Passed by congress last night, H.R. 3081 will once again extend $729,750 “super conforming” loan limits for high cost areas like San Francisco, this time through September 30, 2011 assuming President Obama signs.
One More Year! For Super Conforming Limits Assuming Obama Signs [SocketSite]
If Lowering Rates Isn’t Working, Perhaps Increasing Limits Will [SocketSite]

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by sfrenegade

    Terrible, terrible policy to subsidize housing at this income level. This is part of the Bubble II strategy by our government.

  2. Posted by Jimmy (No Longer Bitter)

    Terrible policy! No way! Subsidize, subsidize, gimme gimme gimme. I want my 3.5% re-fi! Now! Now! Now!
    In all seriousness, as long as the loans are properly underwritten, with large downpayments, why not subsidize the rates all the way to infinity??
    Explain, please.

  3. Posted by JAS

    Putting a floor under housing to this extent seems shortsighted. By keeping prices high, the government merely insures that a higher percentage of income goes toward paying off mortgage debt, rather than being spent or invested in the non-housing economy.

  4. Posted by A.T.

    This doesn’t bother me any more than the idea of GSEs generally. This will very slightly prop up prices in the $500-800k segment as otherwise the underwriting criteria would be more strict, but probably not materially. Of course, this just means sellers in this segment better sell before the end, and buyers who buy in this segment will see a short drop in equity the minute this extension ends.

  5. Posted by j

    In all seriousness I can see why the govt might have an interest in subsidizing some minimum level of housing long before I can see why they should be subsidizing expensive housing

  6. Posted by lol

    Subsidize housing?
    I understand why they would subsidize rentals somehow. Construction/maintenance costs make renting to $20K/Y tenants impossible in expensive cities and they’d be forced into shantytowns like Rio or Cape Town.
    But subsidizing housing for the middle class? I don’t see the rationale there, apart from trying to contain a big f@ck up the same policies created. Let the chips fall as they may and we’ll get back to a real market.
    This market is a monster with too much debt everywhere but no way out except creating/extending more debt.

  7. Posted by lol

    Jimmy (No Longer Bitter),
    Take a step back. Imagine a tiny deficit in housing stock. 7% interest with 100K salaries would lead to 350K homes. With 3.5% you’d get 700K homes. With a constant pool of homes, the same house is “worth” 350K or 700K, not because the house is better or more desirable, but because financing made it that way.
    What did this “fiat” money mean? More wealth? Nope. More debt and that’s all it is in the end. Overall everything evens out, either horizontally (good seller timing, bad buyer timing, sum is 0) or vertically (too much debt today means more to pay tomorrow, rich today, poor tomorrow).
    Housing is the worst possible place to spend debt. The Chinese and Indians are building infrastructure and high tech, quickly catching up on us. We are buying and selling wooden boxes and saving the banks when it stops making money. We should be building solar/wind farms and help cars go electric, beefing up all types of communications. Instead we are stuck into 20th century logic.

  8. Posted by Al

    Well, I’ve been reading about how urban areas with high housing prices also are areas with significantly lower spending on transportation, which accounts for a large chunk of the average person’s budget. It might stand to reason, then, that a $600K loan to a person in such an area would be as safe a bet as a $400K loan to a someone living where housing is cheap but transport is expensive.

  9. Posted by NoeValleyJim

    As I have pointed out before, overall debt and debt/GDP levels in the economy are going down and have been since 2008. The consumer has been massively deleveraging and so have banks and companies.

  10. Posted by diemos

    Goddammit! The government just isn’t doing enough to help our struggling millionaire homeowners! We need to enact super-duper conforming limits immediately.

  11. Posted by Jimmy (No Longer Bitter)

    I agree with diemos. More cheese, please!
    Why would I want high mortgage rates?! That would diminish the value of my nice new house.
    Lower is better. I’m thinking of buying a vacation property in Tahoe … or perhaps a few acres in the desert for solar cells. I wonder if I could get a 2.2% loan for those?

  12. Posted by anonee

    my my diemos,
    talking your book eh? of course you guys want
    to make some money on your positions (long cash, short assets). why don’t you guys just say it?
    admit that you want housing prices to crash so that you can finally buy cheapcheapcheap.
    there’s nothing wrong with that. go on and let your populist colors fly!

  13. Posted by nnona

    “The consumer has been massively deleveraging and so have banks and companies.”
    @NoeValley Jim
    It’s clear you like to indiscriminately link to any newspaper or magazine article that half supports any argument you’ve ever made at SS (and oftentimes one that only you remember), so that you can give yourself a nice quasi-public pat on the back.
    In that spirit, it baffles me that you never linked to this NYT article from just last Saturday…
    http://www.nytimes.com/2010/09/25/business/25credit.html?ref=todayspaper

  14. Posted by meep

    the US economy is driven by consumer spending.
    for people who bought homes before 2003 and did not take a lot of equity out of their houses refinancing at this point in the bay area can mean an extra thousand bucks or more a month. lets get those consumers spending and on the road to recovery!

  15. Posted by lyqwyd

    @anonee
    “… admit that you want housing prices to crash so that you can finally buy cheapcheapcheap.
    there’s nothing wrong with that. go on and let your populist colors fly!”
    opposing housing subsidies and wanting housing prices to crash would be the opposite of populism.

  16. Posted by anonee

    @lyqwyd,
    so you would think. but who do you think really holds the bulk of all those mbs and agency debt?

  17. Posted by diemos

    Ayup. The middle classes’ retirement fund, 401k bond fund, their bank’s assets.
    As I’ve often said it’s really me as a bond holder who is getting bailed out.

  18. Posted by NoeValleyJim

    In that spirit, it baffles me that you never linked to this NYT article from just last Saturday…
    Why do I need to, when I have cheerleaders like you doing it for me?

Add a Comment

Your email address will not be published. Required fields are marked *