From Reuters:
Limit on GSE-eligible mortgages may decline for ’07
By Al Yoon
Declining home values in 2006 may reduce the size of loans eligible for purchase by Fannie Mae and Freddie Mac, raising consumer borrowing costs in some high-priced regions, analysts said.
The so-called “conforming” loan limit is based on home prices in the Federal Housing Finance Board’s Monthly Interest Rate Survey, which have declined 3.1 percent in the 12 months through September. The limit for 2007 will be calculated upon release of October data on Nov. 28.
…
“If the loan limit falls significantly, it may still be difficult for the GSEs to purchase loans originated in the highest-priced markets,” Nancy Vanden Houten, an analyst at economic research firm Stone & McCarthy Research Associates in Princeton, New Jersey, said in a client note.Analysts at UBS Securities LLC in New York also said the loan limit could shrink.
It is also conceivable that the loan limit does not change much while prices in the high-cost areas decline, helping the GSEs, she said. But recent softness in real estate suggests the housing finance board’s data will reflect declines in October, she said.
…
The median sales price in San Francisco was $751,900 in the second quarter, according to National Association of Realtors data. In the New York-northern New Jersey-Long Island area it was $473,700 and in Columbus, Ohio it was $155,700.Loans within the conforming limit cost borrowers up to 0.5 percentage point less than a “jumbo” loan. A new $417,000 loan would therefore cost a homeowner more than $100 in additional payments each month if the limit is cut.
…
The loan limit has not declined since falling by $150 in 1990 to $187,450. Its 15.9 percent jump for 2006 more than doubled the average rise during the decade-long housing boom.
I read today with interest the Star Ledger article about the author of this blog, Mr. Bednar. He is young and full of passion as young men frequently are. His blog and information can provide a service to the public if only he can let his agenda go.
Now that I am a Grandfather and Realtor since 1991, I see the market with the perspective of time. Even though it is raining the sky is not falling. Having owned 6 homes in two states over the past 32 years rest assured the MARKET WILL SEEK IT’S OWN LEVEL! Today I can list a home on the internet for a flat fee. Or I can list a property for sale with a Realtor. These choices were not there in the past. I trust the market and it’s freedom of choice will determine how we do business in the future.
Not Mr.Bednar. I do not belong to a cartel or a kabal, or an economic conspiracy. I am regulated by the State of New Jersey. If you want better supervision of the industry I suggest you elect less corrupt politicians.
Or better yet Mr Bednar should run for the State Assembly and change the business from within.
I know with certainty we all must learn and grow in order to successfully participate in the Real Estate market.
I prefer to get my information from Jeff Otteau, and NAR, NJAR, etc, rather than from Mr Bednar. Having never bought or sold a property, heeding his advice is akin to receiving Cancer Treatment options from a bright but nieve high school biology student rather than a top oncologist at Sloan Kettering. Trust me these are subjects I know much about. My advice to Mr.Bednar, please continue helping the public with your blog, but for the love of Pete use some of this energy to make more money so that you can finally afford to buy your dream home in our lovely but high priced, over taxed, under served, poorly represented, over populated state.
Good luck to you and see you on the Web.
Best regards,
Marvin Crane
Broker Associate
RE/MAX Superior Realtors
Mr. Crane,
You obviously have not been reading Mr. Bednar’s posts on real estate. Mr. Bednar is not producing information but providing information from the same sources you just cited, as well as others sources (government, media, etc.).
If you had read his blog you would know that he actually agrees with you, that “the MARKET WILL SEEK IT’S OWN LEVEL!” And due to fundamentals (for example, medium house prices and medium incomes) house prices should come down. It’s not about not having enough money to afford the area at the present time. It’s about believing that prices will fall and knowing that why would he or ANYONE buy now?
You mention 1991 but do you remember about 5 years before that and the status of the real estate market? As a grandfather I’m sure you’ve heard the term “history repeats itself”. Only a fool would ignore fundamentals and history.
Rich
Of course, that’s my view of Mr. Bednar from being an avid reader of this site. I’m far from trying to speak for him!
Rich
Dear Rich,
I bought my first home in NJ in 1987, just months before the Stock Market correction and subsequent Real Estate correction of 1988-91.
It took many buyer’s 10 years to break even from the high prices of 1987. Yet the same home purchased for $160,000 in 1987 sold for $196,000 in 1999. Last year it’s market value peaked at $425,000.
