The NYT has an excellent piece on how the increase in FHA mortgage limits have made it a subsidy program for relatively affluent families, speculators, and frauds.
--Dean Baker
Posted by Dean Baker on November 20, 2009 6:12 AM|Permalink|
COMMENTS (3)
Is this funny or sad? Or maybe just scary? I can't decide.
That seems contradictory to publicly released numbers from the FHA. The loan limit claims it should be 670k for a duplex in Metro Suffolk, Middlesex and Norfolk counties, which includes the major contiguous urban areas of Boston. Which is still a bit too high. I was actually looking at duplexes, but having even 5% down made going through the FHA unnecessary and the increased interest rate not worth it. Then again I wasn't expecting it to appreciate in real value very much. The story also doesn't quite line up with my personal experience, I would expect them to get an effective 6.7-7% interest rate and the lender probably required that they buy a building with a tenant already on a lease. Further the middle/top of the rental market in the Boston area hasn't been doing so well and they would need to rent out the other unit for 3k a month to keep personal payments at a thousand dollars each.
So yeah, the FHA shouldn't be lending above the median in any given market, and around Boston things around the median have stopped falling, but everything is still moving towards the median.
Well, San Francisco used to be a stable real estate market--because it was so expensive that only people who had high incomes and a multiplicity of rich relatives could afford to buy there. Now San Francisco will be just like other markets, only the losses will be greater.
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COMMENTS (3)
Is this funny or sad? Or maybe just scary? I can't decide.
Posted by: Erik L | November 20, 2009 8:25 AM
That seems contradictory to publicly released numbers from the FHA. The loan limit claims it should be 670k for a duplex in Metro Suffolk, Middlesex and Norfolk counties, which includes the major contiguous urban areas of Boston. Which is still a bit too high. I was actually looking at duplexes, but having even 5% down made going through the FHA unnecessary and the increased interest rate not worth it. Then again I wasn't expecting it to appreciate in real value very much. The story also doesn't quite line up with my personal experience, I would expect them to get an effective 6.7-7% interest rate and the lender probably required that they buy a building with a tenant already on a lease. Further the middle/top of the rental market in the Boston area hasn't been doing so well and they would need to rent out the other unit for 3k a month to keep personal payments at a thousand dollars each.
So yeah, the FHA shouldn't be lending above the median in any given market, and around Boston things around the median have stopped falling, but everything is still moving towards the median.
Posted by: Tucker | November 20, 2009 9:54 AM
Well, San Francisco used to be a stable real estate market--because it was so expensive that only people who had high incomes and a multiplicity of rich relatives could afford to buy there. Now San Francisco will be just like other markets, only the losses will be greater.
Posted by: PeonInChief | November 20, 2009 10:23 AM