Are jumbo loans coming back?

In certain parts of the country, yes. In Socal, not so much. Jumbo mortgages generally exceed $417,000 - they're the ones too big to be bought by government-backed agencies. That obviously covers a lot of ground locally, and during the boom, they easily accounted for 40 percent of all home sales in Southern California. Now, jumbos are hovering around 18 percent, despite signs of a pickup elsewhere. There's no way the housing market can fully recover until that percentage starts going up. From the WSJ:

Robert Flaxman, a 54-year-old real-estate developer in Laguna Beach, Calif., says he is refinancing his $5 million mortgage, which has an interest rate that adjusts monthly. His new loan will be another adjustable-rate mortgage with a fixed interest rate in the 3.75% to 4% range for the first five or seven years, and adjusting annually thereafter. A few years ago, Mr. Flaxman says, he could have gotten a jumbo mortgage from just about any big bank, but since the credit crisis he has had to go to private banks catering to high-net-worth clients. He is working with a specialist, Luxury Mortgage Corp., based in Stamford, Conn., and licensed in 19 states, because "they have a smorgasbord of options."