Lower conforming limit causes 84% decline in loan volume

Dec 19th, 2011  
by IrvineRenter  in Library News

Astute Observations

Astute Observation by Casual Observer
2011-12-19 02:02 PM

“In Los Angeles and Orange counties, where the conforming loan limit was lowered from $729,750 to $625,500, the number of homes sold with purchase loans in that range totaled 58 in November, down 44.2% from October and down 84.1% from a year”

Great example of how % numbers can distort headlines and create alarm/panic.  1.  There were only 58 transactions.  2.  How many were cash buyers (investors who would not be affected by owner-occupied loan limits anyway?)  Please engage brain before putting mouth in gear.

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Astute Observation by lmor
2011-12-20 12:31 AM

“1.  There were only 58 transactions.  2.  How many were cash buyers (investors who would not be affected by owner-occupied loan limits anyway?) “

Zero

58 was the number of transactions which took out loans in the range between $625k and $730k.  Cash buyers don’t take out loans

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Astute Observation by SanJoseRenter
2011-12-19 09:43 PM

Casual Observer (aka Planet Reality):

Your comment above makes no sense.

There were 58 transactions this November, but at 84% less that implies 362 transactions the previous November.

These are statistically-speaking large enough numbers to be meaningful, contrary to your opinion.

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Astute Observation by newbie2008
2011-12-20 08:56 PM

It appears that the 58 are transactions and not loans.  Just a low amount of transactions in that price range,

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Astute Observation by lmor
2011-12-20 10:51 PM

“It appears that the 58 are transactions and not loans.”

Where does that appear to be the case?

The article is fairly clear in stating that there were 58 transactions with loan values in between $625k and $730k, and that that number is 84% less than the number of transactions with loans in that range last year.

This information alone isn’t all that interesting, what would be interesting to know is what effect this had on the selling of homes priced in the $647k-$911k range.  It’s possible there was no change in prices or number of homes sold, and that buyers just found ways around taking out loans in that range through creative financing or putting more money down.

Most likely there indeed was some real effect on prices and sales but I don’t see that specific data in this article.  The DataQuick figures for LA and OC (which includes all sales in all price ranges) shows a 4.6% increase in number of sales and a 5.2% to 8.0% decrease in median prices.  Is there anyway to see data for that $647k-$911k range specifically?

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Astute Observation by zovall
2011-12-20 11:39 PM

“Is there anyway to see data for that $647k-$911k range specifically?”

Here are sales numbers from MLS for LA and Orange County SFR and Condos that Closed with a Sold Price between $647k-$911k.
November 2011 - 545
October 2011 - 578
September 2011 - 740
November 2010 - 668
October 2010 - 674
September 2010 - 762

The limit changed on Oct 1 so I think those numbers make sense.

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Astute Observation by Casual Observer
2011-12-21 09:22 AM

Need to know how many homes were available.  Year over year numbers within a month’s period of time are misleading as to the true nature of the marketplace.  Obviously, all conditions of the marketplace have an effect on sales volume, sale amounts, finance in general, economics, etc.

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