Rep. Gary Miller (R) introduces Keep Homes Unaffordable Act

It should be obvious to everyone at this point that inflated home prices are not a good thing. Homes should return to reasonable (3x to 4x) multiples of annual incomes, and young families should be able to save up a 20% down payment before purchasing. We are still far from that point.

Enter dimwitted California Republican Gary Miller, who thinks the solution to a housing bubble created by easy money is to try to reinflate the bubble with more easy money. His Keep Homes Unaffordable Act:
Economic stimulus legislation passed into law last year temporarily lifted the loan limits to nearly $730,000 from $417,000 through the end of 2008. The limits dropped to $625,500 from $729,750 on January 1.

Rep. Gary Miller, Republican of California, introduced legislation Thursday to reinstate the higher limits, arguing the move was crucial for restoring the affordability of mortgages in some regions of the country and stabilizing the housing market.

"As the crisis in housing markets continues, the availability of affordable mortgage loans remains essential to alleviating the credit crunch and stabilizing the U.S. mortgage market," Miller said in a statement.

The Jan. 1 drop in the high-cost limit has pushed up rates on larger mortgages that no longer qualify for purchase by Fannie or Freddie. Interest rates on "conforming" loans - those that can be sold to Fannie or Freddie - are much lower than on larger loans, known as "jumbos."

Lawmakers representing costly home markets along the coasts have vowed to attach language restoring last year's higher limits to economic stimulus legislation.
The National Association of Realtors, the Mortgage Bankers Association and the National Association of Home Builders have been lobbying for months to make last year's higher limits permanent.

It's bad enough that Fannie and Freddie helped create the bubble by using tax dollars to subsidize loan rates for sub-$500,000 homes. Gary Miller wants them to do the same for houses over $500,000.

The real solution: 20% down, no rate subsidies, fully documented income on loan applications. Without government funny money propelling a bubble, homes will return to affordable levels.

Miller is sick to want first-time homebuyers to have to take on extra debt to buy artificially inflated homes. Either that or he is on the payroll of the real estate industry.

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