One of the most important issues affecting our real estate market today is the credit crunch. Financing has become so difficult to obtain and it seems to many potential borrowers that the rules have all changed. It is true that in the luxury real estate market many of our buyers pay cash or put sizable down payments towards their purchase; however, a larger percentage of luxury buyers still need or want to utilize financing. Most lenders are requiring greater levels of documentation, larger down payments and in some cases cutting appraised values simply to hedge their risk in the luxury home market. They are trying to “make up” for all their excesses of 2004 and 2005 when credit was far too easy to obtain. Unfortunately, they are making their own problem worse. When lenders discourage well qualified buyers from obtaining financing and purchasing a luxury home they only increase the lower number of sales and high number of luxury homes left on the market for sale. When lenders require higher down payments or cut appraised values during the escrow period, they kill transactions that would have otherwise closed escrow and helped our luxury real estate economy. Time will tell how long this credit crunch