Wednesday, March 05, 2008

WSJ: FHA raises loan limit to $730k

FHA officials predicted the increases in California would aid about 33,000 individuals. The new loan limits will be in effect through the end of this year. The goal is to invigorate the market for larger mortgages, which should help push down interest rates.

Holy crap.... Read This article from the WSJ Maybe subscription required (I have one and think its worth it.)

Now why is San Diego only at $697.5k? The table in the article is interesting... and scary.

From the article:
"From what we understand there are not going to be a lot of areas in the country except for California that are going to be at the maximum," Mr. Glavin said.

Umm... what about FL? VA? DC? NY? NV? AZ?

Yes, of the top 2% of 'income earners,' half are in California (2%= ~$200k/year).
But it isn't the only super bubble imploding. But wait... people must qualify. Only 33,000 are expected to be helped by this?!? There is more than that number in dire straights in the Antelope Valley alone! What about the Inland Empire or the SF Bay Area?

Forget any bank holding onto a loan $729,750 or less now without FHA insurance. Also expect anything above $729,750 to require one heck of a down payment, asset and income verification, and an interest penalty. If anything, this will only emphasize how bad the market really is. Hey... the homes I like are $950k to $1.4M... Hmmm.... Yes. I think they'll drop that much.

A note: Some areas have now dropped to afford ability that is just worse than the past historical worst case* examples. Ok... we're going to overshoot the other way. We're in a credit crunch that has only begun. Good solid companies are finding they cannot use their 'cash' portfolios due to poor money market selection. So normal investment that should kick in... cannot.

edit: * added two words for clarity.

Got Popcorn?
Neil

8 comments:

Rob Dawg said...

There is more than that number in dire straights in the Antelope Valley alone!

More like in Quartz Hills south of Avenue "T".

wannabuy said...

More like in Quartz Hills south of Avenue "T".

ROTFLMAO

Oh... that was funny... Until I did the math in my head and realized you could be accurate. :( Actually, by managing people in multiple states, I've come across some who I respect who are stuck with two homes in the very area you mention.

A mixture of greed and hope that has left quite a hangover. Then again, I can point to people I know in 12 states in the same predicament. This is the scary part where TJ and I need to have a few drinks and debate "R" vs. "D."

Got Popcorn?
Neil

tj & the bear said...

What's to debate? You keep making my points for me! ;-)

Rob Dawg said...

Until I did the math in my head and realized you could be accurate. :(

The essence of humor is it not? A grain of truth.

Quartz Hills is almost a caricature in terms of excess and bubble behavior. I can almost bet most of the people who moved there didn't sell their house in Palmcaster but rented it out as an investment instead.

the real shame is out along the Pearblossom Highway. I see those poor pine trees struggling to survive off drip irrigation but they are growing sideways because of the constant wind. Freakin' millions of acres and they still build 8 feet apart. A sea of red tile roofs. sad.

CRT said...

“I'm dying to see how you respond as I dont think you have the guts to make an honest unqualified response. My prediction is you will say (b) but then qualify it some way or the other mentioning something about Case Shiller. What do you think - fellow readers of Neil’s blog? Can he just flat out admit it or will it be an admission with qualifications? I guess we shall see!”

Back to posting eh – so my prediction was wrong (see how easy that is) – it looks like you would prefer not to admit to a mistake and instead slink away quietly. Pretty pathetic in my book.

tj & the bear said...

Did you guys check out the new FNM Jumbo guidelines? I'll break it down for you -- if you can't afford your house, well, you still can't afford your house. Cheers!

smf said...

Well, count me in the 33,000 figure, Neil!

Of course, if we can't sell our current house ASAP, we won't bother with the hassle.

As to the uncle who is building a spec. mansion, IIRC the bank told him that the would only go 65% LTV on his mortgage.

Rosalie said...
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