ps99472
New member
This was brought up in another thread but thought it should deserve its own. The Govt's Jumbo Loan Conforming limit will drop from $729K to its old $625K limit unless congress votes to extend it again (unlikely due to Republican control of the House). Now, I'm not an expert, but this was originally done to soften the housing crisis. If lending stops for homes in the $781K (625/80%) and above range, this would exert a tremendous downward pressure in prices during a housing price decline. If you take buyers off the table because they don't qualify for a loan, that would decrease demand and hence a price drop (I remember supply/demand curve from econ class in college). I can't be sure but wasn't private bank jumbo lending all but non-existent a couple years ago?
Looking ahead in my crystal ball, if the conforming limit drops in Oct. this would put pressure on the homes in the $800k and above range? Wouldn't builders like iPac look at their pre-qual list and see a big problem for everyone who qualified for a 20% down finance? I got an email from BofA a few days ago regarding this issue and they were trying to get people to buy in Maricopa now. I chose not to purchase in the 1st and 2nd phase at Maricopa. Phase 2 move-in is already in Oct. That means I will be one of the buyers who would not be able to secure a favorable jumbo loan when I need to close on my purchase. Doing a Zillow mortgage search shows very few non-conforming lenders even now before the conforming limit drops. Not to mention the interest rate can possibly go up after QE2 ends in June and that private bank lending will be at least 1% higher then its conforming counterpart. If the worse happens, and builders can't move their $900k homes and needs to drop into the lower conforming limit's sweet spot, this would push all prices down right? If $900k goes to $781K then where would the $781K homes go? So only cash buyers can support the prices in Irvine?
Looking ahead in my crystal ball, if the conforming limit drops in Oct. this would put pressure on the homes in the $800k and above range? Wouldn't builders like iPac look at their pre-qual list and see a big problem for everyone who qualified for a 20% down finance? I got an email from BofA a few days ago regarding this issue and they were trying to get people to buy in Maricopa now. I chose not to purchase in the 1st and 2nd phase at Maricopa. Phase 2 move-in is already in Oct. That means I will be one of the buyers who would not be able to secure a favorable jumbo loan when I need to close on my purchase. Doing a Zillow mortgage search shows very few non-conforming lenders even now before the conforming limit drops. Not to mention the interest rate can possibly go up after QE2 ends in June and that private bank lending will be at least 1% higher then its conforming counterpart. If the worse happens, and builders can't move their $900k homes and needs to drop into the lower conforming limit's sweet spot, this would push all prices down right? If $900k goes to $781K then where would the $781K homes go? So only cash buyers can support the prices in Irvine?