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Luxury real estate on the rise
Last month I wrote about European villas for sale at reduced prices in popular vacation spots. Here in the U.S., it's much the same story, as brokers report an uptick in interest from homebuyers in luxury enclaves like Palm Beach, Fla. And Vail, Colo.
According to the Wall Street Journal, sales in Palm Beach were up 50 percent in the year ending June 30 and in Long Island's pricey Hamptons sales spiked 50 percent in the second quarter compared to a year earlier.
With most of the real-estate market still languishing, experts aren't going so far as to call this a boom. Homes in prime locations are more likely to sell even in down times, but it still might not be easy for buyers to obtain a jumbo mortgage.
Beginning this month, the federal government is dropping the highest conforming limit to $625,500 to reflect lower home prices nationwide. Generally, jumbo mortgages are those above the conforming limit of $417,000 set by Fannie Mae and Freddie Mac, but during the housing boom, the limit was as high as $729,750 in high-cost areas.
But banks are reluctant to lend jumbo mortgages and according to the Federal Reserve, 10 percent of banks raised their lending standards on these loans. Borrowers should be prepared with at least a 20-percent down payment and excellent credit.
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