With the government backing 95%+ of all new mortgages I believe this is actually a much bigger deal than the various foreclosure tsunamis that may or may not be coming down the pipe. Keep in mind also that the government is looking to charge higher fees and require bigger down payments for loans underneath the conforming limits, so that will affect house prices as well.
The conforming loan limits are scheduled to come down on October 1, but most banks started working under the new limits some time last month. Some lawmakers are pushing to keep the current conforming limits, but it’s unclear if that push is getting any traction.
The WSJ answered a reader question about this the other day:
With buyers in that price range being asked to put down $100K+ more than they would have to just a month ago, there is no way this won’t put extreme negative pressure on prices.
