Oh, gotcha, NativeCalGal! Thanks so much for explaining. Sure appreciate it, both of you.

I think he meant as opposed to The Creek, it's The 'Nut. Maybe I'm wrong.

The nut! I googled but couldn't find anything. Could you explain a little more? Is the nut a minimum amount?

People in the know call it the 'nut.

In answer to Susan's comment, I totally agree with you! In Contra Costa County, the median income is around $60,000 and the median price of a home is $620,000. Can someone with a $60,000 income afford a home that expensive? Of course not! And even with two incomes, a $800K-plus home is unattainable.

So, Susan, do you think the current correction (one way to put it) is a good thing, and prices *need* to plummet further to become affordable to the average Joe (or Jane)?

Realistically, how many more people are going to be able to afford homes at +$800K, even with a 4 percent drop in price? That's just an astronomical price still.

You both make excellent points! Starting with Doug's comment: First of all, you are 100 percent correct that this will benefit sellers. But I think it benefits buyers too.

You said, "More buyers will be able to bid higher for houses, and this increased demand will raise housing prices."

I agree that more buyers will be able to bid higher for houses, because it's more likely they can get loans to do so.

Obviously, that's good for sellers, who are watching the value of their homes drop precipitously and who can't sell their homes because people can't afford them.

But it's also good for buyers, because the conundrum here is that even though prices are plummeting (bad bad bad: most peoples' homes are their biggest investments), Bay Area residents still can't afford to buy because prices are still out of reach for average-income folks and it's difficult to get a loan for more than $417,000.

You said, "Increasing the conforming limit is just going to prolong the housing crisis...."

Could you explain a little more on that one? Because my concept of the housing crisis is
that prices have dropped steadily all year, a phenonemon that hasn't been seen since the Depression, and are predicted to keep dropping. People are losing their retirement nest eggs, their investments, their equity, and because houses aren't selling, related industries are suffering too.

And Birdie, let me mull your question over. Meanwhile, maybe Doug would have an answer for you.

But Janis, good news isn't such good news for some people. Easier to get loans = more people getting them than can afford them = more foreclosures, no?

Let's assume it does make it easier or cheaper to get larger loans, what is the consequence? More buyers will be able to bid higher for houses, and this increased demand will raise housing prices. Increasing the conforming limit is just going to prolong the housing crisis, presumably AFTER the election, which is why it's supported so vigorously by the politicians. Make no mistake, this is for the benefit of home sellers, and refinancers, not buyers.

Interesting perspective, Doug! I was thinking of it as good news for buyers, because it will make it easier to qualify for loans over $417,000. Or at least that was my thought. You don't think that will happen, then? Could you explain a little more?

"In more good news, a deal announced Thursday wold allow government-sponsored Fannie Mae and Freddie Mac to buy mortgages for as much as $730,000, a huge jump from the former $417,000 limit."

Good news for who, sellers? Certainly not for buyers as this will just push house prices up in response.