The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,309 last month, down from $2,405 the previous month, and down from $3,074 a year ago.
How does that work? Nobody's putting 20% down any more. A 30-year conforming loan is around 5.8%, and people are buying $518,000 houses on $2,309 a month? Assuming 10% down (to be generous), a $518,000 house would be a $466,000 loan costing $2,735 a month. A 5/1 ARM at 5.2% would be $2,560 a month.
What gives? Are we still dealing in negative-amortization option ARMs?