Compare apples to apples. Lenders often talk about their products in terms that don't allow you to easily compare with other lenders, Mr. Higgins of ING says. Make sure to draw fair comparisons that consider mortgage fees and costs.