It is apparent that the price range between $500,000 and $ 1 million is very soft in 2008. In fact, the number of sales has declined about 20% over the same period last year.  There are many reasons for this: Jumbo loans (those over 417K) are at least 1% higher than conforming loans (those under 417K); in the present tight mortgage market the minimun jumbo loan downpayment  has gone up to 15%; the self-employed who were used to low or no documentation loans in the past, now must give full documentation to get financing even when putting 20% or more down.   And perhaps the most important factors are:  those who can afford homes in this price range are tightening their belts since recession is either here or on the horizon, and there are those buyers that are still waiting for the perceived bottom of the market– they think it has not hit yet and are playing a wait- and- see game. 

However, homes priced lower than $500,000 are faring better.  FHA financing is becoming very popular with loan limits at $316,250 for Pima County; therefore, one can buy a home for approximately $326,000 and only put 3% down and credit scores do not have to be as high as those required for conventional financing.  Also up to approximately $460,000  home sales price, one does not have to pay the higher interest rate of a jumbo loan and one does not have to put down 15%–the minimum requirement is 10% for conforming conventional loans. 

This is a stressful time for Sellers, yet opportunity knocks for those motivated buyers out there.