JWM This is a pretty much all I have said on the topic.In the third paragraph I stated directly that the limit increases won’t have much effect.
Submitted by Rustico on January 29, 2008 – 12:42am.
You can make a quantitative argument for the limit increase that make sense either way. I could say for instance 417k is enough for California and is superfluous to the rest of the nation with regards to the intent of these programs especially FHA.
My problem with the limit increase isn’t mathematical it is philosophical. Raising them at the current time seems intrinsically bad. The motivations are wrong IMHO as was the funny business that apparently created the need. I am also concerned that more allowances will be made, in conjunction with these limit increases, such that the gse’s can pass some of the already bad paper on to tax payers. It is not as if all of this is transparent.
Without more devious plans the limit increases don’t change affordability and therefore demand very much in and of itself so prices must continue to come down. I don’t believe underwriting standards are going to be abused to the extent they were any time soon( I will keep an open mind about that though). Interest rates will affect house prices more so when we near a real floor.
I do agree that there is possibly a convergence of factors that make the market or some segments look a little better in the next few months .Some properties will continue to hit new lows everyday and some might hold ground for a few months.
The market in general has still got a long way down to go if the pols, Fed and mortgage industry don’t come up with something better than what they are throwing at the bust so far. Maybe they will keep juicing the housing market perfectly from here on out while the economy miraculously turns to and holds on to prosperity. I doubt it.
