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Housing Update

Despite the fact that we are in the midst of a global pandemic, home prices continue to rise. There are 3 distinct catalysts driving this growth, fiscal policy, consumer preferences, and monetary policy. In regards to our fiscal policy, typically in a recession, people lose their jobs, incomes drop, and foreclosures and distressed sales drag down home prices. We have not seen this level of devastation as the government has taken measures to preserve household incomes. Foreclosures in the United States, as a share of all mortgages, are at their lowest level since 1984. Our monetary policy has lowered borrowing costs and interest rates by two percentage points on average this year. This coupled with the fact that, due to the pandemic, many people are spending more time in their homes and their preferences are changing. People are looking to get into nicer homes with bigger spaces. Many people are moving out of cities and into the suburbs, people are looking for bigger back yards and more room in general.

Jumbo Loans

During the pandemic it became increasingly difficult to assess risk so investors became more cautious when purchasing jumbo loans. The credit score thresholds were increased as were the down payment requirements. We have recently seen Jumbo Loans making a robust return to the marketplace and are now seeing Jumbo loans with as little as 10% down payment, lower reserve requirements, lower credit score thresholds and more flexible underwriting guidelines.

Solar Leases

Solar Leases can affect loan-to-value ratios, for instance if there’s a lien in place while you’re paying off your solar panels, the remaining balance is included in your loan-to-value ratio. If the solar panel contract is being transferred in the transaction it could impact the amount of equity you have in a refinance or the amount of your down payment in a purchase. Solar panels can increase your home value up to 4.1% more than comparable homes with no solar panels, however they can complicate the loan proces

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