Mack truck is headed into the Manhattan market

(Source: Mack Truck Inc.)

When the government lowers its limit for an insured mortgage loan starting Oct. 1, the impact on our housing market may well prove to be staggering.

I confess that I hadn’t focused on the consequences until the New York Times rang alarm bells on Wednesday in a Page 1 story headlined “Federal Retreat on Bigger Loans Rattles Housing.”  In it, David Streitfeld writes:

But now Democrats and Republicans agree that the taxpayer should no longer be responsible for homes valued well above the national average, and are about to turn a top slice of the housing market into a testing ground for whether the private mortgage market can once again go it alone. The result, analysts say, will be higher-cost loans and fewer potential buyers for more expensive homes.

The maximum government-insured loan limit through September in high-cost areas such as ours had been raised to $729,750 as the nation reeled from horrifically deflating house prices across the nation.  The new limit

Case can’t predict, and Times gets NYC wrong

Karl Case, whose name is practically immortalized as co-creator of the Case-Shiller Index, said in September that he thought the housing market may be near a bottom.

In a paper he presented at the Brookings Institution, the Wellesley emeritus professor of economics observed that nine of 20 metro areas had shown price improvement and the relationship between incomes and house prices was nearing a level that occurred at the end of previous housing downturns.

In the New York Times that same month, he wrote that “housing has perhaps never been a better bargain.”

That was September, you might note, so why take issue with him? One reason would be