Today it probably is worth $380,000. By today’s market values it is a bargain, if you need a home. No doubt we are still facing an additional correction perhaps as much as 10% in some markets. But you know I wish I had kept that house as a rental, it would be paid off by now and I would have had $380K in equity. Oh well that’s the Real Estate Market. Over time we will be fine.
Have a great day.
Marvin Crane
Marv,
It’s hypocritical that you would speak of Jim having an agenda. When it comes to real estate, no one has more of an agenda and vested interest than someone engaged in selling real estate such as yourself.
We read and see the same data that you do including Otteau, and we don’t need a salesman to filter and and put a slant on that information for us. Many of us have studied the booms and busts of real estate for ourselves, and have drawn our own objective and independent conclusions.
Jay
btw, I have personally bought and sold 5 houses over 20 years and am no newbie, and I can tell you that this type of website and other RE internet innovations will change the real estate business forever. They have only begun to cause a sea change in the knowledge and sophistication of many buyers, and they are no longer easy targets for NAR and realtor misinformation and spin.
“Having never bought or sold a property, heeding his advice is akin to receiving Cancer Treatment options from a bright but nieve high school biology student rather than a top oncologist at Sloan Kettering.”
How self serving no? To compare yourself to a 10 + year of schooling 10 + year experience medical professional when all you really are is a Realtor? Give it a rest. Unless comical, there is no comparison what so ever in treating cancer to selling real estate.
PS- A top oncologist at Sloan Kettering would now the correct spelling of naive.
Marvin Crane writes:
“I do not belong to a cartel or a kabal, or an economic conspiracy.”
Why is the number of days on market, and previous price drops, hidden every time a realtor re-lists a property to ‘freshen it up’?
Since you are a “grandfather and Realtor since 1991” you have lived through the prior boom/bust cycles, do you really believe recent prices are not mania-driven and are instead actually supported by fundamentals (e.g., wages) and will remain at their absurd levels?
See chart:
http://graphics10.nytimes.com/images/2006/08/26/weekinreview/27leon_graph2.large.gif
“No doubt we are still facing an additional correction perhaps as much as 10% in some markets.”
:::chuckle:::
look folks, Marvin is just not very bright.
Their is no debate. The numbers speak for themselves.
Marv,
Over the last few years I have been a number of open houses with real-estate agents. The one thing I can tell is that these agents only serve their interests and not mine.
At least James Bednar is not doing that. He is doing a big service to putting on his site much needed information from which every home buyer can make a educated decision before buying their homes.
BTW this information should have come from realtors.
GO James GO
I’ve responded to Mr. Crane in email. We’re going to sit down together sometime between the holidays to discuss..
jb
Mr. Crane,
Since you’re an agent who has owned six homes in two states over the past 32 years it may be difficult for you to view the market in the same way a financially responsible fist-time buyer views it. Now that the speculation of appreciating home values is gone, many first-time buyers will wait to see just how solid a foundation today’s prices have been built upon. My personal prediction is double-digit corrections in the most inflated markets off the 2005 highs over the next few years. We’ll have a better idea of where this is headed next year as the exotic mortgages reset in the face of flat to already falling prices, a slowing economy and rising housing inventory levels.
JB,
I think that’s cool! His second reply seems inline into what most of us are saying. He’s seems like a rational, fair-minded person. Should be an interesting discussion.
Rich
report back to us
Mr.Marvin Crane,
I am older and full of passion as many others like myself. I am not a grandfather but I can’t for the life of me decipher how that is relevant in this discussion. I respectfully disagree with your statement, I feel that the public is provided a great service by this site. There is no other agenda other than pointing out the facts. I have owned properties longer than you. Therefore I can also speak with the perspective of time. I would love to debate all your statements and tell you a little bit about where I stand in relation to the state of the industry of today. However, there is no need for me to reiterate what many have read over the past months. I don’t even know if this will get lost under newer topics. Because of this, please post on the most recent topic. I will be most happy to respond. I just don’t want to waste my time with a lenghtly post if you never read it. I could be spending my time more constructively, like talking with the problem loan dept of the big lenders. Please post on the most recent topic and ask me for my response. If you like I can also email you, no need to waste valuable space on this fact finding site. By the way, don’t equate what Mr.Bednar does to a cancer patient receiving treatment. I know many people who are either fighting/lost their fight to this dreadful disease. You claim that you see things thru your years of perspective. Now go forward and act that way. I am looking forward to your response to this.
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