Economic Metamusel for election year

January 24th, 2008 by Marian Bennett
Categories: Finance

Will the financial markets return to normal any time soon? Remember when we said that it couldn’t be all that bad if the government wasn’t involved. Well, that changed and they’re definitely involved now…holding a great big spoon.

The overall stimulus package includes temporary support for raising the conforming loan limit for Fannie Mae and Freddie Mac programs beyond the current $417,000 to $625,000 for higher cost areas such as the San Francisco Bay Area. Also the Federal Housing Administration (FHA) would be able to insure loans up to $725,000 from the current $362,000 ceiling.

According to a Forbes.com article today…“‘Because the country needs this boost to the economy now, I urge the House and the Senate to enact this economic growth agreement into law as soon as possible,’ Bush said.”

I expect this could have an affect on the local real estate market in 2008 since these dramatic actions are designed to stimulate the economy back into action. Many borrowers here rely on jumbo loans, where the median price for a single family home was $936,000 for San Mateo County in 2007. However, I’m really not sure if it’s a well-designed plan (hmmm, I can’t believe I even wrote that) or a knee-jerk reaction fueled by political pressures. Something needs to happen, but is reducing the Fed Funds rate by another 0.75 percentage point and increasing the conforming loan limit at the same time a good thing in the long run? Why do I keep thinking back to 2001?

This development has caught the attention of two other local Realtors, who also share their take on this emerging topic:

Arn Cenedella, a Realtor with Coldwell Banker in Menlo Park highlights how much can be saved each month for a typical borrower.
Dave Blockhus, a Realtor with Coldwell Banker in Los Altos points to the the fact that the down-payment will still be an issue for many.

This entry was posted on Thursday, January 24th, 2008 at 10:56 pm and is filed under Finance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

House passes bill increasing Fannie Mae and Freddie Mac loan limits | Peninsula Real Estate Guru said at January 25th, 2008 at 7:37 am
[...] Marian Bennett living on the San Mateo Coastside and working as a Half Moon Bay real estate agent wonders whether these proposed changes will be a long term benefit to our economy. Marian also wonders how much of this activity is politically motivated. Per the RE Guru: Yes Marian it is ALL politically motivated – just about everything that goes on in Washington is. Most if not all of those Washington politicos sit around and yak yak yak – sit around and do nothing – and then when a problem hits – look for someone to blame – look to profit from it politically – and then try to get on TV and talk about how they feel the pain of the common man and woman while being driven in their limo to a five start restaurant which we the taxpayers pay for. So typical………. [...]
Proposed Increase In The Conforming Loan Limit, Will It Help? | Silicon Valley Real Estate Guide said at January 25th, 2008 at 9:48 am
[...] Cenedella, an agent Specializing in Menlo Park real estate or Marian Bennet, specializing in Half Moon Bay real estate discuss their thoughts on this exciting [...]