I honestly don’t know how American’s persevere through the daily onslaught of sensational media accosting our senses on a regular basis. Truly, our spirit, work ethic, and resolve are unwavering and unequaled – but no one ever said it would be easy to remain this staunch.
The front page of today’s Monterey County Herald reads: Change expected to slow Peninsula real estate market. Now, you are on a Real Estate website. I am a Realtor. My partner is a Broker. We work for the #1 brokerage on the Peninsula – Coldwell Banker Del Monte, so I am going to try and remain calm and unbiased here…mostly.
The issue at hand is one of great importance nationwide, and that is whether or not Congress will vote to continue the federal governments backing of loans up to $729,500 – as has been the standard for the last three years. However, the portrayal of this issue in the immediate start of the article is one of continued reckless media doomsday…”another housing shock, more price drops, more foreclosures, etc, etc and blah blah blah…” Of primary concern to me as a reader is, How does this affect me? Is there anything I can do? What are the facts?
Ok, the fallout mentioned above is certainly possible. However, strong arguments could be made from almost any distressed economic component effectively making a case for how it would affect housing. Gas prices continued escalation wouldn’t be helpful. Slow job growth is hurting. For those employed, job security…on and on topic after topic seems to be a hugely important economic priority and I don’t discount any of these issues and their seriousness, not just for Real Estate, but for the continued success and prosperity of our great nation and its recovery.
To be clear, the topic of government backed loans is a NATIONAL issue with particularly sticky implications for Monterey County. If you are really interested in how we got to this point of government backed loans and their escalating value in the first place (and have a strong stomach) then a good accounting and interesting story can be found by reading All the Devils Are Here by: Bethany McLean. This read is more technical and difficult than Michael Lewis’ The Big Short, but goes much deeper into the specifics of the big banks, specifically Fannie and Freddie – and how they manipulated the system to their sole benefit.
The specific reason that Monterey County is subject to a staggering cut from the current government backed lending limit of $729,750 to a worst case scenario of $483,000 is due to the vast diversity among home sales in the county. Under the new federal formula, the conforming loan amount would be equal to 115% of the median home price in a particular county. The large volume of homes being sold along the HWY 101 corridor at significantly lower prices than homes sold along the HWY 1 corridor dramatically affects the median value of home prices throughout the county. Most counties do not experience extremely wide deviations from their Median sales price.
According to Data Quick, Monterey County sold 347 homes in March 2011 with a Median price of $229,500 (up 2% YOY). Where it gets interesting is that the median price range varies from $130,000 in King City to $1,525,000 in Pebble Beach! Now, I don’t believe that just because someone thinks they should have a home in Pebble Beach that the federal government ought to back it. BUT, our county clearly represents a level of housing diversity that must be addressed by congress.
That leads me to my final thought: WHAT CAN I DO? Contact your congressional representative! If you are in Monterey County that is Sam Farr and you can click right HERE or here:
Tell him that this is an important issue that must be resolved in a manner consistent with our counties unique needs. Tell him you own a home, that you would like to own a home, whatever your case may be. Let him know that you VOTE. Let him know where you stand on this issue…and for that matter any others of your concern! If you want to complain about the way things are, then great – I do it all the time. However, don’t just lament about what could be better. Take a moment to make your voice heard. Every little bit helps.
If you aren’t from Monterey County, then Google the contact information of your congress-person and send them your opinion. If you are from Monterey County, then stop reading this blog and go tell Sam Farr that our county needs special attention to adequately represent the variety of home buyers here.