A woman from Connecticut seeking financial advice from a Today Show panel had an attitude that irked me. She commenced her question by stating that FHA limits had come down recently, and then requested that the panelists predict how soon home sellers would drop their prices to reflect this new reality. [I can’t find the link or I’d share it. Sorry!]
One of the “money experts” told her that her thinking was backwards; the FHA limits had dropped because home prices had already plunged.
This exchange stayed with me all day. Does this woman represent a substantial subset of possible purchasers, thinking that all home sellers need to conform to the limits of a mortgage program? I know the reality is that all sellers need buyers, many buyers need mortgages, and FHA backed mortgages are the main lending source right now. However, I am truly troubled by this woman’s thinking that the maximum buyers can borrow under a program should dictate the overall prices of the marketplace.
Don’t misunderstand me: I want her to buy a house that she can afford. I just don’t want her to think she can afford every house.