Realty Check
Current Housing Indicators |
| CURRENT | PREVIOUS | ||
| Existing Home Sales | 4.49m | ▼ | 4.74m |
| New Home Sales | 309,000 | ▼ | 344,000 |
| Housing Starts | 583,000 | ▲ | 477,000 |
| Building Permits | 547,000 | ▲ | 531,000 |
| HMI | 9 | UNCH | 9 |
| Existing Home Prices | $170,300 | ▼ (annually) | $199,800 |
| New Home Prices | $201,100 | ▼ (annually) | $232,400 |
#DIANAOLICK ON TWITTER
- Private Homebuilders: Dead Men Walking
- Robo-Deal Is All About Lowering Mortgage Principal
- As Mortgage Refinancings Surge, Banks Struggle
- Forty States Sign On to Foreclosure ‘Robo’ Settlement
- Running Robo-Settlement Numbers
- Own vs. Rent Riles Government Housing Policy
- Obama's Mortgage Refi Plan to Go Through FHA
- Housing Demand Defies Fundamentals
- US Treasury Forcing Mortgage Principal Forgiveness
- Robo-Reality: Final Foreclosures Fall as Pipeline Swells
MOST SHARED
- Get Ready for $5 Gas This Year: Ex-Shell CEO
- US Hedge Fund Manager Charged with Insider Trading
- Anthony Scaramucci: S&P 500 Stocks Still Cheap
- LinkedIn’s Growth Is Already Priced In: Analyst
- The Real Reason Behind Bank of America’s Rally
- Investing in the Fountain of Youth
- Verizon, Coinstar Team Up to Take on Netflix
- We Are Well Positioned for 2012: CEO Alcatel Lucent
- Clint Eastwood ‘Surprised’ by Reaction to Chrysler's ‘Halftime in America’ Ad
- Is Bill Gross, PIMCO's Bond King, Losing His Touch?
- Private Homebuilders: Dead Men Walking
- LinkedIn’s Growth Is Already Priced In: Analyst
- The Real Reason Behind Bank of America’s Rally
- 5 Hedge Funds’ Top Stocks Soar After 2011 Rout
- This Valentine’s Day Love Is Served on a Silver Platter
- CEO to CEO: Our Roles Are Changing
- Clint Eastwood ‘Surprised’ by Reaction to Chrysler's ‘Halftime in America’ Ad
- Bulls Check In to Community Health
- Bank of America’s Worst-Case Scenario Gets More Real
- Is Bill Gross, PIMCO's Bond King, Losing His Touch?
- Greece Austerity Deal Runs Into Trouble Once Again
- Why Greece Will Default, Leave Euro Zone
- Apple’s Record Run: $500 Is a Magic Number
- Private Homebuilders: Dead Men Walking
- Housing Still Hurting Consumers, Economy: Bernanke
- Get Ready for $5 Gas This Year: Ex-Shell CEO
- The World's Best Beers
- Diamond Investing: Why It's Not for the Faint of Heart
REALTY CHECK VIDEO
RSS FEED
GSE Loan Limit Exceptions: Are They Really Fair?
CNBC Real Estate Reporter
![]() |
CNBC.com |
I bet a lot of folks don’t know this, but there are already a little more than a few states that are excepted from the rule: Alaska, Hawaii, the U.S. Virgin Islands, and Guam. The maximum amounts for these states are 50% higher than the limits for the rest of the country, according to Fannie Mae.
The reason for those states getting an exception to the rule is that their home prices are completely out of whack to affordability. And that is now the argument Gov. Schwarzenegger is making:
“The current GSE conforming loan limit for lenders willing to originate conforming mortgage loans for median-priced homes in California is $417,000; however, according to the California Association of Realtors, the median price of a single family residence in July was $586,030. Again, this disparity makes these products practically irrelevant in California,” Gov. Schwarzenegger writes in the letter to Congress.
Makes sense, right? Only now I’m thinking about that whole ‘cause and effect’ conundrum. Back in the 1970s, when Congress decided to make these particular exceptions, it was all about the price of real estate in some wacky spots. Clearly a fisherman in Alaska shouldn’t have to pay more out of pocket than a fisherman in Maine, just because homes in Alaska cost so much more, right?
So now we come to the California conundrum. I mean, homes in Alaska were likely so high-priced because there just weren’t that many of them, and, not that I really know the answer, but I’m guessing that it just cost a lot more to build and maintain a home in Alaska than anywhere else. Tourism in Hawaii likely drove the prices out of whack there as well. Not too sure about Guam.
Now the House of Representatives passed a bill on May 22 of this year that would raise GSE loan limits for single family homes to either the median cost in the area or 150% of the current limit, whichever was lower. Then the chairman of the committee that passed it, Rep. Barney Frank, in August, urged the Senate to raise that limit beyond what his own committee had done. This all thanks to the credit crunch in august. “In the current housing crisis, it is clear that we must immediately provide additional mortgage liquidity in all areas of the country, including high cost areas,” Frank wrote in the committee press release. The Senate’s still thinking about it, but that would open the door for California.
Still, when I think about California, I think about a state chock full of homes, chock full of new construction, and chock full of investors who wanted to make a few bucks off of all of that. I think of massive condo complexes and borrowers who took advantage of the easy cash afforded them by unscrupulous or heady lenders. Yes, no question, affordability in California is now out of whack. But when you think about the average California homeowner and you think about the average Alaskan homeowner, are you really seeing the same guy/gal?
Questions? Comments?











