patrick.net

Ahhh! Thanks, I stand corrected... That makes ever so much more sense. I couldn't really believe that "they" would ever let the limit roll back in an election year.

fizbin says

Ahhh! Thanks, I stand corrected... /p>

Interesting. A little checking reveals that the fannie-mae, freddie-mac conforming high-cost limits DO seem to have rolled back. It's only the FHA loans (ginnie-mae) that have the higher allowance.

It would be interesting to see how many more FHA backed loans are showing up in the SV area. How do they compare in cost to conventional loans when the mandatory MIP is factored in?

Whats really crazy to ponder is that in 2001 the Phonie/Fraudie conforming limit was 220k in high cost areas.

Ten years later its 729k and prices are crashed back to 2002 prices except for prime coastal which might be at what 2003/4 prices?

I would like the limits rolled back to 220k but way more likely they ramp it up to 1m soon. It was proposed by NAR to do this they lost (so far.....)

I don't think it's a bubble, I think banks are trying to create an artificial shortage with the government's help (cash infusion into the banks so they don't have to sell their distressed property to survive)... it's a ploy and it may be working.

Here in Orange County, California inventory has suddenly gone to virtually zero, the slim pickings of properties available are going into bidding wars and most are already in Pending status, prices are creeping upwards.

Remember that prices are sticky on the downside but not on the upside, prices can rise 10% in a month but for the same 10% fall it may take 6 months.

In the long run I think home prices will come down a lot in real terms (discounting for inflation), however I think we're in this soup for at least a decade... possibly 2 decades just like Japan since the government will try it's best to put the brakes on the whole correction.

REpro says

REpro says

At some point banks can refuse giving new mortgages for regular buyers. That may create situation: “NO Cash - NO House Amigo.”
50% loans turn away ???
http://realestate.msn.com/potential-homebuyers-hit-mortgage-brick-wall

In the link you sent we read about a couple with credit score 590, and they want to get a house with about 3.5% down. They are told by the bank that they need to get up to 620, and the article says rates will be high unless they reach 700.

Are we supposed to feel sorry for these people? Is the bank being unreasonable to "regular buyers"? I don't think so. I think the bank is being perfectly reasonable. This is what lending standards are supposed to be like. It is a return towards normal. The problem is just that after a decade people have started to think that no income documentation, no credit, no down payment is normal and that they are entitled to mortgages anyway. This is why 50% fall thru.

drtor says

In the link you sent we read about a couple with credit score 590, and they want to get a house with about 3.5% down. They are told by the bank that they need to get up to 620, and the article says rates will be high unless they reach 700.

I've sort of been reading up on this myself and from what I gather, supposedly the "new" threshold for getting a good rate these days is at least 700+ with some sources saying 750 or more. If you're below that then yes, you can get an FHA loan, but you'll also likely be paying a higher interest rate. So yeah, credit is king these days.

It's a totally artificial bubble. There are at least 1.6 million homes in the shadow inventory. That figure hasn't changed much since 2009. Interest rates are being held artificially low to enable buyers to buy homes at higher prices than what they are really worth. If interest rates were higher home prices would drop and more underwater homeowners would walk away. Banks are artificially holding back homes from the market because they want their assets to maintain an artificially high value. Again, they are wanting to maintain these prices because they are afraid more underwater homeowners will walk away in droves if their homes lose more value.

At some point many of the homes which are being held off the market will be sold in large batches to investor groups which will rent them out. Since they won't have been sold on the open market they won't bring down home prices. They will have simply been purged from the shadow inventory all at once. By controlling the number of homes for sale at any one time, and selling large batches to huge investors, the banks will eventually emerge from this bigger & stronger than ever.

In the meantime, those of us who are waiting for prices to drop naturally will be left wondering who were those masked men who designed such a plot.

More cash/credit than brains is what we have happening. Good luck to all the players. I hope you have a defensive play as well.

In many recent sales observations, offers with loans are out of consideration. Houses are going to the highest all cash offer. In transactions looks like investment, ROI becomes a secondary issue.
From some perspective it appears like we are witnessing a gigantic money laundering machine.

REpro says

In many recent sales observations, offers with loans are out of consideration. Houses are going to the highest all cash offer. In transactions looks like investment, ROI becomes a secondary issue.
From some perspective it appears like we are witnessing a gigantic money laundering machine.

You might be onto something. Who are these cash rich guys?