California Real Estate Market Analysis

California real estate market is divided in to three catagories. Under $500k, the market is smoking hot....some areas less than 2 months of inventory. Between $500k-$1,000k, the market is so so and above a Million it is a snails pace. The reason????? It's The Financing Virgina. Their ain't no Santa Claus when it comes to financing. The current dichotomy exists within the conforming loan amount being increased from $417k to $729,750 in many counties including San Diego. The interest rates are higher too which makes qualifying more difficult for these loans. The qualifing is even more strict for jumbo loans, loans above the $729k. Since Fannie and Freddi only buy conforming loans; therfore, less money is available for jumbo loans. It isn't clear why conforming loans pay higher rates and have tougher guidelines to qualify than the loans for less than $417k. Historically, all conforming loans had the same interest rates and qualifying guidelines. Unless Fannie and Freddie start treating all conforming loans equally, and the governement intervenes on the ol' jumbo's, as it has on conforming loans, we will continue to experience this nasty tale of 3 markets and soon the upper-end market will likely see prices depreciate even more before this market strenghtens. Anyone want to buy a home on the cheap in Mission Hills??? Let's wait and see.