OpinionIndustry News

Real estate’s December report card

Guest perspective: Higher loan limits, lower rates signs of positive news

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Almost all of the news this month was positive. GDP, job growth, productivity and leading indicators all improved. Consumer confidence rebounded, mortgage rates declined, and new-home sales surged. Sales continue to soften in some markets, but this is not true nationally. The most positive news came from Fannie Mae and Freddie Mac. The two mortgage giants announced that they will raise the conforming loan amount from $359,650 to $417,000 in 2006, which they claim will allow an additional 466,326 homeowners to become eligible for a conforming loan. Rates on "jumbo" non-conforming loans are typically between a quarter-and-a-half-point higher than conforming rates. The conforming mortgage limits have been rising much faster than home prices. Our grading system of the economy and the housing market is a "bell curve" model, with statistics at an all-time high receiving an "A," statistics near the long-term average receiving a "C," and the worst times ever receiving an "F." In this grading...